On job losses, UAE employee insurance scheme payout effective only from January 2, 2024

Dubai: Job loss claims are starting to come through under the UAE’s landmark ‘Involuntary Loss of Employment’ scheme launched on January 1. But these will continue to be rejected until the first 12 months of the policy is complete. The number of policyholders is close to hitting the 3.4 million mark, and the speed of new signing ups will pick up as the deadline of June 30 looms.

“The first payments against a job loss will effectively start from January 2, 2024 - all submissions until then will not be covered,” said Dana Kansou, Manager of Strategic Partnerships in Dubai Insurance. Dubai Insurance is the manager of ILOE Insurance Pool.

“The insurance pool has on file applications from those who had taken the policy since January 1, 2023, but these were rejected.

As per the policy terms, there cannot be any special exemptions that can be made to the terms of the policy. It’s a fact of life in the insurance industry that the last day of a policy coming into effect is the most important.

- Dana Kansou

The take up rates for the job loss policy - part of reforms the UAE government has been bringing into the employment space - has been sizeable, with the latest tally closing in on 3.4 million policyholders, the majority, of course, coming from the private sector. All those employed in the UAE, including citizens, need to have signed up for the scheme.

The formal cut-off date to do so is June 30, and individuals failing to do so will mean penalties being imposed.

Two sets of disbursals

For individuals earning a basic salary of Dh16,000 or less, in the event of a job termination, he/she will get up to Dh10,000 for up to 3 months. The policy on this would be Dh5 a month. On basic salaries of over Dh16,000, the payout for a job loss would be up to Dh20,000 for the same 3-month term.

Just sign up

To be registered for the policy, the UAE has provided multiple channels, whether that’s through the dedicated website and app, the Al Ansari exchange outlets, bank apps, business centers and kiosks under Upay and ATMs (through C3 Pay). There has been talk of the number of payment channels being added to, but there has been no confirmation from the authorities.

“There are no plans to bring on additional benefits at the moment,” said Dana. “What we have been emphasising remains - sign up to the policy, and if the payments are done monthly, then make sure to do so.

“Any payment miss by the individual risks the chances of a policy lapse if the payment is not made within 90 days of the due date. That would be quite unfortunate. Policyholders must keep in mind that these are linked to the status of their Emirates ID and not to the labour contract.”

Eligible (ex-)employees will get cash compensations of 60 per cent of their average basic salary in the last six months prior to the job loss.

Insurance industry sources say that there is still unawareness running among some policyholders that their chances of a payout on a loss of job starts from the day they make the payment. “Those who prefer to make monthly payments towards their policy are the most vulnerable,” said an insurer.

“The UAE job market is running strong, those who have lost their positions stand a better chance of getting a new one. But they should waste no time in getting the ILOE.”

The policy is linked to the individual’s Emirates ID. On any change in job status, the system will fetch the new employer’s name, basic salary details to check the category.

More job-linked insurance

According to Avinash Babur, CEO of InsuranceMarket.ae, the job-loss scheme sets up the foundation for more policies coming into play related to the employment space.

“Now that the public is beginning to understand the role and importance of unemployment insurance, higher levels of cover for specific risks are expected to be offered by the private market,” said Babur.

In particular, the need lies in providing cover to protect employees against the risk of them not being able to meet their obligations - say, on property mortgages or auto loans as a result of involuntarily losing their job.

- Avinash Babur

That’s for sure. Along with the more fine-tuning on gratuity or pension payments, job loss schemes will be among the most carefully watched by UAE residents and citizens.