Starting on January 1, 2023, the UAE’s unemployment insurance scheme became mandatory for all Emirati and foreign employees across the public and private sectors, as per the Ministry of Human Resources and Emiratisation. This includes employees in free zones.
The new job loss insurance is a crucial part of the government's efforts to strengthen the national economy and align with global standards. It aims to support the UAE's vision as a leading hub for talent, businesses, and investments through economic growth, social development, and enhancing human capital empowerment.
What is Loss of Employment Insurance?
The Ministry of Human Resources and Emiratisation developed a new federal law scheme — UAE’s Unemployment Insurance Scheme. This is a social security programme run by the government to provide a financial cushion to those Emiratis and residents who involuntarily lost their jobs.
For this job loss insurance scheme, you, as an employee, should register with the scheme and pay an insurance premium from your monthly salary. The employees of private and public sector companies should apply for this provision to get cash benefits in case they, unfortunately, lose their jobs.
How Does Job Loss Insurance Work?
If an employee loses their job, the compensation paid is 60% of their basic salary. This payout is subject to a maximum limit of AED 20,000.
This compensation is paid only if the employee is a member of the scheme and has been regular with premium contributions towards this membership. The compensation is paid in cash for up to 3 consecutive months per claim.
Important: The job loss insurance pays compensation when an employee loses a job due to redundancy. To get the benefit, you need to prove that you
Lost the job involuntarily
Had no involvement in any activity like professional misconduct, poor job performance, and more that led to unemployment
Are not employed yet
How is the Loss of Employment Insurance Benefit Calculated?
Under the job loss insurance scheme, an employee receives a monthly compensation that is 60% of their average monthly salary for the last 6 months before their job loss. The maximum compensation of one claim is 3 months’ consecutive benefit.
How to Determine the Cost of Insurance for Job Loss?
To know the job loss insurance cost, we need to understand its 2 categories —
The first category (A) includes employees with a basic monthly salary of AED 16,000 or less.
Insurance cost: AED 5 per month or AED 60 annually
The second category (B) covers workers earning a basic salary of AED 16,000 or more per month.
Cost: AED 10 per month or AED 120 annually
Who Pays for Job Loss Insurance Coverage?
As stated earlier, employees pay for their unemployment insurance. They pay a premium, which can be paid monthly, half-yearly, quarterly, or annually. Note: The premium is subject to Value Added Tax.
Compensation Benefits of Loss of Employment Insurance
Here is everything you need to know about the compensation benefits of loss of work insurance —
Monthly compensation is 60% of the average basic salary for the last 6 months before the Involuntary Loss of Employment.
Compensation benefits are subject to the following upper limits —
Category A — AED 10,000 per mont
Category B — AED 20,000 per month
Maximum compensation for any one claim is 3 consecutive months.
How to Subscribe to the Loss of Employment Insurance?
You can subscribe to job loss insurance through the following channels —
iloe.ae (Insurance Pool)
Insurance Pool’s smart mobile application
Bank ATMs and kiosk machines
Du and Etisalat
Business service centres
Money exchange companies
SMS
Key Features of Job Loss Insurance in UAE
Check out the key features of the loss of employment insurance coverage in the UAE —
Coverage Details — The ILOE (Involuntary Loss of Employment) insurance scheme offers coverage to a wide range of individuals. It covers both Emiratis and residents, whether working with the federal government or in the private sector.
Mandatory for all private and government sector employees, it ensures that all eligible employees get access to this financial security system.
Policy Limits — The scheme has two categories for maximum claim benefits. Over an individual's entire work life in the UAE, the aggregate claim payment should not exceed 12 monthly benefits.
The insurance premium is based on the employee’s basic salary. For salaries of AED 16,000 or below, the premium is AED 5 + VAT per month. For salaries above AED 16,000, it is AED 10 + VAT per month.
The overall VAT amount is included in the first instalment or payment.
Unique Advantages — The ILOE insurance scheme is known for its accessibility and ease of subscription. You can subscribe through any of the channels — SMS, telecommunication bills, kiosks, banking applications, and ATMs.
The second advantage is the protection it offers to employees. For a nominal premium, you can get compensated in case of job loss. This coverage can give you peace of mind — you can manage your monthly budget and look for other jobs without worrying about immediate finances.
Things to Keep in Mind When Filing a Claim for Loss of Work Insurance
Note the following points when filing a claim for job loss insurance —
The insured must subscribe to the scheme for at least 12 consecutive months. Gaps or interruptions, if any, must be of less than 3 months.
All insurance premium subscriptions must be paid on time.
The insured must prove that unemployment is not due to resignation.
The insured should not have been dismissed for disciplinary reasons as stated in the UAE Labour Relations Law and the Human Resources Law of the UAE Federal Government.
Claims must be submitted within 30 days from the date of job loss or the settlement of a labour complaint referred to the judiciary.
The insured should not have an existing complaint related to their absence from work.
Compensation is not entitled if there is fraud or deceit, or if the employer is proven fictitious.
Job loss should not result from non-peaceful labour strikes or stoppages.
The insured should be physically present in the UAE.
Job loss should not be due to the following reasons:
War, riot, revolt, insurrection, armed rebellion, military force invasion, foreign invasion, hostilities, civil war, or civil disorder
Discharge of pollutants, nuclear events, radioactive or toxic effects, or any explosive nuclear equipment
Biological or chemical pollution related to terrorism
Government action leads to expropriation or nationalisation of the employer’s facility or confiscating the money that leads to insolvency
Force majeure events as per the Civil Transactions Law of the UAE No. (5) of 1985
Go through the following frequently asked questions section to know more about job loss insurance.
Frequently Asked Questions
Is job loss insurance mandatory in the UAE?
Yes, job loss insurance is mandatory in the UAE.
Should free zone employees register with this insurance for job loss?
Yes, it has been mandatory from the start. The federal decree requires all government and private sector employees to subscribe to the scheme.
What are the consequences of not paying the premium for job loss insurance?
If the insured fails to pay the premiums for over 3 months from the due date, the insurance policy will be cancelled. Additionally, the insured will have to pay a fine as per the applicable law.
What to do in case you subscribed for the loss of employment insurance but did not receive the Certificate of Insurance?
Follow these steps to get the policy details —
Visit the ILOE portal at www.iloe.ae or go to the ILOE Mobile App.
Select your sector.
Provide your Emirates ID and registered mobile number.
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