Unemployment pay scheme for Emiratis and residents takes effect

The UAE's mandatory Unemployment Insurance Scheme covers both Emirati and foreign employees in the private and public sectors. Getty Images

The UAE’s new social security support programme that will pay Emiratis and residents a cash sum for three months if they lose their jobs came into effect on Tuesday, the Ministry of Human Resources and Emiratisation has said.

The Unemployment Insurance Scheme — which had been expected to begin next January — is mandatory and covers both Emirati and foreign employees in the private and public sectors.

This new system provides a social security scheme that ensures the sustainability of a decent life for Emiratis and resident employees during their unemployment period and will reduce business risks, the ministry said.

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Watch: UAE introduces unemployment payment scheme

“It also aims to enhance the competitiveness of UAE nationals and boost the attractiveness of the UAE’s job market for the best international and national talents and contribute in building a competitive knowledge-based economy that is among the best globally.”

In May, Dr Abdulrahman Al Awar, Minister of Human Resources and Emiratisation, announced the new federal law covering the scheme.

Compensation will be paid for a maximum of three months from the date of an employee’s job loss and will be calculated at 60 per cent of an employee’s basic salary for a maximum payment of Dh20,000 ($5,445) per month, the ministry said.

The scheme applies to all employees in the federal government and private sector in the UAE.

However, investors, such as owners of the establishments in which they work, domestic helpers, part-time employees, workers under the age of 18, and retirees who receive a pension and have joined a new job will not be covered by the insurance scheme.

“The decree reflects the UAE government’s approach in developing the business environment and enhancing the UAE’s position as a preferred destination to work and live, which is confirmed by global indices,” Dr Al Awar said on Tuesday.

“Reports show the preference of people from all over the world to work and settle in the UAE because of the advantages it provides in terms of security, safety, job benefits, as well as the level of education, health, and quality of life.”

In recent years, the UAE — the Arab world’s second-largest economy — has undertaken several economic, legal and social reforms to strengthen its business environment, increase foreign direct investment, attract skilled workers and provide incentives to companies to set up or expand their operations.

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UAE unemployment pay — in pictures

The UAE has introduced a new programme that means people who lose their job can receive a basic cash payment each month. All photos: Getty Images

If an employee loses their job they will receive a monthly payment of 60 per cent of their salary, up to Dh20,000.

Domestic workers, anyone working on temporary contracts, under 18s and retirees are exempt from the new policy.

The monthly payment while unemployed is to help people pay their basic living costs.

If the terminated employee does not find another job after a certain amount of time, the financial support will stop.

The government’s overhaul of a number of visa programmes has also boosted opportunities for foreign workers to live and work in the UAE, including the 10-year Golden Residence Scheme to simplify the eligibility criteria and expand the categories of beneficiaries.

The Green Visa was also introduced to provide a five-year residency for skilled employees without the need of a sponsor or employer.

In an interview with The National in May, Mr Al Awar said the insurance payments would be as low as Dh40 to Dh100 a year for basic cover. However, employees will be able to choose a higher tier once the policy is finalised, he added.

The UAE prioritises preserving human dignity and this decree enhances the legislative environment to safeguard the rights of all employees in the country

Dr Abdulrahman Al Awar

“We will not allow an insurance system with payment amounts that burden employees,” he said at the time.

To be eligible for the unemployment payment, employees have to be insured for a minimum of 12 continuous months.

Employees who have been dismissed from their job for disciplinary reasons, as outlined under the UAE's labour law, will not be eligible for the three-month compensation, the ministry said in the statement.

All employees will pay into an insurance scheme, but officials have not yet said how contributions will be made, such as if payments will be deducted from a worker’s salary or paid through their employer.

“The UAE prioritises preserving human dignity and this decree enhances the legislative environment to safeguard the rights of all employees in the country — Emiratis and residents alike and provides them with the best means of care at all levels,” Dr Al Awar said.

“This contributes to enhancing the stability and prosperity of society, which is among the top priorities of our wise leadership.”