New Unemployment Insurance Mandatory For UAE Employees
2nd January 2023
As of 1st January 2023, it is now mandatory for employees in the UAE to register for the country's new unemployment insurance scheme, as per Federal Decree-Law No. 13 of 2022. The purpose is to provide financial security to employees in the event of their unemployment, providing it is not due to disciplinary reasons or their own resignation, whilst they look for a new job.
Here's what you need to know about the new Involuntary Loss Of Employment (ILOE) scheme.
Who needs to register to the ILOE scheme?
The new scheme affects the following people:
UAE nationals working for the UAE government
UAE nationals working in the private sector (private mainland companies)
UAE residents working for the UAE government
UAE residents working in the private sector (private mainland companies)
Who is not eligible to register to the ILOE scheme?
The following people are not eligible to register:
Investors (owners of businesses in which they work)
Juveniles under the age of 18
Retirees receiving a pension who have rejoined the workforce
Employees working in free zones
What is the cost of registering to the ILOE scheme?
There are two ILOE plans which are dependent upon the employee's salary amount. Plan A is for employees earning a basic monthly salary of AED16,000 or less; whilst Plan B is for employees earning over AED16,000. Plan A costs AED5 per month + VAT; whilst Plan B costs AED10 per month + VAT. See UAE Involuntary Loss Of Employment Plans graphic, below.
Payments can be made monthly, quarterly, every six months or annually and are non-refundable in the event of the insurance certificate cancellation.
Employees are obligated to pay for their ILOE insurance for as long as their work permit is valid, even if a labour complaint is referred to the judiciary.
An employee who is paid on a commission basis and does not have a basic salary specified in their Ministry of Human Resources and Emiratisation (MOHRE) labour contract can choose their plan.
What compensation is provided by the ILOE plans?
In the event an employee is made redundant and needs to make a financial claim on their ILOE plan whilst they look for a new job, they can expect to receive a monthly payment of 60% of their average basic monthly salary, capped at a maximum monthly pay out of AED10,000 for Plan A holders and AED20,000 for Plan B holders, for a period of up to three months or until they secure a new job if it is within three months.
The monthly payment will be calculated upon the average basic monthly salary of the six months prior to the insured's unemployment. See UAE Involuntary Loss Of Employment Plans graphic, below.
Who manages the ILOE insurance?
Dubai Insurance, licensed by the UAE Central Bank, is authorized to issue ILOE insurance policies on behalf of the ILOE insurance pool, which at present includes the following insurance providers: Abu Dhabi National Takaful Insurance Company, Abu Dhabi National Insurance Company, Al Ain Ahlia Insurance Company, Emirates Insurance Company, National General Insurance Company, Orient Insurance Company, Orient Takaful Insurance Company and Oman Insurance Company.
How to register for your ILOE insurance plan
There are a total of eight different ways to register for ILOE, three of which are free.
FREE Ways to Register:
ILOE web portal (available in English, Arabic, Urdu and Hindi)
ILOE android app (download on Google Play)
ILOE IOS app (download on the iPhone App Store)
Additional ways to register, which incur extra service charges:
Al Ansari Exchange
Tawjeeh and Tasheel centers
Etisalat (coming soon)
uPay kiosks (locations) (At time of writing, the locations appear to be limited,with none in Ras Al Khaimah, Al Ain or Fujairah)
C3Pay Bank Apps and ATMS (locations)
I registered using the ILOE web portal. It was was free, quick and easy. It literally took no more than a couple of minutes. Here are the steps:
Go to the ILOE web portal
Input your Emirates ID number and mobile number
You will receive a four digit verification code by text to your mobile
Input the verification code where indicated on the web portal
A pop-up will appear confirming which plan is relevant to your personal salary information registered with MOHRE. Click to agree.
You personal details will appear (name, Emirates ID number, last four digits of your passport number, nationality, category within MOHRE, sector you work in, year of birth and gender). Check the box to confirm they are correct
Select the term you want (either 12 months or two years)
Select how you want to pay for your insurance policy (monthly, quarterly, every six months, annually or in full (if you opt for two years).
Review the terms and conditions and then click to pay.
You can pay using Samsung pay or by entering your credit card details.
You can enter your email address in a pop-up to have your policy details emailed to you upon completion of payment.
Upon successful processing of the payment the transaction details will be displayed and you will be redirected back to your details page on the ILOE web portal, where you will then be able to access your policy details and payment statement.
When to register for your ILOE insurance
UAE employees have until 30th June 2023 to register for ILOE insurance.
Any persons employed after 1st January 2023 have a four-month grace period in which to register for ILOE insurance, starting from either the date they arrived in the UAE or the date of their change of status visa.
How to make a claim
A claim can be made providing the terms and conditions of the insurance policy are met and:
a period of 12 months has passed since registering for the policy
no interruption to the insurance policy for more than three months.
payment compliance with agreed payment plan
proof that unemployment is not due to employee resignation
proof that unemployment is not due to disciplinary procedures
claim made within 30 days of unemployment date
no existing absconding complaints
the claim is genuine (not fraudulent or deceptive)
unemployment is not as a result of non-peaceful strikes
the claimant is legally resident in the UAE
the claimant has not taken up a new job
If the above is in order, the claimant needs to complete a Claim form and submit it to the Administrator (the relevant department at Dubai Insurance) within 30 days of being unemployed via the one of the following channels:
ILOE website www.iloe.ae
ILOE mobile app
ILOE call center: 600599555
The claimant must supply the following supporting documents:
Dismissal document indicating the date and reason for unemployment
Undertaking to provide a copy of the final judicial ruling in the event of a labour lawsuit
Any supporting documents that the insurer may request
How quickly will ILOE claims be paid?
Upon receipt of an eligible claim, payment will be made within two weeks.
What happens if an employee does not pay for ILOE insurance?
In the instance an employee fails to maintain their agreed payment schedule (e.g. monthly, quarterly etc.), and the payment remains unpaid for 90 days, their insurance certificate will be considered cancelled and they will be liable for fines and penalties according to the legislation in force at that time. Such non-payment will also result in the employee having an interruption to their insurance.
Click the link below to download the ILOE insurance policy terms and conditions for your reference and convenience.
Gateway Group's opinion on the new ILOE insurance for UAE employees
We see the introduction of this insurance as a further positive step in the numerous reforms the UAE government has made to attract and retain talent in the UAE.
For expatriates to live and work in the UAE, they need to have a residency visa and work permit. Until recently, if an expat lost their job, they had a grace period of just 30 days to either find and secure a new job or to leave the country. This changed in October 2022 with the grace period being extended to six months, giving expats a reasonable amount of time to find a new job, and the stability to make decisions rather than knee-jerk reactions.
By introducing the ILOE insurance scheme, employees who are made redundant will now have the added security of a financial blanket for three months whilst they look for a new job. For just a small monthly amount, the financial burden of losing a job will be replaced with peace of mind of getting a financial payout, if they should need it. It's rainy day money!
If you you have visa questions and would like to outsource your employee visa processing, speak to us at Gateway Group. Our team will be happy to assist you.
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With offices in Abu Dhabi and Dubai, Gateway Group helps international companies get registered to do business in the United Arab Emirates (UAE). We are the authority on business licenses and visas for expats in Abu Dhabi and Dubai.
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We value long-term relationships and our incredible client retention is one of our strongest assets, which is extremely rare in our industry.
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Written by Jenny Hunt
Founder, Gateway Group, Abu Dhabi & Dubai, United Arab Emirates
FORBES' Top 100 Most Influential Women in the Middle East