Unemployment Insurance: Latest updates -

Unemployment Insurance: Latest updates

Over 6.5 million people in the UAE subscribed to the Unemployment Insurance scheme last year, since its launch in January 2023. Officially called the Involuntary Loss of Employment (ILOE) insurance, this mandatory scheme aims to provide UAE residents with financial security in case they lose their jobs due to reasons other than disciplinary action or resignation.

It is mandatory for all employees from the public as well as private sectors to sign up for the Unemployment Insurance in accordance with Federal Decree-Law No. 13 of 2022. Employees who fail to subscribe for the insurance, will have to pay penalties.

What is Unemployment Insurance?

 The mandatory unemployment insurance scheme came into effect on 01 January 2023, and it was made mandatory for employees in the UAE. If they lose their job at least 12 months after the start of their insurance subscription, they will receive 60% of their basic salary for up to three months.

Those exempted from subscribing to the unemployment insurance are company investors, owners of facilities, domestic helpers, employees with a temporary employment contract, juveniles under 18 years of age, and retired persons who receive a retirement pension.

If the employees resign themselves from a company, if any fraud was involved, or if they get fired for disciplinary reasons under the UAE’s Labour Law (or any other applicable laws), then they are not eligible for the unemployment insurance.

How do you subscribe

You can subscribe to the policy through bank ATMs, kiosk machines, or MOHRE-approved financial institutions.

If your employees use our C3Pay payroll cards, then they can simply subscribe to the Unemployment Insurance via the C3Pay app. As an employer, HR/Finance manager or business owner, you can also Bulk Subscribe all your employees in one go through our Edenred payroll portal. Any new employees (C3Pay cardholders) whom you bulk subscribe, and who do not have an existing policy, will automatically be subscribed to the insurance for two years.

How to submit a compensation claim

From the date of their unemployment, employees have a period of 30 days to submit their claim to the ILOE Insurance Pool (represented by Dubai Insurance). They will receive the compensation within two weeks. They will get paid for three months or until they find a job, whichever comes first.

If you are an employee, kindly note that you will be eligible for compensation only if you have paid the insurance subscription for the entire year and you have legally been present in the UAE, since your unemployment. Your right to compensation will be forfeited if you cancel your residency and leave the country, or join a new job, within the processing period.

Avoid fines and penalties!

Employees who fail to subscribe to the ILOE will be fined AED 400, and employers who are caught colluding with the insured to get the insurance benefits, could be fined up to AED 20,000. Unpaid penalties shall be deducted either from the employees’ salary or end-of-service benefits.

Under ‘fines and collection methods’, the ministerial resolution states: “Workers or employees who fail to pay their fines for three months from the due date will have the fine amount deducted from their wages through the Wage Protection System, end-of-service gratuity, or any other alternative method deemed acceptable by the Ministry of Human Resources and Emiratisation.”

Employees can pay these fines via the MOHRE website, MOHRE app or any ministry-approved business service centre. It is also possible to apply for paying through instalments or request a waiver.

What’s new

In January 2024, Dubai Insurance updated their terms and conditions for ILOE:

  • Payments will no longer be accepted in monthly or quarterly instalments for new policy subscriptions. New subscriptions must be paid in full, and they will be valid for a period of two years.
  • All existing subscriptions will be renewed for one year and must be paid in full.

For any other information on the Dubai Insurance policy updates, feel free to contact the ILOE contact centre on 600 599 555.

Edenred UAE is happy to help with any information related to your employees’ financial rights, WPS-compliant payments or salary cards for your employees. Feel free to reach out to us on info.ae@edenred.com


Related Articles

Flexible Working Hours expected in the UAE?
5 Essential Tips for an Effective Payroll and WPS Strategy
Why accuracy is important in Payroll Processing