The UAE Unemployment Insurance Scheme, known as the Involuntary Loss of Employment (ILOE) program, offers essential financial support to residents working in the private sector of the UAE and other Gulf countries.
This insurance program aims to provide a safety net for workers who lose their jobs due to unforeseen circumstances or termination, ensuring they can meet their living needs during periods of unemployment.
The primary objective of the ILOE scheme is to alleviate the fear of job loss among employees by offering financial assistance.
Workers contribute a monthly premium during their employment, which entitles them to receive cash compensation if they become unemployed.
This proactive approach by the UAE government reflects its commitment to financial security and a stable labor market.
Despite the UAE’s low average unemployment rate of 2.5 percent over the past decade, compared to the Middle East and North Africa’s 6.8 percent, the country continues to prioritize the well-being of its workforce through this unemployment insurance program.
By doing so, the UAE not only supports individuals during challenging times but also demonstrates a strong dedication to fostering a secure and supportive work environment for all its residents.
Perks of Unemployment Insurance
Unemployment insurance provides a crucial safety net for individuals who lose their jobs due to factors beyond their control, such as layoffs.
This benefit offers temporary financial support, enabling people to sustain themselves while they actively search for new employment opportunities.
Initially, only Western countries had implemented unemployment insurance by 1945. However, in the 1990s, numerous transitioning countries began to introduce similar programs.
More recently, an increasing number of developing nations have followed suit, recognizing the importance of such a scheme.
The scope of unemployment insurance is comprehensive, covering both private and federal sector employees.
However, certain groups are excluded from this scheme:
- Entrepreneurs and business investors.
- Domestic workers.
- Contractual or temporary employees.
- Individuals under the age of 18.
- Retirees who have rejoined the workforce with a different employer.
These exclusions ensure that the benefits target those employees who are most in need, regular employees who face sudden unemployment.
Entrepreneurs and investors typically have different financial safeguards, while domestic and temporary workers often fall under separate labor protections.
The age restriction aligns with general labor laws, and retirees receiving pensions are not the primary focus of this safety net.
The UAE Unemployment Insurance Scheme
The UAE government launched the Unemployment Insurance Scheme in May 2022. It is an initiative aimed at providing support to both Emirati and expatriate workers across various sectors.
This program is regulated by Federal Decree-Law No. 13 of 2022 and Cabinet Decision No. 97 of 2022. It mandates enrollment for all employees, whether in the public or private sector.
Inclusion Criteria and Exceptions
Under the directive of the Ministry of Human Resources & Emiratization (MoHRE), the scheme extends its coverage to workers in free zones and semi-governmental entities, except for those in DIFC and ADGM. Notably, participation in DIFC and ADGM remains voluntary.
The scheme exempts investors or business owners, domestic workers, employees with temporary contracts, juveniles under 18, and retirees with new employment.
Compensation Structure
Operating through partnerships with nine local insurance firms, the scheme offers compensation at 60 percent of an employee’s basic salary for a maximum period of three months.
The compensation structure is divided into two categories:
- Category A: For employees with a basic salary of AED 16,000 or less. The monthly insurance cost is AED 5, with compensation capped at AED 10,000.
- Category B: For employees with a basic salary above AED 16,000. The monthly insurance cost is AED 10, with compensation capped at AED 20,000.
Payment Channels
Various payment channels have been established for the convenience of beneficiaries. These include the Involuntary Loss of Employment (ILOE) portal and mobile application, Al Ansari Exchange, kiosk machines, telecommunication bill payments, bank ATMs and applications, and business service centers.
The UAE Unemployment Insurance Scheme stands as a proactive measure by the government to safeguard the financial well-being of its workforce during times of involuntary job loss.
Through its comprehensive coverage and accessible payment channels, the scheme aims to mitigate the impact of unemployment on individuals and families across the nation.
Claiming Unemployment Insurance Compensation in UAE
To claim unemployment insurance benefits in the UAE, individuals must follow a straightforward process ensuring they meet eligibility criteria, file a claim, and receive compensation promptly.
Step 1: Meeting Eligibility Criteria
To qualify for unemployment compensation, ensure you meet the following requirements:
- Subscription Duration: Your subscription must cover at least the past twelve (12) consecutive months.
- Premium Payments: You should have paid all the required insurance premiums.
- Reason for Unemployment: Unemployment should not be due to resignation.
- Work Dismissal: You must not be dismissed for disciplinary reasons.
- Abscondment Complaint: You must not have an existing abscondment complaint.
- Honest Claims: Claims should not be fraudulent, and the company you worked for must be legitimate.
- Labor Strikes: Unemployment should not result from non-peaceful labor strikes or stoppages.
- Legal Presence: You must be legally residing in the UAE.
Step 2: Filing a Claim
Submit your claim within 30 days following your termination or the court’s ruling on your labor complaint, if applicable.
You can file your claim through the following channels:
- ILOE Portal: The official online portal for unemployment insurance claims.
- Mobile App: Download the ILOE app to submit your claim.
- Call Center: Contact the call center at 600599555.
- MoHRE and Insurance Pool Channels: Use any other channels specified by the Ministry of Human Resources and Emiratisation (MoHRE) and the insurance pool.
Step 3: Receiving Compensation
After filing your claim, licensed service providers authorized by the UAE’s Central Bank will process your request.
They will issue the compensation within two weeks of your claim submission. Compensation amounts are provided in both United Arab Emirates Dirham (AED) and United States Dollars (USD).
By following these steps, you can efficiently claim your unemployment insurance benefits in the UAE. Ensure all your documentation is accurate and submitted promptly to avoid delays in receiving your compensation.
Unemployment Insurance Benefits and Challenges in UAE
While the UAE’s unemployment insurance program faces challenges, its benefits contribute significantly to the well-being of the workforce and the country’s economic development.
Advantages of Unemployment Insurance
Enhanced Social Protection: The unemployment insurance program demonstrates the government’s commitment to safeguarding the well-being of both Emirati and non-Emirati employees by providing substantial income support during periods of unemployment.
This safety net not only aids individuals in times of job loss but also contributes to the resilience and adaptability of the UAE workforce.
Flexibility in Payment: Subscribers enjoy flexibility in payment schedules, with options to pay monthly, quarterly, half-yearly, or annually.
The relatively low premiums, ranging from 5 AED to 10 AED per month (plus VAT), ensure accessibility to a wide spectrum of the workforce.
Efficiency in Administration: Unlike traditional unemployment insurance programs where the government disburses compensation, the UAE’s scheme operates through private insurance providers.
This unique approach enhances efficiency and reduces bureaucratic processes, simplifying payment and claim procedures for subscribers.
Supportive of Economic Development: According to Minister of Human Resources and Emiratisation, His Excellency Dr. Abdulrahman Al Awar, the unemployment insurance law is an integral part of the UAE’s efforts to develop its legislative and legal structure to meet the demands of the national economy.
By providing financial support during periods of unemployment, the scheme promotes economic stability, attracts international talent, and fosters a competitive knowledge economy, aligning with the UAE’s vision of becoming a global hub for talent and investment.
Challenges of Unemployment Insurance
Short-term Coverage Limits: The maximum duration for a single claim under the UAE’s unemployment insurance program is three months.
Once a beneficiary secures a new job, their compensation ceases. Additionally, irrespective of the number of claims made, the total compensation cannot exceed 12 months throughout one’s employment tenure in the UAE.
Extended Eligibility Period: Eligibility for compensation requires individuals to have paid insurance premiums for at least 12 consecutive months.
While this prolonged eligibility period aids in stabilizing the insurance pool, it poses difficulties for those who lose their jobs before completing the requisite duration.
Equity Concerns in Payouts: The absence of a federal minimum wage in the UAE complicates the fairness of the scheme’s payouts.
Advocacy organizations highlight that low-income workers, despite contributing the same amount to the scheme as their higher-earning counterparts, receive significantly smaller claims due to payouts being based on a percentage of the basic salary.
Employee Responsibility: Under the UAE unemployment insurance scheme, employees bear the burden of paying insurance premiums, with no contribution required from their employers.
Non-compliance and late payments incur penalties, with fines ranging from $108 for non-enrollment to an additional $54 after a 90-day grace period for overdue payments.
These fines are deducted from the employee’s salary or end-of-service pay, and non-compliance may lead to policy cancellation and difficulties in renewing work permits.
To Sum Up
Unemployment insurance plays a vital role in supporting individuals during periods of joblessness. It provides the necessary resources to help them navigate the transition between jobs and maintain financial stability.
Unemployment insurance is a crucial lifeline for those who lose their jobs due to circumstances beyond their control such as layoffs.
It serves as a temporary financial cushion that enables them to sustain themselves while actively pursuing new job opportunities.
This scheme extends its coverage across various sectors, encompassing both private and federal domains.
However, certain categories are exempt, including self-employed individuals, investors, domestic workers, and those employed on a contractual or temporary basis.
Despite challenges, the UAE’s unemployment insurance program offers significant benefits, contributing to social welfare and economic stability.
