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 Involuntary Loss of Employment Scheme (“ILOE/Scheme”), which being a unique Scheme provides security for employees who lost their jobs due to reasons other than disciplinary action or resignation until they find a new job. This scheme is an important step towards ensuring the well-being of workers in the United Arab Emirates (“UAE”) and ensuring that they are able to support themselves and their families during times of unemployment. The Scheme is a social insurance program that provides a safety net for workers who lose their jobs due to economic downturns or company restructuring. It provides a temporary income to workers who are unable to find employment and helps them get back on their feet until they are able to find a new job.

Objective of the Scheme

• a. provide the insured with income for a limited period of time during his/her unemployment
• b. Enhancement of Emirati cadres' competitiveness on the labour market and the provision of social protection to ensure their continued decent living until an alternative employment opportunity become available.
• c. achieve a competitive knowledge economy by attracting and retaining best international talent.

Scope

As per the Scheme, the Scheme applies to all government and private sector workers. The following categories are however, exempt from the scope of application:

• a. Investors, business owners who own and manage their business themselves.
• b. Domestic workers.
• c. Employees on a temporary basis.
• d. Juveniles under the age of 18.
• e. Retirees who receive pension and have joined a new employer.
• f. Employees working in the free zones.

Manner of subscription:

All eligible workers may subscribe to the Scheme by using the channels provided by the MoHRE from time to time. Presently, the following channels are available for subscription:

Direct channels (Free of charge, without any additional cost):

• a. ILOE’s Portal.
• b. ILOE’s Portal.

Other channels (Subject to additional service charge upon subscription):

• a. Bank ATMs & Kiosk machines.
• b. Bank ATMs & Kiosk machines.
• c. Money exchange companies.
• d. Money exchange companies.

Contributions to be made:

All eligible workers are required to pay a monthly insurance premium basis their present basic salary.

All workers with a basic salary of AED 16,000 or less are required to pay a monthly insurance premium of AED 5, i.e. AED 60 annually (“Category A”).

Workers with a basic salary exceeding AED 16,000 will need to pay AED 10 per month, i.e. AED 120 annually (“Category B”).

To be eligible for the compensation, the worker must have been paying the monthly premium for at least 12 consecutive months.

The worker may choose to pay the premium on a monthly, quarterly, half-yearly or on an annual basis.

The insured worker may, in coordination with the insurance company, subscribe to additional benefits in addition to the above basic package.

Compensation:

A Maximum Monthly Limit of 60% of Basic Salary/Wage (calculated based on the average Basic Salary/Wage of the last 6 months prior to unemployment) shall be payable to the eligible worker subject to the Maximum Monthly Limit shall not exceeding AED 10,000 (Ten Thousand Dirhams) monthly for Category A, and no more than AED 20,000 (Twenty Thousand Dirhams) monthly for Category B.
Further, the compensation will be paid from the date the worker loses their job and will be paid for 3 months or until he/she finds a job, whichever is earlier.
Further, the compensation will be paid from the date the worker loses their job and will be paid for 3 months or until he/she finds a job, whichever is earlier.
The insurance providers must process the insurance claims in accordance with the terms and conditions of the insurance policy and the applicable legislations of the Central Bank of the UAE.

Suspension of Compensation:

The insured worker will lose his/her eligibility for compensation if any of the following situations occur:

• a. he/she was dismissed from work for disciplinary reasons under the UAE’s Labour Law in the private sector (Federal Decree Law No. 33 of 2021 Regarding the Regulation of Employment Relationship and its amendments) and the Human Resources Law in the federal government, in addition to any applicable legislations.
• b. there has been fraud or deceit involved in his/her claim.
• c. the establishment where he/she works is fictitious.

Compensation:

The Scheme has several benefits for workers in the UAE. It provides a financial safety net for those who become unemployed and are unable to find a new job immediately. This means that workers are able to support themselves and their families during this time, rather than having to rely on savings or other forms of financial assistance.
The Scheme can also improve morale for individuals who have lost their job, as it helps them feel supported and less alone during this difficult time. This may in turn improve retention of talent in the UAE, as it provides support to individuals who may have otherwise left the country due to job loss, which is also one of the stated objectives of the Scheme.
Overall, ILES has been successful in providing a safety net for UAE citizens who have experienced involuntary job loss. However, it is important to note that the program is not a long-term solution and is intended to be a temporary form of support. It is important for individuals who are receiving assistance through ILES to actively seek new employment and to take advantage of any job training or other resources that are available to them. By doing so, they can increase their chances of finding a new job and becoming self-sufficient again.