UAE Unemployment Insurance Scheme

In implementation of the Federal Decree Law No. 13 of 2022 concerning the Involuntary Loss of Employment, the Ministry of Human Resources and Emiratisation (“MoHRE”) has introduced the Involuntary Loss of Employment Scheme (“ILOE/Scheme”). This unique Scheme provides security for employees who lose their jobs due to reasons other than disciplinary action or resignation until they find a new job. The Scheme represents a significant step towards ensuring the well-being of workers in the United Arab Emirates (“UAE”) and provides a safety net for those who are unemployed due to economic downturns or company restructuring.

Objective of the Scheme

• Provide Income: To offer the insured income for a limited period during their unemployment.
• Enhance Competitiveness: To enhance Emirati cadres' competitiveness in the labour market and provide social protection to ensure a decent living until an alternative employment opportunity arises.
• Knowledge Economy: To achieve a competitive knowledge economy by attracting and retaining the best international talent.

Scope

The Scheme applies to all government and private sector workers. However, the following categories are exempt:

• Investors and business owners who manage their own businesses.
• Domestic workers.
• Employees on a temporary basis.
• Juveniles under the age of 18.
• Retirees receiving a pension and who have joined a new employer.
• Employees working in free zones.

Manner of Subscription

Eligible workers may subscribe to the Scheme using the channels provided by MoHRE. The available channels are:

• Direct Channels (Free of charge):
  • ILOE’s Portal.
  • ILOE’s Portal.
• Other Channels (Subject to additional service charge):
  • Bank ATMs & Kiosk machines.
  • Money exchange companies.

Contributions to be Made

All eligible workers must pay a monthly insurance premium based on their basic salary:

• Workers with a basic salary of AED 16,000 or less: AED 5 per month (AED 60 annually) (“Category A”).
• Workers with a basic salary exceeding AED 16,000: AED 10 per month (AED 120 annually) (“Category B”).

To be eligible for compensation, workers must have paid the monthly premium for at least 12 consecutive months. Premium payments can be made monthly, quarterly, half-yearly, or annually. Workers may also subscribe to additional benefits in coordination with the insurance company.

Compensation

Compensation includes:

• A maximum monthly limit of 60% of the average basic salary of the last 6 months prior to unemployment, not exceeding AED 10,000 for Category A, and AED 20,000 for Category B.
• Compensation will be provided from the date of job loss for up to 3 months or until a new job is found, whichever is earlier.
• Insurance providers must process claims in accordance with the insurance policy terms and the applicable legislations of the Central Bank of the UAE.

Suspension of Compensation

Eligibility for compensation may be lost under the following conditions:

• Dismissal from work for disciplinary reasons under UAE Labour Law.
• Fraud or deceit involved in the claim.
• The establishment where the worker is employed is fictitious.

Benefits of the Scheme

The Scheme offers several benefits, including:

• A financial safety net for unemployed workers, helping them support themselves and their families during unemployment.
• Improved morale for individuals who have lost their jobs, which can contribute to better talent retention in the UAE.

While the ILOE Scheme provides temporary support, it is essential for individuals receiving assistance to actively seek new employment and utilize job training or other resources available to them. This approach will help increase their chances of finding a new job and achieving self-sufficiency again.