News & updates

This is part of a series of publications on the Employment in the UAE, on a general federal level and in relation to specific free zones, to give employers a better understanding on their ongoing statutory obligations vis-à-vis their employees.

Have you registered for the Unemployment Insurance Scheme?

The UAE Unemployment Insurance Scheme for Emarati and foreign employees (the “Scheme”) came into effect on 1 January 2023 and became mandatory for all employees in the UAE, with some exceptions. It is estimated that 7 million employees in the UAE subscribed to the Unemployment Insurance scheme since last year. The new rules are applicable for free zones (such as DMCC) since May 3^rd, 2023. The social security program, called the Involuntary Loss of Employment Insurance Scheme serves as a safety net, offering financial support to those facing unexpected job loss.

It is mandatory for all employees from the public as well as private sectors to sign up for the Scheme in accordance with Federal Decree-Law No. 13 of 2022. Employees who fail to subscribe will have to pay penalties. If you have not subscribed yet please find below detailed information about the Scheme and the required procedures to subscribe, and feel free to reach out to us for further details and information.

The UAE Unemployment Insurance Scheme:

Employees of all nationalities, including Emirati nationals, who work in the UAE, are legally required to subscribe to the Scheme. The Scheme covers all employees working in the UAE, including those working in Free Zones (such as DMCC). Those exempted from subscribing to the Scheme are company investors, owners of facilities, domestic helpers, employees with a temporary employment contract, juveniles under 18 years of age, and retired persons who receive a retirement pension.

Cost of the Scheme:

The cost of the Scheme is divided into two categories:

       1. Category A (“Category A”): The first category covers employees who earn a basic salary of AED 16,000 or less per month has been set at AED 60 annually 

           (plus VAT).

       2. Category B (“Category B”): The second category is for employees who earn a monthly basic salary of more than AED 16,000, will pay AED 120 a year

           (plus VAT).

On January 2024, Dubai Insurance updated their terms and conditions for subscription payments:

     *   Payments will no longer be accepted in monthly or quarterly installments for new policy subscriptions. New subscriptions must be paid in full.

     *   All existing subscriptions will be renewed for one year and must be paid in full.

How to subscribe to the Scheme:

Employees can currently subscribe to the scheme through the Dubai Insurance Company, via the following options:

     *   ILOE website and its smart application (https://www.iloe.ae/#).

     *   Bank ATMs and kiosks.

     *   Business service centers.

     *   Money exchange centers.

     *   Telecommunication bills (e.g., Du and Etisalat) SMS.

How does it work?

In the unfortunate incident of loss of their job, the employee (subscriber to the Scheme) can file a claim with the insurance provider for the compensation entitled to them. Insured employees who lose their jobs must submit their claims through three approved claim channels: the insurance pool’s e-portal, smart application, or call center within 30 days from the date of their unemployment.

Criteria for eligibility:

These employees, who are subscribers to the Scheme, shall be eligible to receive compensation only if they have satisfied the following criteria:

     *  The employee must have had to subscribe to the Scheme for a minimum subscription period of Twelve (12) consecutive months;

     *  The employee must have paid all the insurance premium payments;

     *  The employee must prove that the reason for unemployment is not due to resignation;

     *  The employee must not have been dismissed for disciplinary reasons under the Labour Relations Law and the Human Resources Law of the 

         Federal Government in addition to any applicable legislation;

     *  The employee must submit the claim within 30 days from the date of loss of the working relationship;

     *  The employee should not have an existing complaint against him related to the absence from work;

     *  The employee shall not be entitled to compensation if there has been fraud or deceit involved in his claim or if their place of work is fictitious;

     *  The employee’s loss of employment should not be the result of non-peaceful labour strikes or stoppages, whether they result in harm or not; and

     *  The employee must be a legal resident or national of the UAE.

Payout:

If the employee has satisfied the above criteria, he shall be eligible for compensation for a maximum of three (3) months from the date of their job loss in accordance with the following table:

Last date of registration to the Scheme:

The deadline for registration for the Scheme was 30 June 2023. Employees who did not subscribe to the job loss insurance scheme by 30 June 2023 may face penalties.

Employees who began their employment after February 28, 2023 must register within four months of the start date of employment.

Penalties:

Employees who fail to subscribe to the scheme by the deadline or fail to pay the premiums may be disqualified from receiving unemployment insurance benefits. In addition, non-compliance can result in fines of:

  –  AED400 for failure to subscribe to the scheme

  –  AED200 for failure to pay the premiums for more than three months

These penalties can be deducted by the authorities via various means, e.g. from salary account, end of service benefits, among others.

You may follow the below link for instructions on how subscribe to the Scheme: https://www.iloe.ae/#