Employees Are Asked To Subscribe To Unemployment Scheme To Avoid Penalty

The UAE government introduced the Involuntary Loss of Employment (ILOE) scheme on 1 January 2023. 

The unemployment insurance scheme will provide the employee with a maximum 3-month cash compensation until he/she finds another job i.e, 60% of the employee's monthly basic salary averaged over the last six months of employment. However, the employee must have been enrolled in the insurance program for at least a year. Employees who fail to subscribe to the scheme are liable to pay a fine of AED 400.

 ILOE  is a type of social security scheme that grants Emiratis and residents financial support if they lose their jobs after being dismissed by their employers in the public and private sectors.

No fraudulent or dishonest claims should be made to receive compensation. Similarly, the employer's workplace shouldn't be fictitious. The employee must prove that he/she was unemployed for a reason other than resignation or fired on disciplinary grounds.

The employee has 30 days from the date of his or her unemployment to submit the claim. After receiving the claim, the insurance company has two weeks to deposit the compensation to the insured's account.

The subscription to the insurance is obligatory for all emirates as well as for expatriates and must be carried out before 30 June 2023. Anyone failing to do so before the given deadline would be liable to penalties. Exemption  is given to investors, domestic helpers, juveniles under 18, temporary contract workers, employees working in the free zones, and retirees eligible for pension who have joined another job.

The Dubai insurance company provided seven  different channels, the ILOE website and ILOE app being the only two direct channels. Indirect channels include Al Ansari exchanges, self-service kiosks, business centers, SMS and telecom bills, and bank applications.

 The involuntary loss of pension policy assures employees funds for three months from the day of job loss without them having to dip into their gratuity payments. The categories are as follows.

 

Type	Category A	Category B
Basic Salary	< AED 16,000	> AED 16,000
Insurance Cost	AED 5+ VAT per month or AED 60+ VAT per year	ED 10+ VAT per month or AED 120+ VAT per year
Compensation	Up to AED 10,000	Up to AED 20,000

The compensation to the insured is calculated based on 60% of the average basic salary over the last six  months of employment before job loss. Compensation shall be given out within two weeks after the claim date and will not exceed three months per claim. The insured is eligible to receive aggregated compensation for job loss for a period not exceeding 12 months regardless of the number of claims made.

 Employee compensation is eligible if they have worked and paid into the insurance plan for a minimum period of one year, with the condition that they have not been dismissed due to disciplinary action or resignation. Employees are requested to apply to the scheme to avoid penalties.

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