UAE Unemployment Insurance: Top 10 Things to Understand

The UAE unemployment insurance scheme came into force recently (January 1, 2023) and has been mandated by the UAE Government for all working individuals in the nation.

In 2022, the UAE introduced a new insurance scheme for unemployed individuals in the Government and private sectors. With this plan, unemployed individuals will receive up to 60% of their base salary for a period of up to 3 months following the date of unemployment. It must be noted that the amount to be paid to such individuals has a monthly cap of AED 20,000.

The authorities have also announced a 6-month grace period for enrolment. The qualified employees, thus, have a grace period of 6 months (until June 30, 2023) to subscribe to the Involuntary Loss of Employment (ILOE) programme, according to Ministerial Resolution No. 604 of 2022 on the ILOE or Involuntary Loss of Employment.

Key Details of the New Unemployment Insurance Scheme

Here are the essential details of this new programme -

• You can apply for this scheme by visiting the iloe.ae website, selecting the ‘Subscribe Now’ option, and proceeding as directed.
• This plan’s cost is AED 5 per month for individuals making under AED 16,000 (basic salary) and AED 10 per month for those making more than AED 16,000.
• After January 1, 2023, there will be a four-month grace period for employees who wish to change their visa or start working in the UAE.
• A fine of AED 400 will be imposed for non-subscription.
• A fine of AED 200 will be charged for a delayed/missed instalment premium.
• Freezone workers, domestic servants, investors and business owners, minors, temporary contract workers, and retirees belong to the exempted categories.
• The following subscription channels are available for this programme - the Insurance Pool website and its smart application, business service centres, bank ATMs and kiosks, money exchange firms SMS, and du and Etisalat.
• The minimum subscription duration of this scheme is 12 months.
• The compensation can be availed for up to 3 months.
• Non-applicable cases: Fraud or dishonesty in the claim, a fraudulent firm, already-filed complaints, and actions resulting from violent labour strikes or stoppages.

For individuals that qualify for the unemployment insurance scheme, here are the major benefits -

• The monthly compensation is 60% of the average of the recent basic salary of 6 months before the unintentional loss of employment.
• Category A: Highest monthly claim amount is AED 10,000
• Category B: Highest monthly claim amount is AED 20,000
• The cumulative claim payment amount must not surpass 12 monthly benefits throughout the insurance tenure for the entire working life of the working individual (irrespective of how many claims one submits).

What if a Qualified Worker Chooses Not to Enrol in Unemployment Insurance?

Here are the major consequences that a qualified/eligible employee can face if they don’t enrol -

Case 1: Not a Subscriber

The penalties for employees will be AED 400 starting on 1 July 2023.

Case 2: Subscribed But Failed to Pay for 3 Months (or More) in a Row

In this case, the employee will become ineligible for unemployment compensation and would be required to re-subscribe by getting new insurance, paying all overdue sums, and a fine of AED 200.

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