In implementation of the Federal Decree Law No. 13 of 2022 concerning the Involuntary Loss of Employment, the Ministry of Human Resources and Emiratisation (“MoHRE”) has introduced Involuntary Loss of Employment Scheme (“ILOE/Scheme”), which being a unique Scheme provides security for employees who lost their jobs due to reasons other than disciplinary action or resignation until they find a new job. This scheme is an important step towards ensuring the well-being of workers in the United Arab Emirates (“UAE”) and ensuring that they are able to support themselves and their families during times of unemployment. The Scheme is a social insurance program that provides a safety net for workers who lose their jobs due to economic downturns or company restructuring. It provides a temporary income to workers who are unable to find employment and helps them get back on their feet until they are able to find a new job.
Objective of the Scheme
- Provide the insured with income for a limited period of time during his/her unemployment.
- Enhancement of Emirati cadres’ competitiveness on the labour market and the provision of social protection to ensure their continued decent living until an alternative employment opportunity become available.
- Achieve a competitive knowledge economy by attracting and retaining best international talent.
What Is the Purpose of the Unemployment Insurance Scheme in the UAE
- Provides income support to individuals during their unemployment period, ensuring they can meet their basic needs.
- Enhances Emiratis’ competitiveness in the labor market by providing financial security and reducing the financial burden of job loss.
- Contributes to the overall goal of building a competitive knowledge-based economy by attracting and retaining the best international talent.
Who Is Eligible to Participate in the Unemployment Insurance Scheme
Both Emirati nationals and residents working in the federal government and private sectors are eligible to participate in the unemployment insurance scheme.
However, certain categories are exempt from the scheme, including:- Investors (owners of companies they work at)
- Domestic helpers
- Temporary-contract workers
- Juveniles under the age of 18
- Retirees who are entitled to a pension and have joined a new job.
How Can Individuals Subscribe to the Unemployment Insurance Scheme
To subscribe to the unemployment insurance scheme, individuals can visit the ILOE Insurance Pool website and its app and any other channels announced by the Ministry of Human Resources and Emiratisation (MoHRE).
How Does the Compensation Amount in the Unemployment Insurance Scheme Work
The compensation amount in the unemployment insurance scheme is based on the individual’s average basic salary over the six months before the loss of employment.
- Employees with a basic salary of AED 16,000or less are eligible for a maximum monthly compensation of AED 10,000.
- Those with a basic salary exceeding AED 16,000can receive a maximum monthly compensation of AED 20,000.
The compensation is paid for a maximum of three consecutive months or until the individual finds a new job, whichever occurs earlier.
Is Unemployment Insurance Mandatory in UAE
Yes, unemployment insurance is mandatory in the UAE. which began on January 1, 2023, had a deadline extended to October 1, 2023, for workers to enroll and comply with the scheme’s requirements. The UAE Government started implementing fines for workers who haven’t subscribed to the Unemployment Insurance scheme or have failed to make timely payments.
Can Employees of Free Zone Areas and Semi-governmental Employers Participate in the Unemployment Insurance Scheme
The UAE government has recently announced that the unemployment insurance scheme is now mandatory for employees of free zones and semi-governmental employers. Additionally, this doesn’t apply to employees of entities registered in the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM). However, employees of entities registered in these financial-free zones can voluntarily enroll in the scheme.
Summing It Up
The Scheme has several benefits for workers in the UAE. It provides a financial safety net for those who become unemployed and are unable to find a new job immediately. This means that workers are able to support themselves and their families during this time, rather than having to rely on savings or other forms of financial assistance. The Scheme can also improve morale for individuals who have lost their job, as it helps them feel supported and less alone during this difficult time. This may in turn improve retention of talent in the UAE, as it provides support to individuals who may have otherwise left the country due to job loss, which is also one of the stated objectives of the Scheme.
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