New UAE Unemployment Insurance Scheme: How it will help workers

The UAE government made a recent announcement of a new scheme that will be favorable for workers in the UAE. Next year, the official authorities in charge will implement this new scheme known as unemployment insurance in the UAE. In case you work in the UAE, you should know about this new scheme that will soon come into effect.

In this article, you will learn everything you need to know about this new scheme the government will soon implement. For example, we will detail who is eligible for this insurance along with all the terms and conditions.

  1. What is the new scheme for unemployment insurance in the UAE?
  2. The most essential things you must know about the new scheme
  3. How will it benefit workers in the United Arab Emirates?
  4. Who will be eligible for UAE unemployment insurance?
  5. Will this new scheme help reduce dependency on firms in the UAE?
  6. Can this new insurance help boost MENA startups and protect the most vulnerable workers?
  7. Will unemployment insurance prevent poverty and distress in the region?
  8. How can Connect Resources help you stay up-to-date with the latest UAE news?

1. What is the new scheme for unemployment insurance in the UAE?

Not long ago, the United Arab Emirates‘ Cabinet announced the implementation of a new policy that will provide support to citizens and ex-pats. The recently announced unemployment insurance in the UAE as a scheme that benefits them in the private and public sectors. The main benefit that this policy will bring is providing all workers in the UAE with a source of income in case they lose their job unexpectedly.

However, according to local experts, this new unemployment insurance scheme also aims to attract the best talents to the country. Starting from January 2023, employees from the public and private sector will be required to have unemployment support insurance. In addition, you should also know that the government recently announced this new federal law that makes this new insurance mandatory.

By having this type of job loss insurance in the UAE, workers who lost their jobs unexpectedly will receive support. Indeed, they will get cash support every month for a limited period if they lost their jobs under unforeseen circumstances. In this way, they will be able to have enough time to look for other alternatives as stable income sources.

For the working population in the UAE, this job loss insurance can bring economic stability to individuals and their families. Furthermore, it also provides them with the time they need to seek employment while helping them manage their financial obligations. Combined with many other reform measures on the visa and labour front, the UAE becomes more attractive for professionals.

2. The most essential things you must know about the new scheme

When we talk about this new type of insurance in the UAE, there are some things we must highlight. For example, the scheme will be applicable to both UAE citizens (Emiratis) and the UAE’s ex-pat workers. The main goal of this scheme is to provide financial security in the event that a UAE worker loses their job unexpectedly.

On the other hand, the new scheme has other remarkable details that you must be aware of, including the following:

  • UAE residents will be required to pay a minimum of AED 40 and a maximum of AED 100 on an annual basis. In this way, they can have access to the new job loss insurance in the UAE. It is also worth mentioning that it is possible for employees to apply for higher insurance packages.
  • If a UAE worker loses their job, the insurance will provide them with 60% of their base salary for a period. However, there will be a limit of AED 20,000.
  • The MORHE (Minister of Human Resources and Emiratisation) said that this new scheme will come into effect in January 2023.

Several new age insurance brokers in the UAE have affirmed that average workers will have peace of mind. That is because they will be sure that their benefits and compensation rights are under protection.

Many European countries provide their workers with comprehensive benefits, and the UAE Labour Law covers these benefits as well. This is possible by obligating employers to take suitable insurance options for the well-being and health of their workers. The new unemployment insurance will fill the gap by offering a guarantee of income replacement in the event of loss of job.

3. How will it benefit workers in the United Arab Emirates?

His Highness Sheikh Mohammed bin Rashid Al Maktoum, leader of the UAE Cabinet, has mentioned the details of this scheme. He said that the unemployment insurance system aims to enhance the competitiveness of the labour market. It also aims to provide a social umbrella for workers and establish a stable work environment for everyone.

The Cabinet also ensures that the scheme is flexible and allows the workers to agree on additional benefits. In order to do this, they must make an agreement with their insurance service provider. The scheme also reduces risks in the labour market for workers and increases flexibility for companies to deal with changes.

As for how it will work, the MOHRE will develop a mechanism in order to create and operate the scheme. This mechanism will also be useful to create and operate its application, subscription fees, and other procedures or requirements. In this way, it will be possible to ensure the success of the scheme and get the expected results.

Nonetheless, it has not been specified yet whether the employers have to assist their employees in applying for the program. But many experts are sure that this new job loss insurance will have far-reaching effects.

4. Who will be eligible for UAE unemployment insurance?

As we mentioned before, both Emiratis and ex-pats alike are eligible to receive unemployment insurance in the UAE. The MOHRE has confirmed that those workers who lose their jobs under unforeseen circumstances will get this financial support.

The new unemployment insurance in the UAE will apply to employees of all nationalities in the private and public sectors. However, you should also know that certain individuals will not be able to qualify for this new policy in the country. For example, these are the individuals who are not eligible for job loss insurance:

  • Investors.
  • Domestic workers.
  • Employees who work under temporary contracts.
  • Juveniles under the age of 18.
  • Retirees with pensions or new job opportunities.

Apart from these individuals, all employees who are UAE residents will be able to enjoy the benefits of this scheme. For instance, women who have female security jobs in Dubai are part of the individuals who can apply for the new insurance. They will have protection and receive financial support in case they lose their jobs unexpectedly or without warning.

5. Will this new scheme help reduce dependency on firms in the UAE?

Many local experts gave their opinion regarding the new unemployment insurance in the UAE coming into effect next year. They have stated that this scheme could be a game-changer for employee stability and will put the onus back on firms. In this way, it ensures that they have what is necessary to retain top talent, more than just wages.

On the other hand, some UAE entrepreneurs have said that this scheme is a huge step toward employment stability. It is also an important initiative for protecting employee rights in the UAE. Additionally, it complements the most recent changes made to the UAE Labour Law, like the introduction of new visa categories.

As a result, the new scheme related to unemployment insurance in the UAE encourages individuals to join the UAE workforce. Also, it encourages them to remain in the country after their employment contracts end since they will not need to immediately relocate. To summarize, they will not have to worry about lacking money if they lose their jobs under unforeseen circumstances.

6. Can this new insurance help boost MENA startups and protect the most vulnerable workers?

Apart from helping UAE workers, the new unemployment insurance in the UAE will have other positive effects. For example, it will benefit the startup ecosystem because it will widen the UAE’s existing talent pool. Although many startup employees work remotely, blue-collar workers will have a reason to remain in the country while looking for other jobs.

Some specialists have said that the true net beneficiary of the scheme is the most vulnerable levels of the workforce. Precisely, it benefits workers from developing countries who work in the UAE in more blue-collar roles within startups. Therefore, this new initiative is considered a basic humanitarian move and good for business.

Apart from blue-collar workers, seasoned talent within the startup ecosystem will also be incentivized to stay in the country. The main reason is the protection and comfort that the new insurance in the UAE will provide them with. Therefore, the scheme will not only attract talent but also retain seasoned professionals.

7. Will unemployment insurance prevent poverty and distress in the region?

Since UAE citizens and ex-pats will now have a safety net, the scheme will considerably help prevent poverty and distress. According to specialists, the unemployment insurance scheme is likely to help alleviate the distress in the nation caused by unemployment. Besides, it will provide the assistance that unemployed individuals need to prevent them from falling into poverty.

It is known that unemployment affects the disposable income of families and erodes their purchasing power. It can also diminish the morale of employees and significantly reduce the economy’s output. For that and many other reasons, the government has decided to implement the new insurance scheme as a safety net.

From January 2023 onwards, the new unemployment insurance in the UAE will come into effect to help prevent these situations. It will provide financial support to unemployed individuals as well as improve the nation’s economy and maintain long-term financial stability.

8. How can Connect Resources help you stay up-to-date with the latest UAE news?

Professionals living in the United Arab Emirates must always stay up-to-date with the latest news and announcements in the country. Otherwise, they will not be able to stay compliant or enjoy the benefits that new schemes like this one can offer. If you work in the UAE, Connect Resources, as your reliable ally, will help you get the best experience.

In case you are operating a company in the country, we can help you improve its functions with our services. In this way, you will save valuable time and resources while your company grows exponentially.

Additionally, our agency offers the best solutions in other countries in the Middle East, in case you operate your company outside the UAE:

 

Would you like to get more information about the new unemployment insurance in the UAE? The best way to find out more about this new scheme is by consulting an expert team like Connect Resources: your most reliable partner in the UAE. Call us at +971 43 316 688 so we can provide you with all the information you require. You can also send us an email at contact@connectresources.ae to receive detailed answers to your inquiries, and more. Contact us!

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