All You Need to Know About Unemployment Insurance Scheme in UAE

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United Arab Emirates (UAE) made it compulsory for all Emirati and foreign workers in public and private sectors to join the unemployment insurance program from 1 January 2023. This includes employees in free zones as well.

The Involuntary Loss of Employment (ILOE) insurance scheme is a form of social security introduced in May last year. It acts as a financial safety for Emiratis and residents who lose their jobs. If someone’s employment is terminated by their employer, they will receive a cash payment for three months through this program.

To be eligible for ILOE insurance, employees must be registered with the program and pay a monthly insurance premium based on their salary.

The deadline to register for this program is 30 June, according to the Ministry of Human Resources and Emiratization (MoHRE). Failure to do so will result in a fine of AED 400.

After a grace period of 90 days, if the insurance premiums are not paid, a penalty of AED 200 will be imposed, and the policy will be canceled.

Here’s all you need to know about Unemployment Insurance Scheme:

How Does ILOE Insurance Scheme Work

If you lose your job in UAE, the unemployment insurance program will provide compensation for up to three months. The amount of compensation you receive will be calculated at 60% of your basic salary. The maximum monthly payment you can receive is Dh20,000 ($5,445), as determined by MoHRE.

The insurance program is divided into two groups. The first group includes employees earning a monthly basic salary of AED 16,000 or less. The second group is those making AED 16,000 or more.

How Much is the Monthly Premium

Employees of the first group will need to pay AED 5 per month or AED 60 annually for their insurance coverage. Employees of the second group will be required to pay AED 10 per month or AED 120 annually.

What Are Other Payment Options

Payments can be made monthly, quarterly, half-yearly, or annually, according to the ministry’s statement. The cost of the insurance policy is subject to value-added tax (VAT) in UAE.

How Much is the Compensation Amount

The compensation amount will depend on your monthly basic salary. However, there are limits to the maximum cash you can receive.

For the first category, the monthly cash will not exceed AED 10,000. For the second category, it will not exceed AED 20,000.

For example, if you have a monthly basic salary of AED 10,000 and you lose your job, you will receive 60% of that amount for three months, which will be AED 6,000.

How to Claim the Compensation

If you are an insured employee and you lose your job, you must submit your claim within 30 days from the date of your unemployment.

There are three approved channels to submit your claim:

  • ILOE insurance e-portal
  • Smart app
  • Call center

Once you submit your claim, the compensation will be paid to you within two weeks from the date of the claim.

Who is Eligible for ILOE Insurance

Employees can receive jobless insurance if they meet certain criteria:

  1. They must have worked and subscribed to the insurance program for at least 12 months.
  2. They should not have been dismissed due to disciplinary reasons or because they resigned.
  3. Employees who work on a commission basis can also subscribe to the scheme.

However, there are some cases where employees are not eligible for the payment:

  1. If they have left the country.
  2. If they have started a new job.

These eligibility requirements determine whether an insured employee can receive the jobless payment or not.

Who is Not Covered Under This Scheme

The ILOE insurance scheme does not cover investors in UAE. It also does not cover domestic helpers, part-time employees, workers under the age of 18, and retirees who receive a pension and have started a new job.

What About Freezone Employees

Yes, it is mandatory for free zone workers to join the unemployment insurance scheme. Initially, the requirement was only for employees in the government and private sectors, as stated in the federal decree.

However, the subscription channel for free zone workers was opened recently. This means that free zone employees can now register for the unemployment insurance scheme.

How to Apply

Here are some additional details about the scheme:

  • Visit the ILOE insurance’s website.
  • Press ‘Subscribe Here’ for registration.
  • Select your employment sector. Enter personal details such as ID, phone number, and verification code via SMS.
  • Choose payment interval. It can be monthly, quarterly, bi-annual, or annual. Type your email.
  • Go to the payment page and complete registration.

Dubai Insurance

Dubai Insurance is an insurance company based in Dubai. It provides various types of insurance coverage, including life insurance, health insurance, property insurance, motor insurance, and other general insurance products. The company offers insurance services to individuals, businesses, and organizations in Dubai and the surrounding regions.

Dubai Insurance is the authorized insurer responsible for issuing ILOE policies on behalf of the insurance pool. According to Dubai Insurance CEO, Abdellatif Abuqurah, some big companies have already registered for this coverage.

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