UAE's Job Loss Compensation: Understanding the New Guidelines
Losing a job can be a challenging experience, but the UAE government has taken significant steps to support employees during periods of unemployment. The Ministry of Human Resources and Emiratisation (MoHRE) has outlined four key conditions for employees to qualify for ‘Unemployment Insurance Compensation.’ This system aims to provide financial relief and ensure a decent quality of life for affected employees and their families.
Key Conditions for Eligibility
To benefit from the Unemployment Insurance Compensation, employees must meet the following conditions:
- Minimum Subscription Period: Employees must have been subscribed to the unemployment insurance system for at least 12 consecutive months.
- Job Loss Due to Non-Disciplinary Reasons: The employee must not have lost their job due to disciplinary action under the Labour Relations Law, Federal Human Resources Law, or any other applicable legislation.
- Genuine Compensation Claims: The claim must not be fraudulent or associated with fictitious employment.
- Suspension of Compensation Upon New Employment: If the beneficiary secures a new job during the compensation period, payments will be halted.
Who is Covered and Who is Exempt?
The decree-law applies to employees in both the private sector and federal government sector, including UAE nationals and residents. However, some categories are exempt, such as:
- Business owners working in their own establishments
- Domestic workers
- Employees on temporary contracts
- Individuals under the age of 18
- Retirees receiving pensions who have re-entered the workforce
Compensation Structure
The compensation is calculated at 60% of the insured salary (basic salary), with a maximum payout of Dh20,000 per month for up to three months from the date of unemployment. The total coverage period is capped at 12 months throughout an individual’s entire tenure in the UAE job market.
Additionally, employees can negotiate additional benefits with licensed insurance providers regulated by the Central Bank, without affecting other entitlements or compensations.
Enrollment and Payouts
By the end of 2024, approximately 83% of the targeted private sector workforce had enrolled in the Unemployment Insurance System, and total compensation payouts exceeded Dh114 million for that year.
What is Unemployment Insurance?
The UAE’s Unemployment Insurance System provides financial compensation to insured employees for up to three months if they lose their jobs due to contract termination. In exchange, employees pay a monthly subscription fee during their employment period.
Compensation payments begin from the first day of unemployment, covering 60% of the insured salary for a maximum of three months per claim.
Disqualification and Suspension of Compensation
An insured employee loses eligibility for compensation if:
- They are dismissed due to disciplinary reasons.
- Their compensation claim is fraudulent or deceitful.
- Their employing establishment is proven to be fictitious.
- They secure new employment during the compensation period.
Final Thoughts
The Unemployment Insurance Compensation system is a major step towards creating a strong social safety net for employees in the UAE. Understanding these conditions and requirements can help employees navigate unexpected job losses with financial stability.
For more updates on employment policies, career strategies, and professional development, visit Labeeb.ae.
Reference: Gulf News
