UAE introduces unemployment insurance scheme

UAE residents will pay between AED 40 and AED 100 (£8.70 to £22) annually into an insurance scheme, and in return will be eligible to receive up to 60 per cent of their base salary, or up to AED 20,000 per month, if they lose their jobs.

The scheme will be available to both Emirati and expat citizens resident in the UAE and working in the public and private sectors, for both local and foreign companies.

Employment expert Luke Tapp of Pinsent Masons said: “This is a significant step forward for employment relations in the UAE.”

“The unemployment scheme, particularly when coupled with changes to visa options, provide a genuine and practical safety net for expat and Emirati employees within the UAE. One of the key obstacles in attracting talent into the region has been around job and financial security. Implementing a nationwide social security system is the most practical and effective way of addressing any such concerns,” Tapp said.

“It is an important and transformational development for the UAE and will have an extremely positive impact on expats and UAE nationals, as well as private and public sector employers operating within the UAE,” Tapp said.

Minister of human resources and Emiratisation, Abdulrahman Abdulmannan Al Awar, confirmed the scheme in May. It will come into force in 2023.

Al Awar said the UAE cabinet had adopted a federal law on the scheme, and highlighted its flexibility which he said would reduce labour market risk.  

The introduction of unemployment insurance comes in the wake of the UAE’s new Labour Law, which came into force in February 2022. The Labour Law protects staff, makes provision for part-time and flexible working, and brought in a right to paid compassionate leave.

In April, the UAE government announced an overhaul of its visa system, aimed at making it easier for foreigners to live and work in the country – including several categories which do not require a sponsor or host.