UAE Government issues decree on Unemployment Insurance.
In February of 2022, the UAE Government passed Federal Law No. 33 of 2021 (“New Labour Law”) abrogating and replacing the previous labour law i.e. Federal Law No. 8 of 1980.
As part of the Government’s initiative to overhaul the labour law regime and to ensure the UAE remains a competitive marketplace while also attracting international talent a number of changes have been proposed in support of the New Labour Law.
In September 2022, the UAE Government, issued a decree, Federal Decree-Law No. 13 of 2022 concerning Unemployment Insurance (“the Decree”). The objective of the Decree is to ensure availability of income for short periods in case of unemployment while further enhancing the competitiveness of the labour market and providing social protection until alternative job opportunities materialize for the employee.
Scope & Application
The Decree applies to:
Investors (owners working in the establishments);
Workers on Temporary Contracts;
Juveniles under the age of eighteen; and
Retirees who receive a retirement pension and have joined a new job.
The UAE Ministry of Human Resources is expected to establish and administer the Unemployment Insurance Scheme based on further directions from the UAE Cabinet.
As per the Decree, the conditions for eligibility will be as follows:
Subscription to the scheme should be no less than 12 months;
Employee should not have been dismissed from the job for disciplinary reasons;
Any claim for compensation under the scheme should not have been made through deception;
Payment of the compensation shall be suspended if another job is secured during the insured period;
Further conditions may be imposed by the UAE Cabinet.
Compensation & Benefits of the Scheme
Compensation shall be paid on month basis at the rate of 60% of the employee’s salary with a cap of AED 20,000 per month for 3 months from date of unemployment;
The maximum period of compensation shall be 3 months for each claim; and
The insured employee will be entitled to agree on additional benefits with the scheme provider.
The above developments are a positive result for the employment market in the UAE. Our employment law team is monitoring the developments and the key details to be issued by the UAE Cabinet and anticipate implementation of the scheme to occur during 2023.