United Arab Emirates: Unemployment Insurance Scheme Forthcoming
May 19, 2022
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At a Glance
- Effective January 2023, Emirati and foreign nationals will have access to a new Unemployment Insurance Scheme in the United Arab Emirates.
- This measure is a part of the United Arab Emirates’ effort to encourage Emirati nationals to work in the private sector and is another step toward the national vision to attract and retain talent to maintain a dynamic labor market.
The situation
A new Unemployment Insurance Scheme will apply to both Emirati and foreign nationals who work in the public or private sector, starting January 2023. This scheme will serve as an incentive for Emirati nationals to join the private sector.
A closer look
- Unemployment insurance packages. The unemployment insurance packages will range from AED 40 to AED 100 per year. It is not yet clear how the contribution will be made to the employee.
- Assistance. In the event of termination, employees will become eligible to receive 60% of their basic salary to assist with living costs up to a maximum of AED 20,000 monthly during unemployment, for up to six months. This financial support will discontinue once the individual obtains new employment.
- Exemptions. Employees on temporary contracts, investors, domestic workers, retirees who receive a pension and those under the age of 18 years are ineligible for this scheme.
Impact
It is not clear if payments into the scheme will need to be made by the employer or employee and if the insurance scheme is applicable to employees across all jurisdictions. If employers will be required to pay into the scheme, they should seek further counsel related to mandatory payment into the scheme.
Background
The new Unemployment Insurance Scheme is the result of recent measures to create favorable conditions for Emirati and foreign nationals. It is a step to provide financial security to private sector employees.
The scheme will serve as an incentive to attract Emirati nationals to private sector and will also encourage foreign nationals to work in the United Arab Emirates.
Looking ahead
The UAE government is likely to publish further clarifying details about unemployment insurance packages in the coming months.
This alert is for informational purposes only. If you have any questions, please contact the global immigration professional with whom you work at Fragomen or send an email to [email protected].
