We all know that the Emirates keeps on facilitating businesses around the globe with tax-friendly environments and huge incentives. Recently, on January 1st 2023 UAE government took a very good initiative of job loss insurance for employees to retain and facilitate top talent.
However, what is unemployment insurance in UAE, how it works and who can avail of it are still unknown to many.
So, let’s dive deeper and resolve all these concerns.
What Is a Job Loss Insurance Scheme in UAE?
In UAE, job loss insurance is also known as ILOE (Involuntary Loss of Employment ) or unemployment insurance.
It is a type of insurance policy designed to provide financial support to individuals who lose their jobs due to factors beyond their control. It could involve company downsizing, restructuring or even employer termination. The main aim is to offer temporary financial assistance to the unemployed person so that he can cover living expenses while looking for new employment.
Under this scheme, you can receive up to 60% of your average basic salary for the last 6 months (if unemployed). However, it is only valid for a maximum of 3 consecutive months.
There will also be a cap on the monthly benefit amount, which depends on your salary category. The total benefit amount you can receive over your entire career in the UAE is capped at 12 months of payments.
Eligibility:
Generally, every employee in the UAE can get job loss insurance. However, there are a few exceptions to the rule. For instance, investors, business owners, Domestic workers, Temporary workers, and Employees below 18 years old are not eligible to apply.
You also need to provide proof of employment in a UAE company to avail of ILOE. Not only this but before you make a claim, it’s also necessary that you are employed with the same employer for more than 12 months. With that, proof of citizenship or you can also say a residency visa is also a must for this insurance scheme.
Remember, if you have moved to any other country to get a new job or for any other reason, you are also not eligible to apply for the claim.
UAE Job Insurance Plans:
The ILOE scheme does categorize employees into two groups based on their salary.
| Category A | Category B | |
| Salary Range (AED per month) | Up to 16,000 | Above 16,000 |
| Maximum Monthly Benefit (AED) | 10,000 | 20,000 |
| Employer Premium (AED per month + VAT) | 5 + VAT | 10 + VAT |
It means if you are earning a basic salary of up to 16000, then a payment of less than Dh 5 per month or Dh 60 annually will be deducted. On the contrary, if you are earning more than this, then an amount of Dh 10 or 120 annually will be deducted, which will be compensated later when the job is lost.
Compensation Claim :
Suppose you lose your job due to your employer’s termination. Now, you can claim a percentage of your previous salary. This is to help you financially while you search for a new job. Usually, the compensation amount will be 60% of your average basic salary over the most recent 6 months before losing your job.
Remember, there’s a maximum limit on the monthly benefit you can receive. This limit depends on the salary category assigned to you (whether Category A or B).
To claim your compensation, all you need is to visit the ILOE website, click on submit claim and process with the necessary steps such as phone number, emirates ID, etc.
Claiming Limit:
You have 2 options: consider claiming compensation.
First is that, you can receive benefits for a maximum of 3 consecutive months after each job loss. Conversely, the total compensation you can receive throughout your entire working career in the UAE is capped at 12 months of payments, regardless of how many times you claim.
Subscription Channels:
You don’t need to subscribe to the ILOE scheme directly. Your employer is responsible for registering you and paying the premiums on your behalf, as it is mandatory.
Payment Option:
The cost of the ILOE scheme is minimal for employees. The premium amount depends on your salary bracket and typically falls between AED 5 and AED 10 per month, with a small VAT added on top. Your employer deducts this from your salary along with other social security contributions.
Monetary Benefits of Job Loss Insurance:
- When you lose your job through termination (not including quitting or getting fired), ILOE provides a safety net as you can receive up to 60% of your average basic salary for the past 6 months.
- The compensation is capped, with a maximum benefit depending on your salary category, which provides a significant financial cushion during the job search.
- While it’s not a permanent solution, ILOE still offers benefits for a maximum of 3 consecutive months per claim.
- The program is incredibly affordable for employees.
How Does it Work?
The good news is that you don’t actually need to subscribe to the job loss insurance scheme in the UAE (officially called the Involuntary Loss of Employment – ILOE scheme) yourself. It’s a mandatory program for most employees in the UAE.
Here’s how it works:
Your employer is responsible for registering you in the ILOE scheme and paying the monthly premiums on your behalf. These are typically deducted from your salary along with other social security contributions.
So, as long as you fall under the eligible employee category, you’ll be automatically enrolled by your employer. There’s no separate application process for you.
If you lose your job due to employer termination, you can file a claim within 30 days from the ILOE website.
FAQ:
Who pays for the insurance coverage?
Your employer pays for the ILOE scheme on your behalf. They’re responsible for registering you and making the monthly premium contributions. These premiums are minimal, typically ranging from AED 5 to AED 10 per month, with a small VAT added, depending on your salary bracket.
Is it Mandatory to avail?
Yes, the ILOE scheme is mandatory for most employees in the UAE.
Where can I find more information?
You can find more details about this on ILOE’s official site, which is https://www.iloe.ae
