Important Challenges Faced by Employees Due to Job Loss in the U.A.E

 Losing a job in the UAE can be particularly difficult due to the unique structure of the employment market. Here are some of the most significant challenges employees face:

Financial Strain:

• Limited Safety Net: Unlike some countries, the UAE lacks a universal minimum wage, leaving many vulnerable to financial hardship after job loss.
• Temporary Support: The Involuntary Loss of Employment (ILOE) scheme offers some financial assistance, but it's only a portion of the salary for a limited duration.
• Debt Management: Job loss can make managing existing financial obligations like rent, loans, and credit card payments difficult.

Visa and Residency:

• Visa Dependence: Many UAE visas are tied to employment. Losing a job can lead to visa cancellation and a short timeframe to leave the country, creating stress for employees with families in the UAE.
• End-of-Service Benefits: Employees are entitled to gratuity payments upon job termination after a specific period. However, disputes or delays in receiving these benefits can worsen financial difficulties.

Legal Issues:

• Labor Disputes: Disagreements with employers regarding termination, unpaid wages, or benefits can arise. Understanding and navigating UAE labor laws is crucial in such situations.
• Notice Period: Employment contracts typically have a notice period for termination by either party. Leaving abruptly without proper notice could lead to legal repercussions.

Additional Challenges:

• Competitive Job Market: Finding a new job quickly can be difficult, especially in some sectors.
• Emotional Impact: Job loss can be emotionally draining, adding to the overall stress of the situation.

Seeking Support:

Here are some resources that can help employees facing job loss in the UAE:

• Ministry of Human Resources and Emiratisation (MOHRE): https://www.mohre.gov.ae/

 Job Loss Insurance in the UAE

Traditionally, there hasn't been standalone "job loss insurance" available in the UAE. However, a recent development offers some financial protection in case of involuntary job loss:

• Involuntary Loss of Employment (ILOE) Scheme: This government-introduced program provides partial financial support to employees who lose their jobs involuntarily (through termination, not resignation or disciplinary action).

Key Points about ILOE:

• Eligibility: Applies to most private and public sector employees (exceptions include investors, domestic workers, temporary workers, and those under 18).
• Benefits: Offers up to 60% of the average monthly salary over the past 6 months, capped at specific amounts (Category A: maximum 10,000 AED/month, Category B: maximum 20,000 AED/month).
• Duration: Pays for a maximum of 3 consecutive months per claim.
• Requirements: Requires contributions from the employee for at least 12 consecutive months before a claim can be made.

Limitations of ILOE:

• Temporary Support: It's not a long-term solution and only provides limited financial assistance for a maximum of 3 months.
• Contribution Requirement: Employees need to have been contributing for at least a year to be eligible.

Alternatives to Consider:

• Emergency Savings: Having a well-funded emergency savings account can act as a buffer during a job loss.
• Debt Management Plans: If facing debt issues due to job loss, consider consulting a financial advisor or exploring debt relief options.

Resources:

• ILOE Scheme: https://www.iloe.ae/ 

The U.A.E 2025 initiative, All Private Sector Employees Get Mandatory Health Insurance

HH Sheikh Mohammed

 Current Situation (as of March 19, 2024):

There is no federal law mandating health insurance for private sector employees across the UAE. However, two individual emirates have implemented mandatory health insurance:

Abu Dhabi: Requires employers to provide health insurance for employees and their families.

Dubai: Requires employers to provide health insurance for employees, with coverage for dependents being optional.

Upcoming Change (effective January 1, 2025):

A mandatory health insurance scheme will be implemented nationwide for private sector employees and domestic workers. Employers will be responsible for covering the cost of this insurance when issuing or renewing residency permits for their workers. 

Starting January 1, 2025, the UAE will require employers to provide health insurance coverage for their private sector employees and domestic workers. This new rule applies to workers obtaining or renewing their residency permits. It marks the second mandatory insurance program for UAE employees, following the implementation of a job loss protection scheme in 2023. 

This initiative aims to improve the competitiveness of the UAE's labor market and guarantee access to quality healthcare for the workforce. 

Health insurance is a fundamental aspect of any comprehensive healthcare system, providing individuals with access to necessary medical services without facing exorbitant costs. By making health insurance mandatory for private sector employees, the UAE is demonstrating its commitment to prioritizing the health and safety of its workforce. 

This new policy is expected to have far-reaching benefits, not only for employees but also for employers and the overall economy. By ensuring that workers have access to quality healthcare services, productivity will likely increase, absenteeism due to illness may decrease, and overall job satisfaction could improve. 

Furthermore, mandatory health insurance can help alleviate the financial burden on individuals and families in the event of unexpected medical emergencies or chronic illnesses. It provides a safety net that offers peace of mind and ensures that individuals can seek medical treatment without worrying about the associated costs. 

In conclusion, the UAE's decision to implement mandatory health insurance for private sector employees from 2025 is a positive development that underscores the country's commitment to the well-being of its workforce. By prioritizing access to healthcare services and financial protection, the UAE is taking a proactive approach to safeguarding the health and livelihoods of its residents.

New UAE labour rules effective on January 1, 2016

The new rules were unveiled on Monday by Minister of Labour, Saqr Ghobash to build upon the latest decisions to the labour policy initiative in 2011 regarding labour mobility.Sweeping new rules by the Ministry of Labour will forge a stronger relationship between employers and workers and enhance the labour market across the country by ensuring transparency and encouraging more flexible labour mobility for workers.

The three new rules cover application of ministry-approved contracts, conditions for terminating employees and labour permits to work for new employers

Ministerial Decrees 764, 765 and 766 pave the way for improved labour relations by securing more stable practices governed by regulations that protect workers who are legally sponsored to enter the UAE, the ministry said. “The new rules will also bring greater transparency, clarity and tighter monitoring of labour contract conditions and ensure both employer and employee enter into fully voluntary relationships,” a statement said. The decrees will see the creation of a new unified, standard labour contract.

Three decrees' objectives:

The primary purpose of the decrees is to delink sponsorship and labour relations: the former serves to secure legal entry and temporary residence in the UAE, while the latter is governed by an employment contract the terms of which are compliant with national labour legislation and regulation.
This purpose is achieved by:

•     Ensuring the transparency of the contracting process in the country of origin;
•     Ensuring non-substitution of the contract terms post arrival in the UAE;
•     Defining due processes for terminating labour relations;
•     Spelling out the rules and conditions for granting a worker whose labour relation has ended a new work permit.

  Highlights of Ministerial Decree (764 ) of 2015 on Ministry of Labour-Approved Standard Employment Contracts

•     Standard employment offer/contract: terms, rights and obligations;
•     Informed consent;
•     Non-substitutionof labour contract;
•     Filing the offer for eventual capture as a legal contract;
•     Termination clause;
•     Commitments by the employer.

    Highlights of Ministerial decree (765) of 2015 on Rules and Conditions for the Termination of Employment Relations

Any employment relation may be terminated, by either party, subject to a due process. One party or the other cannot be made to involuntarily continue the relation. A relation is terminated:

    By mutual consent, at any time
    By one party or the other, subject to certain considerations of notice and/or identification
    A relation is considered to be terminated if:

    - If employer does not meet its contractual obligation to worker;
    - If employer ceases to empower worker to perform his/her employment duties without; complying with due process;
    - If  a worker absconds, without complying with due termination process.

While a relation cannot be sustained except by mutual consent, the way it is terminated has a direct bearing on the status of the worker after termination (the granting or declining of a new work permit)

Highlights of Ministerial Decree (766) of 2015 on Rules and Conditions for granting a permit to a worker for employment by a new employer

    Sets the conditions for granting a new work permit to a worker whose labour relation with an employer has ended as a function of the manner the relation was terminated
    
    Notably ascertains that the power to determine the status of the worker whose employment has ended is a public authority

UAE e-labour cards from today, Employers can apply electronic labour cards and contracts through Tas’heel

The Ministry of Labour has announced that it will stop use of old plastic labour cards and paper contracts starting from today and will bring in new electronic work permits and contracts in lieu of the old ones.

It will replace the traditional plastic cards and paper contracts to implement the decision issued by the Saqr Ghobash, Minister of Labour, the ministry said in a release.
The move came as a step towards e-transformation in their provided services, which is part of commitment towards the directives of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai to provide high-quality services to customers, meet their desires and achieve their satisfaction.
The ministry stated that the employers can apply for electronic labour cards and contracts through Tas’heel service centres across the UAE or within their companies only if they were registered under Tas’heel.

Moreover they should apply for these electronic services within 60 days from the workers entry to the UAE, where the ministry will grant the applicant a preliminary approval after meeting the conditions and then issue their permits electronically, their data will be sent to General Directorate of Residency and Foreigners Affairs to complete their residency procedures.

The Labour Ministry has urged all companies to apply for electronic employment contracts during the prescribed period of 60 days, in order to avoid a fine of Dh1000 for each month of delay.

The ministry said that it will stop issuing any new work permits to uncommitted companies until they apply for the new electronic Labour cards and employment contracts if they’re required to, or provide rational justifications for not issuing them on time.
Employers and workers can check their work permit and contract through ‘e-netwasal’ service, which is available within the ministry’s webpage (www.mol.gov.ae) after signing up for free, employees can benefit from the services, as well as employers through checking several reports about their companies.

Emirates Identity cards will be recognised as the official identification documents, especially by the inspectors of the ministry, as the ID card will not be issued to workers who do not have work permits by the Ministry of Labour. Employers must handout ID cards to their owners to be ready when questioned by Labour ministry inspectors, it concluded. Wam
 

Expat-sponsored maids must renew UAE ID cards every year

Housemaids sponsored by expatriates in the UAE will receive identity cards with one-year validity, according to a top official.

Dr. Ali Mohamed Al Khouri, Director-General, Emirates Identity Authority (Eida), said ID cards must be renewed every time residency visas expire.

While employees of federal institutions get a three-year visa, private sector staff get only two-year visas. And their ID cards will also hold respective expiry dates, he said.

Explaining ID card validity terms for domestic helps, Al Khouri said housemaids working for Emirati sponsors will get a visa for two years and, therefore, their ID cards will need to be renewed every two years at a cost of Dh200.

However, housemaids sponsored by expatriates will get a visa for one year and their ID cards must be renewed each year at a fee of Dh100.

When reminded about the added cost to sponsors, Al Khouri said: "The operational cost of one ID card is more than Dh200. Plus the cost of staff, building and state-of-the-art techniques involved in the process...all these are borne by the government."

Speaking of the benefits of ID cards, Al Khouri said residents will realise its importance in the coming months.

According to the Chamber of Commerce and Industry of Abu Dhabi, currently five per cent of the total population comprise housemaids.

And 80 per cent of them are Filipinas and Indonesians.

Dubai maids’ salaries double even as family incomes stagnate

Despite the financial woes of many residents in Dubai since the economic slowdown began in 2009, salaries of maids in the city have doubled.

Residents of the city complain that there have been no hikes in the past few years but the situation is very different in their homes.

The asking rates of maids these days are much higher than what is set by their respective consulates.

Recommended salaries for Indian maids is Dh1,100 as advised by the Indian Embassy, while new regulations from the Philippines say the minimum salary should be Dh1,400.

As per the Sri Lankan embassy, the minimum salary for Sri Lankan maids is Dh825.

However, the reality is different say residents.

Maids in New Dubai are far more expensive than this and nearly all of them ask for a hike every year, complain residents.

“I have more than doubled my maid’s salary in the last four years. While recession has seen us cut back costs on a lot of things, this is one cost that has escalated year-on-year,” Charlene Saldanha, an Indian resident living in the popular The Springs area told .

“The average cost of a maid in my household per annum is around Dh30,000. This includes the salary, the visa fee, medical costs, food, toiletries and airfare to home country,” she added.

Besides this, getting a maid from an agency adds to the overall burden. “The costs involved in hiring a new maid are exorbitant. The agency fee or the cost of finding a new maid, the cost of bringing her here, and to top it all, the fee we have to pay to the government, make it a huge burden.

“In the case of an existing maid, the government fee, medical and the increase in salary to retain the maid per annum are equally huge. So, all this takes a toll on the family income that has not seen any increase since [2009] recession,” she said.

“I got a maid from Sri Lanka in 2009 for Dh700. Since then I’ve never got a pay hike and lost my job once. I was lucky enough that I found another one in three months’ time. I’ve changed my child’s school so that I save on the fee but my maid’s salary has gone up to Dh1,400, exactly a 100 per cent jump,” said another resident.

Popular forums are full of residents complaining that they don’t know how much of a hike would be termed fair enough.

Many believe that the problem is more acute where both the spouses work and have a child at home. Residents also claim that an increase in salary does not result into better work.

“High salary does not always equate to better performance. I have learned the hard way with this one. I believe it's better to pay a housemaid at a fair/reasonable monthly salary ranging between Dh 1,500-1,800 a month based on experience.

“Obviously, one has to pay more if they have worked for you longer, have many children, larger houses, if the maids drive, etc. If they work hard, put in extra hours and babysit, then pay them a little bonus each month.

“I do this with my maid and she is so thrilled. I reward her hard work when I can. In other words, compensate extra work and initiative in that month. This prevents them from getting too comfortable in a base salary and gives them a reason to work hard,” writes a resident on the forum.

Another point of contention is that Western expats in the city pay their maids a lot more than other expats, which sets the market trend.

“Please bear in mind that Dh2,000 or even Dh1,500 is not the market rate. [It is much less]. These are salaries paid mostly by Western expats and the majority of the UAE population is not Western expats,” companied a pink-bunny on the forum.

“I pay significantly more than Dh2,000. However, at the time of renewing the contract she started telling me about her friends who earn Dh4,000. I made it very clear that I was not interested in what her friends earned.

“I did not think it was anyone else's business what she earned and that was between her and me. I don’t think she should be going round discussing it. She knew and I knew that she was earning well over market rate. If she wasn't satisfied and wanted to look for other work I would be disappointed but would support her. The issue has never been raised again,” wrote another resident on the site.

Gratuity should be calculated on basic salary

End-of-service gratuity should be calculated on the basis of the basic salary as per the employment contract signed between the employer and employee, the Ministry of Labour said.

According to the ministry, if the basic salary is not clearly stated in the employment contract, gratuity should be calculated on the basis of the last salary paid to the employee, as quoted by Dubai-based Arabic daily newspaper Emarat Al Youm.

Humaid bin Dimas, Executive Director for Labour Affairs, said “the basic wage in the employment contract should be written with the consent of the employee.”

Bin Dimas said end of service gratuity should be calculated on the basis of gross salary if the employment contract is not clear about basic salary.

The ministry expressed its view in response to demands of employees in private firms to calculate end of service gratuity on the basis of the total, rather than basic, salary.

Bin Dimas said: “When an employee signs an employment contract, he implicitly accepts the amount fixed in the contract as the basis for calculating end-of-service gratuity.”

Employees of private companies requested the Ministry of Labour to pass a law calling for calculating end of service gratuity on the basis of total salary because employers often keep basic salary low to take unfair advantage of the law while paying gratuity.

Some said it would be fair if the basic wage is calculated at 60 per cent of total salary.

Rami, who works in an insurance company with a total monthly salary of Dh7,000 said his basic wage in the employment contract is Dh700.

He said he was forced to sign the contract because there was no other alternative.”

Rami urged the MoL to specify 60 per cent of the total salary as the minimum basic salary, especially as the law requires the employee to work for five years in the same company to get gratuity of one month’s basic salary for each year worked.

Mohammed Wanoos, who works in a contracting company, said the UAE regulations allows the worker to stay an extra month after the end of the employment contract, but asked how he could live for a month when the gratuity is enough for only a few days.

Wanoos urged the Ministry of Labour to calculate the end of service benefits on the basis of total salary or determine the ratio of basic wage to full salary.

He said he got Dh1,500 as end-of-service gratuity after he worked for three years in the same company despite a total salary of about Dh7,000 a month.

Bin Dimas said “the UAE’s Federal Labour Law mentions both basic salary and allowance but does not indicate their proportion to each other.

He added that the MoL asks employers to update employee contracts.

He added that the employment contract is signed with the mutual consent of the employer and employee.

The employee knows before signing the contract details of his salary and end-of-service benefits.

How to overcome the six-month labour ban in UAE

Employees who have been slapped with a six-month labour ban for breaking their contracts before the expiry of two years can work for a new company, provided they hold at least a high school diploma and have been offered a good position and salary by the new company, employers were told by the Ministry of Labour .

To lift the ban, an employee should have been offered a minimum salary of Dh5,000 for high school graduates, Dh7,000 for diploma holders and Dh12,000 for bachelor's degree holders.The salary must be mentioned in the labour contract.

No fee will be imposed for lifting the ban when these conditions are met, Ali Al Shehi, Senior Administrator at the ministry, said in a seminar held to inform employers about their rights and duties as well as recent ministerial decisions.

"We are still imposing the six-month labour ban on employees who quit their jobs before completing two years of service, but the ban can be lifted if the new employer offers the candidate a good position and an appropriate salary," he said.

The new employer needs to submit the employee's educational certificate, which does not need to be attested at this stage. It will be scanned and entered into the Tas'heel system, and a new labour permit will be issued accordingly.

Al Shehi told employers that as of January 2012, company categories will have a different scale when it comes to labour permit applications.

"When a new company is registered, it will be charged Dh1,500 for each of the first four work permits to be issued to the company, which corresponds with category B2," he said.

Afterwards, the company can move up or down categories B1, B2 or B3, or C depending on its activity, the number of employees it hires, their qualifications and diversification in the nationalities of workers.

Companies in B1 category pay Dh600 per work permit, while B2 companies pay Dh1,500 and B3 companies pay Dh2,000 for each permit.

Diversification

"This step aims to encourage diversification and hiring employees from various nationalities, so companies who hire workers from one nationality will not be upgraded, while those that hire from more nationalities will move up to categories B3, B2 and so on," Al Shehi said, adding that companies will also upgrade their categories by hiring skilled workers.

He advised people who want to start new companies to check their sponsor's record at the Department of Economic Development to ensure that their record is clear and they have no other companies facing problems, which will hinder their application.

"The sponsor of a company has to clear any outstanding dues or labour issues before he can sponsor another one, so we advise those who want to open a new business to look for a sponsor who has no other companies registered under his name," Al Shehi said.

Tas’heel -Online Goverment system for labour related process in UAE

Tas’heel is an online government system designed to simplify all labour related processes, improve output volume and increase efficiency. It allows companies and typing centers to make online transactions and payments to MOL, encouraging a paperless environment. Through Tas’heel, companies do not have to worry about physically submitting payments or documents Receive new labour card and mission labour card application

Transactions- Receive modify or lost labour card application
- National new labour card application
- Sponsorship transfer (express)
- Company License Renewal
- Relative Sponsor Work Permit
- Modify Work Permit
- Replacement of Work Permit
- Nawakas Scanning Document
- Cancel New Labour Card Application
- Online Cancellation
- Salary Certificate

Labour Card
Receive New Labour Card and Mission Labour Card Application: This application is used when attempting to apply for a Labour Card or a Mission Card for the first time. An employee can only be eligible for this application if he/she obtained their Labour Contract as well as their Medical Fitness test. This service can be accessed using the Transaction Number. For the normal new labor card must be submitted through TASHEEL system within 60days of entry otherwise penalty will be given by MOL.
For Mission Work permit it is valid for 3 month and must be submitted through TASHEEL system within 1 week from the date of his entry, otherwise fine will be 500 for each 10days delayed of submission.

Receive Modify or Lost Labor Card Application: This application is used when a modification is made to an employees’ nationality, salary or occupation. It is also used to replace a lost Labour Card. For Modification: A letter from the company is required with the old contract as well as the new contract stating modification in the new contract
For Lost Labor Cards: A letter from the police is required stating that the employee has misplaced his/her Labour Card and officially reported it to the authorities.

This service can be accessed using the Transaction Number.
National New Labour Card Application: This application is only applicable for U.A.E Nationals applying for a Labour Card for the first time. An employee can only be eligible for this application if he/she obtained their Labour Contract as well as their Medical Fitness test. This service can be accessed using the Transaction Number.
Sponsorship Transfer: This application is used when an employee is transferring to another job and must in turn transfer their sponsorship status. To complete the process, the employee must obtain the cancellation (signed by previous employer & employees) as well as the new contract (signed by the new employer and employee). This service can be accessed using the Transaction Number.

NOTE: After scanning the application correctly the PRO must submit the following documents at MOL:
The receipt from TASHEEL system.
The original cancellation signed by both parties
Computer card for the old company
Two contract copy from the application

Establishments
Company License Renewal: This application is used to renew a Company Trade License. This service can be accessed using the Company Code and License Number.

Work Permit
Relative Sponsor Work Permit: This application is used when a sponsored relative(wife/family members) is seeking a work permit and is required to provide no objection documents from the sponsor in order to proceed with the application. This service can be accessed using the Transaction Number.

NOTE: The following must be verified before entering the application into the system, otherwise the application will rejected:
The passport of the sponsored relative as well as the sponsor must be valid for at least 6 months
The residency of the sponsored relative as well as the sponsor must be valid for at least 1 month
The age of the sponsored relative seeking a work permit must at least be 21 years of age

Modify Work Permit: This application is used to amend information in the work permit such as name, nationality, passport number, etc. This service can be accessed using the Transaction Number.
Replacement of Work Permit: This application is used by the employing company who decide replacing a current employee on a valid work permit with a new employee using the same work permit without incurring additional or new charges. A work permit is valid for 60 days and can be extended for a maximum of 30 additional days. The replacement process can take place only if the work permit is valid. This service can be accessed using the Transaction Number. Create Temporary Work Permit: a person who holds residence visa at another company or family sponsorship. It will be valid for 6 months after getting the approval from MOL. The cause of this application will be depends upon the category of the company.

Miscellaneous
Nawakas Scanning Documents: Nawakas means ‘missing’ and this application refers to missing one (1) or more documents from the requirements submitted for Labour Card and Work Permit applications. This service can be accessed using the Transaction Number.
Cancel New Labor Application: This application is used when employee information is entered incorrectly in the Labour Contract Application and requires rectification. The incorrect application must be cancelled using this service after which the system will require an hour to update itself. Once this is done a New Labour application must be entered and submitted. This service can be accessed using the Transaction Number.
Online Cancellation: This application is used when an employer seeks to cancel the labour card and contract of an employee (who no longer reports to the employer). The cancellation can be signed electronically or manually depending on whether the company has an electronic signature. Signatures that are manually applied tend to get processed more efficiently and take less time. This service can be accessed using the Transaction Number.
Salary Certificate: This application is used when the Ministry of Labour requests from a company the salary certificate of a specific employee.

Cancel work permits and Labour cards UAE establishments directly approach Tas'heel centres

Establishments wishing to cancel work permits and labour cards need to directly approach Tas'heel centres

Abu Dhabi: Establishments wishing to cancel work permits and labour cards need to directly approach Tas'heel centres directly, as the Ministry of Labour will no longer provide this service starting on Sunday.Tas'heel is an online government system designed to simplify all labour-related processes.

According to Humaid Bin Deemas, Undersecretary at the Ministry of Labour, this step comes to save the time and effort of customers by providing the services, from typing application to cancelling of cards, at one stop, without having to visit the Labour Ministry offices.Bin Deemas called on establishments to present their requests directly to the 25 ‘Tas'heel' service centres in Dubai, Sharjah, Ajman, Fujairah, Ras Al Khaimah, Umm Al Quwain and Al Ain City.

In Abu Dhabi, establishments can apply through typing centres linked with the Tas'heel system.He pointed out that the ministry's offices will stop receiving requests for cancellation beginning on Sunday.

Bin Deemas said owners of establishments, who have the e-signature, may avail of this service starting on Sunday. However, those who do not have their e-signature have until September to get it, as manual applications will only be accepted until the end of September.

He said after the establishment owners cancel labour cards at the Tas'heel centres, the data will be sent electronically to the Labour Ministry. The Labour Ministry will then send the data to the Residency and Foreigners Affairs Departments.Bin Deemas said this service will benefit more than 280,000 establishments registered with the ministry and which carry out more than one million different cancellation transactions.

He also noted that the e-link project includes linking about 20 key services between the ministries of Labour and the Interior. the new procedure allows the owners of the joint system to facilitate the completion of the procedures for cancellation round the clock, seven days a week.

The Ministries of Labour and Interior will jointly implement the electronic cancellation service for labour cards, with effect from Sunday.The move comes in line with the first phase of the electronic link between the two ministries to boost the strategic partnership and achieve qualitative shift in exchange of data and information.

In accordance with this service, applicant firms seeking cancellation of work permits and labour cards will apply to the Tas'heel service centres set up for this purpose.