13 May 2022
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The UAE offers unemployment compensation for Emiratis and residents - Based on The National News of UAE website, people will get cash payouts for a limited time to assist with their daily expenses.

Scheduled to be implemented in January 2023, the required plan is for Emirati and international employees in the private and public sectors.

Dr. Abdulrahman Al Awar, the Minister of Human Resources and Emiratisation, introduced the new Federal Law on Thursday.

It states that each employee will contribute to an insurance company program.

Officials have not yet specified how the payment would be made, including if it will be paid by their company or deducted from their wages.

For a short time, employees will get 60% of their basic monthly wage, up to Dh20,000 per month, to assist with living expenses.

If they are terminated, they will receive a monthly payment equal to about 60% of their base income, up to Dh20,000.

The majority of payments will be far less than the indicated limit.

Employees will be offered insurance packages supplied by the country's existing insurance providers.

At a conference in Dubai, Dr. Al Awar said that the annual premiums for basic coverage would be as low as Dh40 to Dh100.

Comparing the coverage to auto insurance, he stated that individuals might be able to select a higher tier after the policy is finalized.

He also declared that they will not permit an insurance system with excessive premium payments.

He also added that if employees are terminated, they will get a monthly payment equal to about 60 percent of their base wage, up to Dh20,000.

UAE launches unemployment payment plan

Each month, employees in the UAE are paid a lump amount. However, incomes are often categorized as "basic," "housing," and "transportation."

Dr. Al Awar explained that investors, domestic workers, workers on temporary contracts, employees under 18 years old, and retirees are exempt from the new legislation.

He also added that monthly support will cease once a new employment has been acquired, and employees will be able to restart or improve their prior insurance packages.

After a specific period,

if the dismissed employee has not found new employment, financial support will cease.

When the ministry publishes the governing regulations, how the new system will be implemented will become clear.

Shahram Safai, a partner at Afridi & Angell legal consultants who specialize in employment law, stated that installing a safety net is a momentous occasion, notwithstanding the likely tiny size of the payouts.

"With the imminent implementation of unemployment benefits, the UAE gets closer to the top jurisdictions regarding labor legislation and employee protection," he added.

That is advantageous for employees and businesses, as it allows them to recruit and attract the most acceptable candidates.

Employing more Emiratis in the private sector

Included in several measures adopted by the UAE Cabinet last week, the initiative aims to encourage more Emiratis to work in the private sector and create a more stable work environment for all inhabitants.

Under the Nafis system, organizations with more than 50 workers must employ 2% Emiratis.

This quota will annually increase until it reaches 10 percent.

Companies that recruit Emiratis will reap financial benefits.

As an incentive, the Ministry of Human Resources and Emiratisation announced it would reduce by 80% the costs it charges businesses for obtaining visas and work permits.

Dr. Al Awar stated that there are already over 31,000 Emiratis employed in the private sector, which is expected to expand dramatically by 2026.

"Two percent of your staff being Emiratis is not excessive for a 50-person private firm," he remarked.

The proportion is relatively low in a labor market that grants over 1,2 million work permits yearly.

Companies that do not boost their quota will be required to pay Dh6,000 per month for each Emirati they fail to recruit up until the quota is met.

"The sum will grow by Dh1,000 year until 2026 for non-compliant businesses."

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