Unemployment Insurance also called Job Loss Insurance is a type of insurance that pays the employees a certain amount of compensation in the event of job loss. This compensation can either be lumpsum or distributed over a limited period. Voluntarily quitting your job is not covered by Unemployment Insurance. The benefits offered by a job-loss insurance plan can highly depend on the insurer. The benefits of having this scheme would be having financial security in the event of involuntary job loss, keeping you to stand on your feet while searching for a new job.
UAE has taken another big step by introducing the scheme “Unemployment Insurance” that is meant to protect the workers who lose their jobs. The ruler of Dubai announced on Twitter, that this scheme is to enhance the competitiveness of the labor market, provide a social umbrella for its workers and establish an environment for all.
The Scheme works for all public and private sector employees with an exemption for domestic workers, investors, temporary contract holders, under 18 employees, and retirees. The scheme will be mandatory and would take into effect by early 2023. If you are an insured worker in the UAE and unexpectedly lose your job, you will be given a cash package up to 60% of your basic salary up to a maximum of AED 20,000 as compensation under this scheme. This package would last until you find another job. This is a promising major reform with 85% of the population being foreign workers, until this reform job loss would mean leaving the country and coming back on a new visa to find another job and a financial drain. This could change now under the new Insurance scheme. When an individual secures another job, payment ceases. The cash support would be limited for a period until they find an alternative.
The premiums will vary from AED 40 to AED 100 annually to be borne by the employees. There would be an option to apply for higher insurance packages and the idea is to provide flexibility and have more choices. Existing Insurers will be offering these packages and MOHRE (Ministry of Human Resources and Emiratisation) will oversee the entire exercise.
UAE is consistently awarded as one of the best places
to work and this initiative would bolster the job market, especially for the
expatriates. This scheme provides peace of mind and attracts the best talents
to the region. While the employee is out of work, this scheme brings a level of
economic stability to the individual and the whole family. The Current labor
law in UAE obligates the employers to take best-suited insurance for their
employees including the health and well-being of their employees. Unemployment
Insurance closes the gap by offering an income guarantee in the event of job
loss.
The new insurance system intends to guarantee labor market stability and encourage more Emiratis to enter the private sector. It is part of the UAE’s most recent broad changes, which aim to recruit and retain talent while also improving its labor market’s competitiveness.
The United Arab Emirates, which consists of seven
emirates, including Dubai and Abu Dhabi, has been enacting new labor rules to
make it easier for foreign workers to work there.
Employees should have better confidence and security due to the new policy.
The new unemployment insurance plan will provide a blanket cover for the expatriates and Emirati employees in the UAE’s governmental and commercial sectors in the case of job loss, limiting the uncertainty and financial obligations in the country. The program is expected to assist in reducing the stress produced by unemployment. It will help unemployed people, preventing them from major stress whilst unemployed.
The Government officials are working on the finalized
framework to a few of the details that are still in the grey. These details
would be released in the coming months.
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