About the Involuntary Loss of Employment Scheme
Enacted through Federal Decree Law No. 13 of 2022 on the Involuntary Loss of Employment (ILOE), this distinctive Scheme ensures financial protection for individuals who experience job loss unrelated to disciplinary measures or voluntary resignation until they secure new employment. Eligible individuals stand to receive a monthly cash benefit, amounting to 60% of their average basic salaries over the preceding six months prior to the loss of employment. The cash benefit is applicable for a maximum duration of three consecutive months for those who have consistently paid monthly premiums for at least 12 consecutive months.
Commencing from January 1, 2023, the UAE’s recent unemployment insurance initiative has become a mandatory scheme for both Emirati and foreign employees in the public and private sectors. The program is structured into two tiers – the first encompassing those earning a basic salary of AED 16,000 or less per month, and the second catering to individuals earning AED 16,000 or more monthly. Subscribers in the first tier will incur a monthly cost of AED 5, equivalent to AED 60 annually, while those in the higher earning bracket will contribute AED 10 monthly or AED 120 annually. Payment frequencies can be chosen on a monthly, quarterly, half-yearly, or yearly basis, with the insurance policy subject to value-added tax (VAT).
Monthly cash sums are capped at AED 10,000 for the first tier and AED 20,000 for the second, calculated at a rate of 60% of the basic salary. Employees qualifying for jobless payments must submit claims through approved channels – the insurance pool’s e-portal, smart application, or call center – within 30 days of unemployment. Compensation is disbursed within two weeks from the claim date and is limited to a maximum of three months per claim.
To be eligible for jobless payments, individuals must have worked and subscribed for a minimum of 12 months, excluding cases of dismissal due to disciplinary reasons or voluntary resignation. Those who have left the country or secured new employment are ineligible for such benefits. The insurance program excludes investors, establishment owners, domestic helpers, part-time employees, individuals under 18, and retirees receiving a pension while engaging in new employment.
It is crucial to note that these laws originated in 2022, mandating the statutory unemployment insurance for all entities in the private and public sectors. Importantly, this insurance cannot be procured through brokers in the private insurance market. Each employee is required to subscribe individually, without intervention from the employer. The Ministry of Human Resources and Emiratization (MoHRE) has announced the opening of subscription to the Unemployment Insurance Scheme on January 1, 2023, urging UAE nationals and residents working in the federal government and private sector to enroll.