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Employees in the UAE should enroll in the unemployment insurance scheme as early as possible, as last-minute delays caused by certain technical issues may result in penalties.
The UAE implemented the Mandatory Involuntary Unemployment Scheme (ILOE) on January 1, 2023, which provides guarantees for employees who lose their jobs for reasons other than disciplinary action or resignation to find new jobs.
Employees working in the private sector, federal government and free zones must subscribe by June 30 to avoid a Dh400 fine. Failure to pay the premium will result in an additional penalty of Dh200.
However, instead of mandating unemployment insurance for employees, companies are required to encourage employees to participate.
The human resources department of the local company said that employees faced some problems in subscribing to the insurance plan, which caused a short delay in the completion of the transaction.
A human resources executive said staff contacted them when they were unable to subscribe because passport or work permit details were not updated in the government system.
“When you apply for unemployment insurance, if your passport details are not correct in the current contract, it won’t go through. So we make a request to the immigration department to update the information. Then they can buy insurance,” said an executive express.
Importantly, the subscription journey for employees working in free zones is different than for private and federal government employees.
When subscribing to the plan, HR receives a few daily requests about minor technical issues.
“Therefore, employees are advised to join the ILOE program as soon as possible. What if they subscribe a day or two before the deadline and there are technical issues? Send an email, remind them and ask them to do what is necessary,” the executive said.
Under the ILoE scheme, employees with a basic salary of less than Dh16,000 are required to pay Dh5 per month or Dh60 per year, plus VAT as a premium. They will be compensated with 60% of their average base salary (last six months before unemployment), up to a maximum of Dh10,000 per month for a maximum of three consecutive months. Under the scheme, employees with a base salary of more than Dh16,000 are required to pay a premium of Dh10 per month or Dh120 per annum + VAT.
Since January 2023, more than 2 million people have subscribed to the program.
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