Both private and government sector employees must subscribe to the UAE’s new social security support program, the Unemployment Insurance Scheme from the beginning of January 1, 2023. The compulsory UAE Unemployment Insurance Program is now mandatory for UAE residents and nationals employed by the commercial sector and the federal government. There is a fine of Dh400 if you don’t join the program by the deadline of June 30, 2023.
But the question rises what is the UAE’s Unemployment Insurance Scheme and how does work? How can you sign up and avoid any possible fines? Here is everything you need to know about it.
What is the UAE Unemployment Insurance Scheme 2023?
The unemployment insurance scheme is an initiative introduced by the Ministry of Human Resources and Emiratisation (MoHRE) that helps employees or workers financially in case they lose their jobs. It provides financial security to public and private sector workers and professionals in case they become jobless.
If a person is terminated or loses his job, he is entitled to a maximum cash compensation for three months. Remember that this scheme is not for those who lost their jobs due to resignation or disciplinary actions under the Human Resources Law, Labour Relations Law, and any other applicable legislation.
To run and finance the program, the Ministry of Human Resources and Emiratization made a contract with nine regional insurance providers. The ministry reported that in the first two days of operation, above 60,000 UAE employees had signed up for the scheme. According to the report, 96% of participants decided to sign up for the annual payment plan.
Beginning from January 1, 2023, both foreigners and citizens in the UAE must purchase required unemployment insurance. Those who do not will be liable to fines.
The unemployment insurance program offers a grace period for enrollment; those who do not register by the end of the grace period will be liable to fines beginning June 30.
The scheme was announced back in May of 2022, and the legal framework was outlined in the Cabinet Decision No. 97 of 2022 addressing the controls and methods for the implementation of the Unemployment Insurance Scheme and Federal Decree Law No. 13 of 2022, which was published on September 15, 2022.
Subscription Fees and Compensation
The Unemployment Insurance Scheme, as the name suggests, has a fixed fee or subscription which can be paid annually, once every six months, quarterly, or monthly. The subscription fee is according to the basic salary of the employee.
There are two categories for this program. The ILOE insurance pool, which is represented by Dubai Insurance, is offering this service.
The first category is for those employees whose salary is Dh16,000 or less. They have to pay Dh5 per month or Dh60 a year. They can get a maximum compensation of Dh10,000.
The second category is for those workers whose monthly basic salary is more than Dh16,0000. They have to pay a subscription fee of Dh120 a year or Dh10 per month. They can avail themselves of a maximum cash compensation of Dh20,000.
Insurance Compensation Rate
The insurance compensation rate is calculated at 60 percent of the employee’s monthly basic salary in the last six months before his or her termination from the job or unemployment.
How to Apply?
There are a number of channels such as ILOE’s official website, call center, and mobile application through which you can subscribe to this program. The monthly compensation will be provided within two weeks of submitting the claim.
UAE employees can use the other subscription channels which are as follows:
- Kiosk machines and bank ATMs
- Money exchange companies
- Business service centers
- du and Etisalat
Of course claims about a nonexistent company or false claims are forbidden. The Unemployment Insurance Law stipulates that fraudulent claims made in accordance with the Labor Law and any other applicable laws shall result in sanctions and penalties. If the establishment they work for is fictional or if there was fraud or dishonesty involved in the insured’s claim, they will not be entitled to reimbursement.
Who is Eligible for Unemployment Insurance?
In order to receive cash compensation, the employee must be subscribed to the program for at least 12 consecutive months. You will not receive any compensation if you leave the country or opt for a new job.
Additional eligibility criteria are as follows:
- Losing your job shouldn’t be one of the consequences of non-peaceful stoppages or labor strikes whether they cause any harm or not.
- The subscription must be uninterrupted for three months in a row.
- The insured must make a commitment to timely pay all required insurance premiums.
- The covered employee shouldn’t already be displeased over the absence from work.
- The insured must file a claim within 30 days of the day the working relationship ended, otherwise the judiciary will be involved in the labor complaint’s resolution.
People in the following categories are not covered by the Unemployment Insurance Law:
- Retirees who get a pension and have joined a new job
- Investors like people who own the firm for which they work
- Temporary workers (under the Labor Law, like contractors)
- Domestic helpers or workers
- Young individuals under 18 years of age
The message “If you are an employee in a free zone; Please note that workers in free zones are not currently covered by the unemployment insurance product (ILOE)” is displayed to free zone employees who attempt to register on iloe.ae (ILOE).
Is This Program Really Impactful for Employers of Government or Private Sector?
The establishment of a social security program is a step in the right direction and is a part of a bigger government initiative in the UAE to:
- Create a more enticing and secure work market to catch the attention of highly qualified people from across the globe.
- Strengthen the protections and rights of a worker.
Expats’ employment in the UAE used to be not much safe because losing a job quickly meant losing a source of earning, and visa cancellation forced them to quickly find other employment or leave the country.
Expats can now stay in the UAE for up to six months after their visas are canceled. The Unemployment Insurance Law provides up to three months of cash compensation, making it more likely that they will stay in the UAE to look for new jobs.
In keeping with the government’s Emiratization objective, additional unemployment benefits will ideally encourage more Emiratis to work in the private sector.
FAQs – Frequently Asked Questions
How to Take Unemployment Insurance in UAE?
Employees can take Unemployment insurance through the ILOE Insurance Pool website, its app, or any other channel that MoHRE may announce. Employees of the federal government and the commercial sector must enroll in the scheme starting on January 1, 2023.
What is Labour Insurance in UAE?
All employees in the UAE must now enroll in the unemployment insurance scheme as of January 1. The program, which was first introduced in September 2022, would provide up to AED 20,000 per month in unemployment benefits for three months after a worker loses their job.
What is the Unemployment Rate in UAE?
The percentage of the labor force that is unemployed yet looking for work is referred to as unemployment. The UAE’s unemployment rate in 2021 was 3.36%, up 0.17% from the previous year. The UAE’s unemployment rate in 2020 was 3.19%, up 0.96% from the previous year.
What is a good salary to live in UAE?
Who can Benefit from Unemployment Insurance?
You can claim benefits from the Unemployment Insurance Fund (UIF) if your employer cancels your employment. You can only receive the benefits if you made contributions to the UIF when you were employed. If you’ve fled the office, quit, or been put on administrative leave, you cannot make a claim.
The Unemployment Insurance Scheme in the emirates is without a doubt a great initiative for unemployed people. This scheme aims to help unemployed workers. Now, there will not be any worry about leaving the country or getting money for expenses as the scheme can give you enough money for three months to either find a new job or work on something else to make an earning out of it.
But not all people are eligible for compensation as per this scheme.
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