If there’s one thing the global health crisis has taught us, it’s never to underestimate the power of a good insurance policy. In this case, we’re talking about unemployment insurance, which provides financial support for those who lose their jobs through no fault of their own. This is especially important in the United Arab Emirates (UAE), where expats are often in high-earning positions that can make it challenging to find new work once they’ve been laid off.
In this post, we’ll explore this mandatory insurance scheme set to take effect on 1 January, 2023, what it means for expat workers, and how you can apply for it. If this interests you, keep on reading to learn more.
- UAE Unemployment Insurance scheme: Overview
- How to make an insurance claim
- Frequently Asked Questions:
- 1. What is the tentative cost of job loss insurance which is mandatory for all employees from next year?
- 2. Who is eligible for the UAE unemployment insurance scheme?
- 3. What compensation will the insured receive under the UAE unemployment insurance scheme?
- 4. Who pays for the insurance coverage?
- 5. When will the mandatory UAE unemployment insurance scheme begin?
- 6. Is it mandatory for everybody who works in the UAE?
- 7. How do I receive the unemployment compensation if I lose my job?
- 8. When will the compensation be halted?
UAE Unemployment Insurance scheme: Overview
The UAE’s unemployment insurance scheme provides financial support and a dignified life to the unemployed. It is a social security program that aims to help the country’s residents and federal employees who lose their jobs due to termination. It also attracts and retains the best talent.
This program, also known as the Involuntary Unemployment Scheme, functions as follows:
The Involuntary Loss of Employment (ILOE) insurance scheme has been launched in accordance with the provisions of Federal Decree-Law No. (13) of 2022 to compensate employees working in the Government and Private sectors with a cash benefit for a limited period not to exceed three (3) consecutive months per claim in the event of termination.
The ILOE insurance scheme aims to provide a decent life for workers in the United Arab Emirates, in the event of unemployment until an alternative employment opportunity becomes available. This creates a safety net for workers in case of unemployment and protects the rights of employees who are employed in both public and private sectors.
According to Minister of Human Resources of the UAE, Abdul Rahman Al-Awar, the country’s unemployment insurance program aims to provide stability to working professionals in the country’s various regions. It also seeks to maintain the competitive advantage of the public and private sectors of the country. The UAE is regarded as one of the most favorable working environments in the world.
The Benefits of the Unemployment Insurance Program
As is now evident, as a worker in the UAE, you can expect to benefit from the unemployment insurance program in various ways. Let’s take a quick look at the most important ones:
- Provides financial security in the event of involuntary unemployment.
- Allows you to look for a new job while keeping your mind at ease.
- With a small investment, you can obtain substantial funds for your livelihood.
- Extra benefits, such as compensation in the event of death and/or incapacity, may be granted depending on the plan chosen.
In terms of compensation, these are the benefits you can expect to receive:
The Monthly compensation is 60% of the average basic salary over the most recent 6 months before the Involuntary Loss of Employment
- For Category A: Maximum Claim Benefits : 10,000 AED (2,722 USD) per month
- For Category B: Maximum claim Amount : 20,000 AED (5,444 USD) per month
- Maximum compensation for any one claim: 3 consecutive months
- Maximum Period of Benefits: During the Insurance Period over the entire work life of the Insured in the United Arab Emirates the aggregate Claim Payment shall not exceed 12 monthly benefits (regardless of the number of Claims submitted).
As this is a mandatory program, all subscribers must be employed and paying the premium based on their compensation grade for at least twelve (12) months starting January 1, 2023.
Residents and UAE nationals who are working in the private or public sectors can avail of the country’s job loss insurance scheme. Individuals with professional designations are also eligible to join the program.
To be eligible for compensation, the insured must meet the following criteria:
- The insured in the scheme must have a minimum subscription term of twelve (12) consecutive months. As long as the membership has not been interrupted for three (3) months.
- The insured was required to pay all insurance premiums on time.
- The Insured proves that resignation did not cause unemployment. In addition to any other applicable legislation, the federal government’s Labor Relations Law and Human Resources Law ban dismissal for disciplinary reasons.
- Submit the claim within (30) thirty days of the work relationship’s termination or the outcome of the labor dispute brought before the court. There should be no complaints about the insured employee’s absence from work.
- The insured is not entitled to payment if his claim is founded on deception or fraud, or if the establishment for which they work is fictional.
- Employment should not be lost as a result of non-peaceful labor strikes or stoppages, regardless of whether they inflict harm.
- The insured must be legally present in the United Arab Emirates. The following reasons should not be used to terminate employment:
- As a result of a proclaimed or undeclared conflict, riot, insurgency, armed revolt, revolution, military or usurping force, invasion, act of a foreign enemy, hostilities, civil war, or civil disturbance.
- As a result of a pollutant discharge, a nuclear event, or the radioactive, toxic, explosive, or other hazardous effect of any explosive nuclear equipment or component thereof.
- As a direct or indirect result of, or contributor to, biological or chemical contamination generated by or as a result of terrorism.
- The employee became bankrupt as a result of a direct action by the government of the United Arab Emirates that resulted in the seizure or nationalization of the employer’s property or the confiscation of his funds.
- In line with the United Arab Emirates Civil Transactions Law No. (5) of 1985, as a result of the occurrence of force majeure
Meanwhile, those who fall under these categories are exempted from the mandatory scheme:
- investors, business owners who own and manage their business themselves
- domestic workers
- employees on a temporary basis
- juveniles under the age of 18
- retirees who receive pension and have joined a new employer.
Step 1: Determine the subscription fees you’ll need to pay via the scheme’s authorized subscription channels:
- For people with a basic salary of around Dh16,000, a monthly subscription fee of around Dh5 is required. They are also entitled to a cash compensation of up to Dh10,000.
- For people with a basic salary of over DHD16,000, monthly payments of around Dh10 are required. They are also entitled to a cash compensation of up to Dh20,000.
Step 2: Decide on your payment schedule, which can be settled monthly, quarterly, semi-annually, or annually.
NOTE: An employee’s insurance premium is computed at a rate of 60 percent of their basic salary six months prior to their unemployment.
Step 3: Subscribe to the scheme via any of the following channels:
- Insurance Pool’s website(www.iloe.ae) & its smart application
- Bank ATMs & Kiosk machines
- Business service centres
- Money exchange companies
- du and Etisalat
- Other channels that MOHRE specifies with the service provider (insurance company)
How to Pay Unemployment Insurance
The scheme will be administered by the Dubai Insurance Company, which is the agent for the nine-company insurance pool:
- Dubai Insurance Company
- Abu Dhabi National Insurance Company
- Al Ain Ahlia Insurance Company
- Emirates Insurance Company
- National General Insurance Company
- Orient Insurance
- Abu Dhabi National Takaful Company
- Oman Insurance Company
- Orient UNB Takaful Company
How to make an insurance claim
To be eligible for compensation, the dismissed employee must have been covered for at least 12 months, beginning on the day they first registered in the plan.
The insured must meet the standards mentioned below to be eligible for compensation:
- Minimum subscription period is 12 consecutive months.
- All insurance premiums must have been paid on time.
- The reason for unemployment should not be resignation.
- Job loss must not have been due to a disciplinary reason.
- The claim must be submitted within 30 days from the date of job loss.
- The worker should not have an existing complaint related to absence from work.
- The employee will not be entitled to compensation if there has been fraud or deceit involved in his/her claim.
- The loss of employment should not be the result of non-peaceful labour strikes or stoppages.
- The insured must be legally present in the UAE.
Employees who are insured and leave their jobs must file a claim within 30 days through one of three claim channels: the insurance pool’s e-portal, smart application, or contact center.
Compensation is paid out within two weeks of the claim date and is limited to three months per claim.
Starting January 1, 2023, all federal employees, as well as those working in the private sector, will be able to subscribe to the UAE unemployment insurance scheme.
Individuals can subscribe to the Insurance Pool by visiting www.iloe.ae. They can also choose to subscribe to other channels specified in the video.
Frequently Asked Questions:
1. What is the tentative cost of job loss insurance which is mandatory for all employees from next year?
According to the Human Resources and Development Minister of the UAE, the mandatory job-loss insurance will cost between 40 and 100 per year. This is submitted to the insurance provider yearly.
2. Who is eligible for the UAE unemployment insurance scheme?
Individuals who are employed in the private and public sectors in the UAE are eligible for the country’s unemployment insurance program.
3. What compensation will the insured receive under the UAE unemployment insurance scheme?
This scheme provides insured individuals with a 60% salary cap. They can also choose to get a higher insurance package.
4. Who pays for the insurance coverage?
According to the Ministry of Labor, employees will pay for the insurance. This can be done either monthly, quarterly, or annually. The value of the policy is also subject to tax.
5. When will the mandatory UAE unemployment insurance scheme begin?
The mandatory UAE unemployment insurance program will launch on 1 January 2023. Starting this period, employees can subscribe to the scheme in order to benefit from it as soon as after 12 months.
6. Is it mandatory for everybody who works in the UAE?
The program does not cover investors, including those who own establishments that employ domestic help, workers under 18, retirees, and those who have joined a new job after receiving a pension.
7. How do I receive the unemployment compensation if I lose my job?
Employees who have lost their job can submit their claim through the three approved channels. These include the e-commerce platform of the insurance pool, the call center, and the smart application.
The compensation will be issued within two weeks following the claim’s submission. It can be capped at three months.
8. When will the compensation be halted?
If the worker’s employer is found guilty of fraud or deceit in relation to the claim, or if there is evidence that the worker has been dismissed for disciplinary reasons, he/she will lose his/her eligibility for compensation.
Now that we’re at the brink of a new year, it’s important to look ahead with a plan in mind. And with the introduction of the unemployment insurance scheme starting next year, you can rest assured that you and your family are covered. The scheme will also allow you to get back on your feet after a period of unemployment.
Indeed, this move by the UAE government is a major step forward in ensuring the safety and well-being of workers in the country. The scheme will also help you to deal with any financial issues that may come your way during a period of unemployment. However, as the scheme is only in its initial stages, there are still some things you need to know about it, as there may be new developments in relation to this starting next year.
We hope you’ve learned something from this article and that it has given you a better idea of what the unemployment insurance scheme is all about. If you want to know more, you may visit MoHRE’s official website.
Disclaimer: This post is intended for information-sharing purposes only. If you have specific queries regarding the new scheme, feel free to contact the relevant agencies involved.
READ NEXT: Unemployment, a Big Issue