Registered for the UAE’s Unemployment Insurance Scheme?

If not, you could face a fine of AED400

The Unemployment Insurance Scheme launched by the United Arab Emirates (UAE) offers three consecutive months of financial assistance to UAE residents and Emiratis employed in the Arab Gulf state’s private and federal government sectors who lose their jobs due to reasons other than disciplinary action or resignation.

The scheme adheres to Federal Decree Law No. 13 of 2022 concerning the Involuntary Loss of Employment (ILOE).

 Private sector and federal government employees had to subscribe to the scheme starting January 1, 2023.

The initiative operates as a form of insurance or social security, where individuals receive financial support for three consecutive months or until they find a new job in exchange for a monthly insurance premium paid during their regular employment period.

The primary goal of the scheme is to ensure a sustained decent standard of living for the unemployed while fostering a competitive knowledge economy in the hydrocarbon-rich UAE by attracting and retaining top international talent.

Exempt categories

The Unemployment Insurance Scheme extends to all workers in the private and government sectors across the UAE, with certain exceptions such as investors, self-managed business owners, domestic workers, temporary employees, juveniles under 18, and retirees with pensions who have joined new employers.

As per the scheme, eligible employees will be compensated with a monthly financial benefit of up to 60% of their average basic salaries for the six months before loss of employment. The financial benefit shall be provided for a maximum of three consecutive months for a claim only for the workers who pay the monthly premium for at least 12 straight months.

The cost of subscription to the UAE’s Unemployment Insurance Scheme varies based on the worker’s basic salary:

– Workers earning AED16,000 or less per month pay a monthly premium of AED5 (AED60 annually), with compensation capped at AED10,000 monthly.

– Those earning more than AED16,000 per month pay AED10 per month (AED120 annually), with compensation capped at AED20,000 monthly.

Workers can pay the premiums monthly, quarterly, half-yearly, or annually, with the option to subscribe to additional benefits beyond the basic package. The insurance policy value is subject to 5% VAT.

The policy period is available for one year or two years.

Subscription channels for the Unemployment Insurance Scheme include the ILOE Insurance Pool website https://www.iloe.ae/Default.aspx, its app, and any other channels announced by the UAE’s Ministry of Human Resources and Emiratisation (MoHRE).

Compensation claims and eligibility

Workers must file compensation claims within 30 days of unemployment, and the relevant private insurance company has two weeks to transfer compensation to the insured’s account.

Compensation is provided from the date of job loss and lasts for three months or until reemployment, whichever comes earlier.

Eligibility for compensation requires a minimum of 12 consecutive months of paying the monthly premium.

Compensation suspension occurs in cases of dismissal for disciplinary reasons, fraud in claims, or if the workplace is found to be fictitious.

Enforcement and fines

Since October 1, 2023, the UAE Government has begun imposing fines on those UAE-based workers failing to subscribe to or comply with payments for the Unemployment Insurance Scheme.

Non-subscription before the October 1, 2023, deadline incurs an AED400 fine. Failure to pay premiums over three months results in an AED200 fine, and the insurance certificate is cancelled.

Failure to settle fines within three months of the due date leads to deductions from wages through the Wages Protection System (WPS) or end-of-service benefits.

UAE-based Dubai Insurance Company is the lead insurer for the Unemployment Insurance Scheme, along with Abu Dhabi National Insurance Company, Al Ain Ahlia Insurance Company, Emirates Insurance Company, National General Insurance Company, Orient Insurance, Oman Insurance Company, and Orient UNB Takaful Company.

ILOE helpline: 600 599 555

ILOE email: iloehelp@iloe.ae

Featured image: The primary goal of the UAE’s Unemployment Insurance Scheme is to ensure a sustained decent standard of living for the unemployed. Image: Charles Deluvio

Last Updated on 11 months by Arnold Pinto