Employees in the UAE have more reasons to celebrate following the recent announcement of unemployment insurance by the Human Resources and Emiratisation Ministry. The information came after the UAE government announced they would adopt the initiative.
This change forms part of a string of new labor laws in the UAE to provide a conducive work environment for foreign workers. One of the approved regulations is in the form of entry and residence permits for foreign professionals.
The insurance scheme is expected to have a sweeping impact across the Emirates labor market and will come into effect in January 2023.
What the UAE Unemployment Insurance Offers
The unemployment insurance system aims to offer all UAE citizens and foreigners in the public and private sector cash support for when they are no longer working. The money will be allocated for a period of time until the workers can secure another job.
The insurance plan may cost fees starting from as low as 40 dirhams to 100 dirhams annually, including paying workers who lose their jobs 60% of their basic salary up to a maximum of Dh 20,000 every month to cover living expenses.
The employees must also contribute towards an unemployment insurance plan starting from 2023. Workers also have the option to apply for different insurance packages. As of now, the ministry is not yet clear on how the contributions will be deducted.
The job loss insurance, one of its kind in the UAE, will not apply to domestic workers, retirees with pensions or new employment opportunities, juveniles under 18 years, and employees working under temporary contracts.
It's also important to note that the financial support will end if an employee fails to find another job within the set timeline. In addition, quitting the job or being reasonably fired disqualifies an individual from the unemployment benefits.
A Secure Working Future
Given that foreigners working in the UAE make up over 80% of the labor market, unemployment insurance is a valuable economic reform. In a Twitter post, Sheikh Mohammed bin Rashid assured that the policy will enhance labor competitiveness and offer the workers social protection while stabilizing the work environment.
Ensuring workers who suddenly lose their jobs means they will be cushioned from the adverse effects of financial insecurity, while employers will use the insurance as an incentive to attract and retain talent both at the domestic and international levels.
It remains to be seen how the UAE unemployment insurance scheme will be executed and sustained, including the participation of employers and employees. However, the Ministry of Human Resources and Emiratisation will be primarily involved in implementing the scheme, including setting the application and subscription fees while cooperating with insurance service providers.
Even so, it offers all workers a promising working future in which they can achieve their goals without worrying about financial stability. In addition, it places the UAE as one of the leading nations with a progressive labor market that will continue to draw in more talented and skilled workers and investors in the future.
If you're a business owner looking to tap into Dubai's diverse talents, Sentinel Business Centers is here to help. We have a proven track record of years of working with different clients across multiple sectors, helping them navigate through the UAE's ever-growing market. We will help you set up well-equipped office space, including obtaining the relevant licensing to get your business on the move. Please get in touch with us today.