UAE: 6 things to know about the mandatory unemployment insurance scheme
Don’t wait to subscribe, as it will affect how early you would be eligible for the payout
Dubai: While subscription to the UAE’s new unemployment insurance scheme is mandatory, private sector and federal government employees now have up till October 1 to sign up for the Involuntary Loss of Employment (ILOE) insurance.
But it is best not to wait until the deadline as how early you subscribe will affect how soon you will be eligible to receive the payout in case you lose your job. In a post on its official social media channels, Dubai Insurance, which is the company that manages the ILOE Insurance Pool, gave employees three reasons that they should subscribe to the insurance scheme. These are:
#1: It's mandatory - The UAE government has made unemployment insurance mandatory for all eligible employees as of January 1, 2023.
#2: Compensation - By subscribing to ILOE, you will be eligible for up to 60 per cent of your basic salary in compensation in the event of an involuntary loss of employment.
#3: The sooner the better - You need to have been subscribed to ILOE for 12 consecutive months to be eligible for compensation.
Here is a detailed look at six points to keep in mind when it comes to the insurance scheme.
1. You need to be subscribed for one year to benefit
As per the announcement made by the Ministry of Human Resources and Emiratisation (MOHRE), to be eligible to receive compensation under the insurance scheme, you must complete a minimum of 12 consecutive months in your previous job, calculated from the day you subscribed to the insurance scheme. So, the earlier you subscribe to the insurance, the sooner you would be eligible for a payout.
2. You will be able to get 60 per cent of your basic salary for three months
As per the details announced by MOHRE, in case an employee is eligible for receiving the compensation under the new scheme, he or she will receive 60 per cent of their basic salary.
Your basic salary is different from your overall salary, which you may receive each month, or based on a frequency decided upon between your employer and you.
There is also an upper limit to this payout, which you should keep in mind. As per the regulations, employees who fall under Category A (basic salary up to Dh16,000) will receive 60 per cent of their basic salary, up to Dh10,000.
If you fall under Category B (basic salary Dh16,000 and above), you will again receive 60 per cent of your basic salary, up to Dh20,000.
However, many employment contracts may provide additional allowances for housing, transport or other incentives. Your total salary includes the basic wage as well as these allowances, which are provided to meet the cost of living or as a percentage of sales or profits earned by the worker.
It is important to note that your gratuity is also calculated based on your basic salary.
3. It is not applicable if you resign
Another key point to keep in mind is that this insurance has been implemented to provide social support to employees who may lose their jobs due to reasons beyond their control. According to MOHRE, there will be no compensation for workers:
• Dismissed for a disciplinary reason.
• Who have resigned from their job.
• Who have left the UAE
• Who have joined a new job.
4. If you find a new job within three months, you will not continue to receive the payout
Article 5(4) of Federal Decree-Law No. 13 of 2022 Concerning Unemployment Insurance Scheme, states: “During the period of compensation entitlement, the payment of compensation shall cease if a worker or employee is hired by another employer.”
5. It is applicable only if you are staying in the UAE
Article 9 of Cabinet Resolution No. 97 of 2022 Concerning the Procedures and Controls for Implementing Unemployment Insurance Scheme lists out certain conditions that need to be met for the insured individual to benefit from the insurance coverage. Clause 9 of the Article states: “It is necessary for the insured to have a legal residence in the country.”
6. Your claim has to be honoured in two weeks
Article 13 of the same Cabinet Resolution states: “In the event that the insured is entitled to compensation, the service provider is required to make payment within two weeks of receiving the claim that is consistent with the established eligibility criteria, provided the service provider transfers the compensation to the insured's account in the manner determined by the insured ….”