The idea of losing your job when you live and work in Dubai can be quite terrifying. Indeed, in the United Arab Emirates, there is no unemployment insurance in the event that you lose your job. This is why HH Sheikh Mohammed Bin Rashid Al Maktoum decided to introduce this new unemployment insurance program in Dubai.
Following a meeting of the United Arab Emirates Cabinet in Abu Dhabi at the beginning of the month, Sheikh Mohammed revealed the plans for an "unemployment insurance system" for the United Arab Emirates on Twitter.
He stated that this system "
would compensate insured workers with a cash amount for a limited period in the event of unemployment." He also added:
"The objective is to strengthen the competitiveness of the labor market, provide a social safety net for its workers, and establish a stable working environment for everyone."
The program in more detail
The news came as a shock to residents, and especially to expatriates. For the first time in the history of the United Arab Emirates, residents will be able to receive monthly cash payments in the event of losing their job (the exact conditions have yet to be confirmed).
This new program is being welcomed with relief by Emirati citizens and expatriates working in the public and private sectors.
This new measure reinforces the efforts made by the authorities to attract and retain qualified employees in Dubai while reducing risks for companies. Under this program, employees who lose their jobs will receive financial assistance for a set period while they look for new employment.
Scope of application
According to Dr. Abdulmannan Al Awar,
Minister of Human Resources and Emiratisation, this law will apply to all employees, regardless of their nationality, and will come into force as early as January 2023.
Conditions for unemployment compensation in Dubai
Under this insurance scheme, workers dismissed in the United Arab Emirates are expected to receive compensation of
60% of their basic salary with a
maximum of AED 20,000 per month (for a limited period) as temporary income while they look for a new job in the United Arab Emirates.
To do so, employees will be required to pay an
insurance premium ranging from AED 40 to AED 100 per year. However, employees will be able to pay higher insurance premiums if they wish.
Those excluded from unemployment insurance
However, investors, domestic workers, employees under temporary contracts, minors under 18, and retirees receiving a pension who have taken up new employment are completely
EXCLUDED from the unemployment insurance scheme. This means that, in the event of job loss, the categories mentioned above will not be eligible for this compensation.
This announcement clearly reflects the United Arab Emirates' positive commitment to protecting workers. It is also part of the United Arab Emirates' strategy to attract the best talent to the country.
The Ministry of Human Resources and Emiratisation (MOHRE) will play a central and leading role in this major project to protect workers' rights in the United Arab Emirates. This same ministry will oversee the work of insurance service providers.
This new federal law complements the UAE Cabinet's desire to adopt resolutions and a series of incentive measures aimed at strengthening the participation of Emirati workers in the private sector: the famous Emiratisation strategy (
see our FAQ).
Experts estimate that these new unemployment compensation measures in the UAE will help prevent insecurity and distress among employees. This unemployment insurance will certainly help reduce stress and provide crucial support when people need it most.
Finally, these changes align with the policy measures taken in 2020 with a view to revitalizing the tourism sector and the economy of the United Arab Emirates in general.
Our firm has specialized in company formation in the United Arab Emirates since 2009. For more information about our services and package, please contact us by email:
support@merritt.group.
We also have a partner, Merritt Legal Consultants, who specializes in employment law, commercial law, and more. You can contact Maître Joséphine d'Angelo at
josephinedangelo@merritt-legal.com.
Merritt Group
