The UAE’s new unemployment insurance scheme includes non-citizens

18-10-2022

Vivien Fakhoury

Middle East and Human Rights Researcher

Global Human Rights Defence

The United Arab Emirates (UAE) announced an unemployment insurance scheme that is set to launch in early 2023. The aim is to attract new workers amidst competition with its neighbors, like Saudi Arabia, but also to retain foreign talent that is already integrated in the UAE’s labor market. Thus, unlike similar schemes in other Gulf Arab states which only protect citizens, the UAE’s new scheme will also include foreign, resident workers, who make up approximately 85% of its population. [1]

In Gulf Arab states - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE - employment is based on a sponsorship system, meaning your employer will sponsor you vis-à-vis your residency. [2] Consequently, if you lose your job, your residence permit will be terminated, and you are forced to leave the country. The UAE has already made strides in this area and extended the time you are allowed to remain there from 30 days to 6 months after the end of employment. [3]

Yet, the cost of living in the UAE is high and residing there for any amount of time without a monthly income can be difficult. This is where the unemployment insurance scheme can help. Employees can opt in and fees are expected to be between 35 AED to 90 AED per year (around €10 to €25), [4] and coverage begins after 12 months of subscription. For three months, unemployed individuals can claim 60% of their previous salary per month, up to a maximum of 20,000 AED per month (around €5,590). However, the total period of compensation (adding the months they claimed money after each time they were unemployed) cannot exceed 12 months. [5] For example, you lost your job four times and each time you claimed three months, the fifth time you lose your job you will not receive any compensation.

This temporary security gives unemployed residents time to find a new job within the UAE or potentially relocate. Although there are exceptions - for instance, investors and domestic or temporary contract workers who are not covered under the scheme - this is a major step forward in the region’s approach to workers’ rights and benefits.

Notes and Further Reading:

[1] Uppal, R., & Donovan, K. (2022, October 11). UAE launches new unemployment insurance scheme. Reuters. https://www.reuters.com/world/middle-east/uae-launches-new-unemployment-insurance-scheme-2022-10-11/

[2] If one family member is sponsored, that family member can act as a sponsor for other family members. UAE Government. (2022, July 27). Sponsoring family residency visa by expatriates. The Official Portal of the UAE Government. Retrieved October 18, 2022, from https://u.ae/en/information-and-services/visa-and-emirates-id/residence-visa/sponsoring-family-residency-visa-by-expatriates; Robinson, K. (2021, March 23). What Is the Kafala System? Council on Foreign Relations. https://www.cfr.org/backgrounder/what-kafala-system

[3] The National. (2022, October 3). New UAE visa rules to begin today. The National. https://www.thenationalnews.com/uae/government/2022/09/05/new-uae-visa-scheme-to-begin-on-october-3/; Uppal, R., & Donovan, K. (2022, October 11).

[4] Lindo, N. (2022, June 15). Work in Dubai: UAE unveils new unemployment insurance scheme. Euronews. https://www.euronews.com/next/2022/06/10/work-in-dubai-uae-unveils-new-unemployment-insurance-scheme

[5] UAE Government. (2022, October 10). Unemployment insurance scheme. The Official Portal of the UAE Government. Retrieved October 18, 2022, from https://u.ae/en/information-and-services/jobs/unemployment-insurance-scheme; UAE Ministry of Human Resources & Emiratisation. (2022). Laws & Regulations - Federal Decree-Law No. (13) of 2022 Concerning Unemployment Insurance Scheme. UAE MOHRE. Retrieved October 18, 2022, from https://www.mohre.gov.ae/en/laws-and-regulations/laws.aspx