Learn More about The Involuntary Loss Of Employment Insurance in the UAE

Losing a job suddenly can give rise to a number of unanticipated problems, and the situation becomes worse if you are the only earning member in the family. Thanks to the newly introduced Unemployment Insurance Scheme, employees in the UAE who lose their jobs can avail a monthly payment until they find a new job.

Regulated by the Federal Decree-Law No. 13 of 2022, on the Involuntary Loss of Employment (ILOE), the insurance scheme is aimed to provide a certain amount as income to a person who has lost his/her job in the UAE. It is a welcoming step for the workforce in the country, to afford them protection and support in times of unemployment due to reasons such as layoffs or firing.

The highlights of this scheme are given below.

Eligibility: The scheme is applicable to UAE citizens as well as residents, engaged in the federal government sector or the private sector. To claim the insurance scheme, an employee has to fulfill the following conditions:

1. He must have completed 12 consecutive months in the previous job starting from the day of subscription to the scheme
2. He must not have been dismissed from employment because of disciplinary actions under the laws of the UAE
3. He must not claim the scheme through fraudulent means, and the work done by the employee should not be fictitious

If the employee joins another job during the compensation period, he will not be entitled to it anymore.

Exceptions: The insurance scheme does not apply to the following categories of employees:

1. Business owners owning and managing entire businesses
2. Domestic workers
3. Employees under temporary contracts
4. Juveniles under 18 years of age
5. Retirees receiving a pension who have joined a new job

Amount and Benefits: The amount to be paid to an employee in furtherance of this scheme will be calculated on a monthly basis, with the rate of 60% of the basic salary, capped at AED 20,000. The amount will be paid for three consecutive months from the date of losing the job. Additionally, the insurer may provide extra benefits under the scheme for the employee. The payment under this scheme will not bar the employee from any other compensations which he is entitled to receive.

Costs: The Ministerial Decision No. 604 of 2022 On the Unemployment Insurance System, under Article 3, lays down the amount to be paid as premium under the Unemployment Insurance Scheme.

Employees getting a basic salary of AED 16,000 or less are required to pay a premium of AED 5 per month, while employees earning a basic salary of more than AED 16,000 a month are required to pay AED 10 a month. The amount is kept minimal to ensure compliance with the scheme by employees in all sectors.

Penalties: It is to be noted that the employees covered by this scheme are mandated to avail the insurance before 30th June, 2023, as per Articles 9 and 11 of Ministerial Decision No. 604 of 2022, otherwise they will be liable to penalty of an amount of AED 200 or 400, depending upon the premium amount contributed.

Awatif Mohammad Shoqi Advocates & Legal Consultancy is a full-service law firm in UAE committed to delivering sound judgment to its clients on their most difficult and important matters.