The United Arab Emirates’ newly introduced unemployment insurance law started to be utilized recently, providing protection for expatriate residents and citizens who find themselves unemployed. Initially announced in May, the scheme was initiated as part of reforms intended to draw more talent and investment into the country. Since most expatriates are not familiar with the laws and regulations of the UAE, they must seek someone who is completely familiar with the rules of the UAE concerning the employment and legal rights of employees especially the latest and new changes in the employment law. Mr. Arashzad is an experienced and trustworthy lawyer who is familiar with the employment rules of the UAE and can help you to know and understand your legal rights in the UAE.
What does it allow and who is qualified?
The new unemployment insurance law enables insured people to claim a particular cash amount for a period of three months if they face a job loss, based on what UAE’s Ministry of Human Resources and Emiratization (MoHRE) declared recently.
Nazar Musa, CEO of UAE-based PRO Partner Group, in an interview with Al Arabiya English announced that the new unemployment insurance law is organized to bring advantage to most employees in the UAE.
The program will pay recompense, in the form of a cash sum, for up to three months in the event of an employee experiencing job loss, from the date of becoming out of work. Unemployed people will be incapable of claiming 60 percent of their salary per claim as a minimum in recompense upon ending employment if those employees fulfill specific conditions under the program. To be eligible for the payment, the fired employee is required to have been insured for a minimum of 12 successive months. This is computed from the date they first agreed to the program.
Other Gulf countries such as Saudi Arabia, Oman, Qatar and Kuwait have earlier offered some form of unemployment help to citizens. Bahrain also has already offered an unemployment insurance program for non-citizen workers and citizens.
The program should be regarded as a temporary financial action to help the employee find another job or employment. The employee may ask for extra periods of compensatory coverage under the insurance program; still, it is predictable that this will cause extra underwriting and high premium payment to be paid.”
Conditions of Eligibility
It is necessary to be a minimum subscription period of twelve successive months for the insured in the program.
The insured employee should not be fired for disciplinary issues.
The insured employee shall not have a legal right to recompense if there has been fraud.
During the period of recompense payment, the payment of recompense shall stop if a worker is employed by another employer.
The types of employees who will not be eligible for this Law:
a) Investors (individuals who possess the whole business and handle it themselves)
b) Domestic Workers
c) Workers/employees on a short-term basis
d) Workers under the age of 18
e) Retirees who get pensions who have been hired by a new employer
Insurance providers
The new law conducts an unemployment insurance law in the UAE. The insurance will be offered by insurance companies authorized by the Central Bank of the UAE and that meet the conditions for offering unemployment insurance, which is announced by the UAE Cabinet once in a while.
Whilst the law has started to apply, it is anticipated that a Cabinet Resolution will arrange any details on the amount of money that must be paid regularly, the application of the program and any other requirements besides any penalties. The program starting date and subscription amounts were announced when the first announcement on the unemployment insurance program was made earlier in May 2022. Still, these details may be prone to change.
How can UAE citizens and residents receive it?
Basically, the employee will purchase the policy and settle the premium with the UAE insurance company, explained in the law, as a ‘Service Provider.’” It is believed the insurer will be needed to provide a minimum set of advantages, as stated by the law, but employees, may, should they want, ask for extra benefits under the insurance policy with the insurer.
The new social security scheme contains both UAE nationals and residents and is obligatory. All employees will put money into the program, but the officials should determine how precisely the employees must make contributions, as a subtraction from salary, or via the employer directly. But based on the hearings, contributions could be something between 40 Dirhams to 100 Dirhams a year for the basic coverage. Still, employees may choose a top tier once the policy has been completed.”
Advantages (new unemployment insurance law)
Under the latest amendments by the UAE government, residents whose visas are abolished are permissible to stay in the country for up to six months, up from 30 days.
It is believed that the program will improve the quality of the employees both with regard to professional and technical achievements knowing that they have some form of financial support following the ending of their employment.
In addition, employers will take advantage of a wealth of talented employees. The UAE Cabinet officially agreed to the program as part of a larger job stability scheme initiated by the government.
The new recompense system creates social security and guarantees better living for Emiratis and resident employees during their unemployment period and decreases business risks.
Unemployment insurance or income support coverage has been available to buy for many years, such as in the UAE insurance markets, often provided via bancassurance agreements for credit facilities. Insurers provide these products according to their underwriting terms and they are prone to low-value coverage.
Effect on employment and what this means for employers
Unemployment recompense under the new law will not influence any other rights to which the insured employee may be authorized in accordance with other laws in force in the UAE. Presently there are no commitments on an employer to do something. Employers and employees will need to wait for extra updates. It is necessary to continue to observe the position and return to any developments as they take place.
The unemployment program, especially when joined with alterations to visa options, offers a real and viable safety net for expat and Emirati employees within the UAE. One of the important barriers to drawing talent into the region has been around job and financial stability. Executing a nationwide social security system is the most viable and efficient way of addressing any such issues. The expatriates who are working within UAE are struggling with many legal affairs such as visa and residence issues, employment concerns and other troublesome issues that is better to consult with an experienced and knowledgeable lawyer.