It was in May 2022 that the Ministry of Human Resources & Emiratisation announced the launch of a mandatory scheme for unemployment insurance in the UAE. Officially called the Involuntary Loss of Employment (ILOE) Insurance, the scheme is beneficial for both Emiratis and residents working in the private as well as the government sector. The scheme came into effect on January 1, 2023 and aims at offering social protection as well as boosting competitiveness in the labour market.
The key benefits Of the unemployment insurance in the UAE
The insurance scheme offers cash compensation to eligible employees who meet the relevant criteria for up to 3 months in case the job loss happens due to reasons other than disciplinary action or resignation. As an employee you will be eligible for a cash payout of up to 60% of your average basic salary that you were drawing 6 months prior to loss of employment. The benefit of the unemployment insurance in the UAE will be available for employees who pay the monthly premium for at least 12 consecutive months.
Your salary determines your contributions and payouts. You must subscribe to the scheme for job loss insurance in the UAE. Non-compliance will attract financial penalties and may also impact the employee’s eligibility for obtaining new work permits.
The deadline is almost here
The scheme has some exceptions for self employed investors, contractual workers, pensioned retirees, domestic workers and juveniles under the age of 18. Workers or employees in free zones are also prevented from subscribing to the scheme. The deadline for subscribing to the scheme has been set as 30 June, 2023 and employees must register within four months from the date of entry on the employment permit or visa change to avoid any penalties.
The Ministry had also given out a list of 9 national insurance companies to help you subscribe to the unemployment insurance in the UAE. You can use the ILOE website or mobile application to subscribe to the scheme. You can pay premiums using telecom operators like Du or Etisalat, money exchanges, business service centres, bank ATMs, or bank kiosks. The subscription cost of the scheme depends on your salary. If you earn less than 16,000 AED, the maximum monthly premium will be 5 AED plus VAT. For employees earning more than that, the premium will be 10 AED plus VAT.
400 AED has been set as the fine for employees who fail to join the scheme before the June 30 deadline. Employees who fail to continuously pay a premium for more than 3 months will get a fine of 200 AED. The authorities impose even higher fines on employers who collude with employees, and currently it is set at 20,000 AED for each case.
Conclusion
Job loss insurance in the UAE is a relatively new concept and we welcome it as a move that will help retain top talent in the local market. Eligible employees should proactively subscribe to the unemployment insurance in the UAE before the deadline and start paying premiums to stay protected against any future eventualities like loss of employment.
As a leading Chartered Accountancy & Accounting Firm in the UAE, our team is well versed with the legal framework for personal as well as corporate compliances including Income Tax, Property Tax, Corporate Tax etc. If you are looking for timely, knowledgeable and professional assistance in complying with the requirements of the job loss insurance in the uae, then please contact us at info@nn-ca.com or +97143577678 to learn more about our services and how we can help you comply & avoid penalties.
