A Complete Guide to Unemployment Insurance Scheme in UAE

Dubai is a renowned economic hub and a thriving metropolis, serving as a beacon for professionals across the world. Like other cities, it often faces challenges due to economic fluctuations and job security. However, the UAE government has introduced the Unemployment Insurance Scheme to alleviate the effect of job loss and offer a safety net for its workforce.

The program, known as the Involuntary Loss of Employment (ILOE), is incorporated to support people who accidentally become unemployed. The scheme ensures financial stability for those who lose their jobs so that they can maintain their standard of living while looking for new opportunities.

The Dubai Unemployment Insurance Scheme is a milestone, reflecting the UAE's commitment to workforce support and social security. The program is designed to cater to various exposures of unemployment, from payment and registration to eligibility criteria and benefits.

In this comprehensive guide, we will explain how to register for unemployment insurance, the payment process, and certain deadlines to ensure a complete understanding of the UAE unemployment scheme.

UAE Unemployment Insurance

Understanding the Unemployment Insurance UAE

The UAE government introduced the Unemployment Insurance Scheme in Dubai, widely known as ILOE Insurance, in 2023 to provide financial support to the workforce in case of involuntary job loss.

This insurance scheme is a turning point, framing social security features in the UAE and aimed at reducing the economic effect on employees and related families due to joblessness.

What is ILOE Insurance?

ILOE stands for Involuntary Loss of Employment. It is an insurance scheme introduced in UAE to deal with unexpected job loss circumstances.

However, it is essential to remember that the reasons for job loss do not include resignation or other disciplinary purposes but lie beyond their control.

With financial support ensured within the scheme, the policy covers the workforce of both the federal and private sectors.

The scheme stipulates to pay for the insurance for 12 months and claim the compensation for 3 months in the event of job loss. This insurance, in turn, helps individuals to manage their expenses while they find new employment.

Eligibility Criteria for the ILOE Insurance Scheme

To qualify for the UAE Unemployment Insurance Scheme, employees must meet the criteria given below;

Employment Status: The Unemployment Scheme is eligible for nationals and expats living in the UAE. However, it demands employment within the UAE. Also, the employee must hold a valid residency visa.
Minimum Employment Period: To become eligible for insurance benefits, the employee must have worked for at least six months in the particular company or enterprise.
Reasons for Job Loss: Reasons for job loss must include certain economic impacts or downsizing of the company. Resignation or termination due to misdeeds do not come under the eligibility criteria.
Age Limit: Applicants of ILOE must meet a specific age range, typically between 18 and 60 years.

Besides these factors, the UAE Government has also stipulated the categories that are exempt from participating in the scheme, including temporary contract employees, domestic helpers, retirees who already take pensions, investors, and juveniles under 18.

Benefits of the Involuntary Loss of Employment Scheme

Several benefits are offered to eligible individuals under the Dubai Unemployment Insurance scheme;

Financial Support: One of the elementary benefits of ILOE insurance is monthly financial support for employees who have lost their jobs. The insurance helps cover necessary expenses such as utilities, housing, and routine expenditures.
Duration of Benefits: The duration for gaining benefits from the insurance can differ. However, the typical validity remains active for up to 6 months from the date of job loss.
Assistance in Job Search: Some insurance schemes under ILOE also include the additional advantage of job search assistance, extending support to individuals in finding new employment through various recruitment agencies and job portals.

How Do You Register for Unemployment Insurance Scheme?

Registering for the ILOE scheme in Dubai involves straightforward steps, which are guided below;

Check Eligibility: Make sure that you align with the eligibility rules mentioned above.
ILOE Insurance Portal: To continue the process, visit the ILOE Insurance website. You can also download its application or visit other platforms, as the Ministry of Human Resources and Emiratisation (MoHRE) reported.
Complete the Application: Fill all the details required in the application form to secure insurance. The details typically include employment details, personal information, and documents proving your eligibility.
Application Submission: After filling in the required details, click on the submit option along with the scanned documents.
Approval and Insurance Guarantee: Once the application is reviewed and approved, the related department will issue the policy. You will receive the policy documents specifying benefits and coverage.

Unemployment Insurance Scheme

Cost of UAE Unemployment Insurance

The cost of the UAE unemployment insurance varies based on the salary. The typical cost is as follows;

If an individual earns more than AED 16,000, the insurance will cost up to AED 120 yearly or AED 10 monthly.
For the employees earning up to AED 16,000, the insurance will cost them AED 60 yearly or AED 5 monthly.

Payment Channels for Dubai Unemployment Insurance (ILOE)

The UAE Government has made the ILOE subscription process convenient by offering various modes of payment to ensure flexibility and accessibility to all applicants. A few of these channels are;

Mobile App: A mobile application is specified to directly send your insurance payments to the related authority.
Website: Payments can also be made directly through the ILOE official portal.
SMS: Payments through SMS have also been made an option for further convenience.
Customer Service Centers: Employees can manage their payments through authorized customer service centers that direct them to ILOE management.
Bank ATMs: Various banks extend the option of handling insurance payments through ATMs.
Business Centers: Specific business centers manage your premium payment transactions.
Exchange Centers: UAE also comprises authorized exchange centers through which employees can pay for insurance.

How Does the ILOE Insurance in UAE Pay You?

The Involuntary Loss of Employment Scheme in Dubai usually operates in three steps:

1. Make Monthly Payment

You must pay a certain amount if you are eligible for the unemployment scheme and desire to subscribe to it. The monthly payments conferred upon an individual vary according to the salary, which you can find in the above section. These payments are generally split into two categories;

If an individual is employed with a basic salary over AED 16,000, he/she can claim up to 20,000 AED per month or 60% of your salary for three months back-to-back.
If an individual's basic salary is less than or equal to AED 16,000, he/she can claim 10,000 AED per month or 60% of the salary for three months continuously.

2. Considerations for Filing a Claim

To ensure a smooth process for filing a claim for monthly compensation after losing employment, we have compiled obligatory necessities that must be followed to gain insurance benefits.

Apply for the claim within 30 days from the date of job loss (the maximum period for filing a claim is four and a half weeks).
Ensure that your insurance premiums are paid timely.
Ensure you are exempt from any fines due to the delay in ILOE subscription.
Ensure your presence within the UAE while applying for a claim.
The claim shall not be made to scam.

3. Gain the Benefits

Once your claim is approved, you can benefit from your unemployment insurance scheme. You will receive compensation according to the terms and conditions, which includes approximately 60% of the basic salary at your previous job.

Unemployment Insurance Last date

It is essential for employees to be aware of the deadline announced by the UAE government. Employees who have not subscribed to the unemployment policy before 1 October 2023 will be penalized as imposed by the government.

Penalties for not Subscribing to the Dubai Unemployment Insurance Scheme

In case of failure to subscribe before the deadlines, the employees will be subjected to a penalty of AED 400.
If the fine is not settled within three months of the fine deadline, the penalty will be charged to the employee's salary. For this purpose, the UAE government has introduced the Wages Protection System (WPS) to monitor and deduct the fine from the charged employee's salary or end-of-service benefits.
If the insurance premium payment isn't made within three months after the due date, the employee will be charged an AED 200 penalty. Additionally, the employee's insurance certificate will be canceled.

Payment Plan Options for ILOE in Dubai

The payment plan of ILOE in Dubai slightly differs from other insurance plans. The insurance can be paid in four different plans as suggested by the UAE Government;

Annual – This plan completes your insurance at once with a yearly payment.
Semi-Annual – According to this plan, you can make payments twice a year.
Quarterly – A payment plan requiring you to pay for insurance premiums four times yearly.
Monthly – A plan that requires you to pay the insurance every month.

January 2024 Updates

However, as per the new updates released in January 2024, the UAE Government has amended the terms and conditions for ILOE, which include;

All the existing unemployment insurance schemes will receive renewal for 1 year, though full payment is required.
The validity of the insurance period has been maximized for up to 2 years.
New policy registrations will no longer accept quarterly or monthly payments.

ILOE Policy

Authorized Entities for ILOE Policy Subscriptions

Besides the ILOE Insurance Pool Portal, the UAE Government has also specified national insurance companies that are reliable for ILOE subscriptions. These companies include;

Orient UNB Takaful Company
Emirates Insurance Company
Oman Insurance Company
Dubai Insurance Company
Al Ain Ahlia Insurance Company
National General Insurance Company
Abu Dhabi National Insurance Company
Orient Insurance

The Role of Employers in the UAE Unemployment Insurance Scheme

Employers have a crucial role in implementing the ILOE scheme in UAE. Here's how they streamline the process;

Facilitating Registration: Employers can help their employees in the registration process by providing the required information and documents for the employee's application. They can also utilize the Edenred Payroll portal for bulk employee subscriptions.
Informing Employees: Employers are responsible for informing their workforce about the availability of the unemployment insurance scheme in the UAE.
Ensuring Compliance: Employers shall ensure their employees' compliance with the rules and requirements of the ILOE Insurance Scheme as specified by the UAE government.

Common Misconceptions about the Unemployment Insurance Scheme

Various misconceptions prevail regarding the unemployment insurance scheme in Dubai. The most common ones are addressed below;

Misconception 1: The Insurance Benefits are Unlimited

The authorities have already determined the compensation period, and it does not extend beyond a specific time. The benefits are guaranteed typically up to 3 months; however, they can extend up to six months in special cases. After this period, the benefits will cease.

Misconception 2: Unemployment Insurance Covers Voluntary Resignation

Unemployment insurance covers only involuntary job loss. The authorities, particularly MoHRE, will monitor and inspect the overall case of your unemployment. In case of termination, resignation, or any scam, individuals might be discharged from the scheme or imposed penalties.

Misconception 3: All Eligible Individuals are Automatically Enrolled

There is a proper channel to register for the insurance scheme in Dubai. The option of automatic enrollment does not exist in this program.

Closing In

The Dubai Unemployment Insurance Scheme is a vital program representing the UAE's objective of offering social security by providing financial support to employees facing complexities in the country's working environment. The initiative is designed to encourage employee's confidence and maintain economic stability.

The information detailed above helps comprehend the unemployment insurance scheme in UAE and inform individuals about the city's commitment to a progressive and secure environment.

From the benefits and eligibility criteria to payment plans and costs associated with the unemployment scheme, every aspect has been covered to reduce misconceptions among the public.

However, staying updated with real-time information is crucial to receiving maximum advantages and continuous coverage from the scheme.

The unemployment insurance scheme is one of the many health programs developed by the UAE, determining the country's focus on enhancing social security for citizens and expats alike. Certainly! The scheme contributes to the nation's overall economic resilience.

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