The UAE has strengthened its commitment to employee welfare with clear legal guidelines under employment law for those eligible for job loss compensation. The initiative, anchored in Federal Decree-Law No. 13 of 2022 on Unemployment Insurance, provides a financial safety net for workers navigating periods of unemployment.

The law outlines four essential conditions to qualify for unemployment compensation. Employees must have a minimum of 12 consecutive months subscribed to the system. Termination must not be due to disciplinary action under applicable employment law frameworks. Claims must be genuine—not based on fictitious employment—and benefits cease if the beneficiary secures a new job during the compensation period.

The system applies to employees in both the private and federal government sectors, including UAE nationals and residents. However, exemptions apply to business owners managing their own establishments, domestic workers, employees on temporary contracts, individuals under 18, and retirees who have re-entered the workforce.

Compensation is structured at 60% of the insured basic salary, capped at AED 20,000 per month, for a maximum of three months per claim. The total coverage across an employee’s time in the UAE is capped at 12 months.

Employees are also allowed to enhance their benefits through private insurance providers licensed by the Central Bank, without compromising other entitlements.

By the end of 2024, nearly 83% of the targeted private sector workforce had enrolled, with total payouts surpassing AED 114 million. The system is an essential legal tool in supporting workforce stability and offering transitional support in accordance with employment law standards.

Employment lawyers and law firms are increasingly guiding both employers and employees through this system, ensuring full compliance with the evolving legal framework.

 

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