PAYMENTS PLAN FOR WORKERS WHO LOSE THEIR JOBS

▶ Social support scheme will provide safety net to help with living costs

The UAE has introduced a new social support programme that will provide a basic cash payment each month for workers who lose their jobs.

The mandatory scheme, scheduled to begin in January next year, is for Emirati and foreign employees in the private and public sectors.

The Federal Law was set out on Thursday by Dr Abdulrahman Al Awar, Minister of Human Resources and Emiratisation.

Every resident will pay into an insurance scheme.

In return, workers who lose their jobs will receive 60 per cent of their basic salary each month, up to Dh20,000 ($5,445), for a limited period.

For most, the payment would be much smaller.

Employees will be offered different insurance packages that will be provided by existing companies.

Dr Al Awar told The National that payments would be as low as Dh40 to Dh100 a year for basic cover.

But, likening the cover to car insurance, he said people may be able to choose a higher tier.

“We will not allow an insurance system with payment amounts that burden employees,” he said.

“In the event they are sacked, they will receive a monthly salary that makes about 60 per cent of the basic salary, with a maximum amount of Dh20,000.”

In the UAE, employees are paid a lump sum every month. But salaries are commonly broken down into “basic”, “housing” and “transport”.

Investors, domestic workers, those working on temporary contracts, employees under the age of 18 and the retired will be exempt.

“Monthly support will stop once a new job has been secured,” said Dr Al Awar.

If the worker does not find another job after a period of time, the financial support will stop.

Details will be revealed when the regulating procedures are issued by the ministry.

Shahram Safai, a partner at Afridi and Angell legal consultants, which practises employment law, said the introduction of a safely net was significant.

“This is beneficial for employees for sure, but also for businesses, because it enables businesses to recruit and attract the best employees,” he said.

The scheme was among several policies approved by the UAE Cabinet.

Companies with more than 50 employees should have a 2 per cent Emirati workforce under the Nafis scheme. The quota will be expanded each year until 10 per cent is reached.

Companies who hire Emiratis will benefit financially.

As an incentive, the ministry said it would cut the fees it charged companies for issuing visas and work permits by 80 per cent.

“There are currently more than 31,000 Emirati employees working in the private sector, which we expect will increase significantly by 2026,” Dr Al Awar said.

“Two per cent of your employees being Emiratis is not too much for a private company employing 50 people. It’s a very low percentage in a job market that issues over 1.2 million work permits annually.”

Companies that do not increase their quota will have to pay Dh6,000 a month for every Emirati it fails to hire, until they hit the quota.

“The amount will be increased by Dh1,000 every year until 2026 against companies that do not comply.”