Unemployment Insurance Scheme in UAE
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What is the Unemployment Insurance Scheme?
The unemployment insurance scheme covers both private and public sector employees. The scheme offers financial support to ensure that individuals who lose their jobs under unforeseen situations can meet their basic needs. It is mandatory for all private and federal government sector employees to subscribe to this scheme.
How Does Unemployment Insurance Work?
Employees with a basic salary of up to AED 16,000 are eligible to receive a maximum monthly compensation of AED 10,000
Employees with a basic salary exceeding AED 16,000 are eligible to receive a maximum monthly compensation of AED 20,000
The above compensation is payable for a maximum of three months or until the person finds a new job, whichever is earlier
How to Apply for Unemployment Insurance in the UAE?
Individuals who want to apply for the UAE unemployment insurance scheme can visit the official portal of ILOE (involuntary loss of employment) or download its app to avail of the service free of cost. A few other platforms also offer this service at a nominal charge.
Why Did the UAE Government Introduce the Unemployment Insurance Scheme?
Dubai is perceived as one of the best destinations for highly qualified professionals who aspire to a successful global career. The loss of employment insurance scheme enhances the competitiveness of the labor market, helps attract the best global talent, and contributes to building a vibrant knowledge-based economy in the UAE.
Eligibility for Unemployment Insurance
Workers on a temporary job contract
Minors under the age of 18 years
Domestic helpers or assistants
Pensioned retirees who take up a new job after retirement
Investors (or owners) who work at companies
What are the Benefits of Unemployment Insurance?
The compensation offers financial security to workers who unexpectedly lose their jobs
The payout supports the families of workers losing their jobs to cover their basic needs without slipping into debt
The unemployed workers can pursue their job hunt process with confidence and peace of mind
The insurance scheme also offers death and disability benefits to employees who subscribe to any of the plans
How to Claim Unemployment Insurance?
Employees who lose their jobs must submit a claim to their insurers within 30 days of unemployment. The insurance companies typically process the compensation claim within two weeks.
To receive the compensation, the claimants should meet all the terms & conditions of the insurance policy. Further, they must fully comply with the rules and regulations of the central bank.
Penalties for the Failure of Unemployment Insurance
A subscriber who fails to pay the insurance premium for more than three months beyond the due date shall be fined AED 200 along with cancelation of their insurance policies. Any fine has to be settled in full within three months of the due date to avoid legal hassles.
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Frequently Asked Questions about Unemployment Insurance
What is the purpose of the unemployment insurance scheme?
The primary purpose of the unemployment insurance scheme is to provide a financial safety net to individuals who lose their jobs involuntarily. Further, the scheme intends to enhance the competitiveness of the UAE’s job market and attract top talent who can strengthen the economy.
How much does unemployment insurance cost?
The cost of unemployment insurance depends on an employee’s basic salary. If the basic salary is up to AED 16,000, the cost is AED 5 per month or AED 60 per annum. If the basic salary exceeds AED 16,000, the cost is AED 10 per month or AED 120 per annum.
Is unemployment insurance mandatory in the UAE?
Yes. It is mandatory for both public and private sector employees in the UAE to subscribe to the unemployment insurance scheme. With effect from October 1, 2023, the government has started levying fines for workers who have not subscribed to the scheme or do not make regular premium payments.
Who is responsible for providing unemployment insurance in the UAE?
It is the responsibility of employees to subscribe to unemployment insurance and pay the premiums on time. The employer has no obligation to contribute to this scheme.
Can I claim medical expenses under the Unemployment Insurance Scheme?
No, the UAE’s Unemployment Insurance Scheme does not cover medical expenses. This scheme is designed to provide temporary financial support to employees who lose their jobs due to circumstances beyond their control, covering up to 60% of their basic salary for a maximum of three months. However, medical insurance for employees is a separate requirement and is typically provided by employers during active employment. Once an individual is no longer employed, they must arrange their own health insurance to ensure continued medical coverage.
What is ILOE insurance?
The involuntary loss of employment (ILOE) insurance scheme protects private sector and government employees in the UAE against job loss due to termination of employment. The insurance provides a cash benefit for a maximum of three months to employees who have lost their jobs due to reasons other than disciplinary action by the employer.
How to pay for ILOE online?
The payment procedure is as follows:
- Visit the ILOE website or download the ILOE app on your smartphone.
- Sign up or log in to your account using your credentials
- Select a suitable policy type based on your requirements
- Choose your employment sector; enter your Emirates ID and phone number
- Choose the payment method (i.e. debit card or credit card) and make the payment. You will receive a confirmation receipt through SMS and email
Is having a Labor Card in UAE necessary to apply for the Unemployment Insurance Scheme?
Yes, having a valid Labor Card in the UAE is necessary for legal employment and is linked to the Unemployment Insurance Scheme. Employees must show proof of subscription to the Involuntary Loss of Employment (ILOE) insurance when applying for or renewing their labor card. This ensures eligibility for financial support in case of job loss.
Disclaimer: The information presented here is gathered from trusted sources on the Internet. We make every effort to ensure accuracy and reliability, and we encourage readers to cross-check information with official sources and use their discretion when relying on it.