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UAE: No new work permit till job loss insurance fines are cleared; penalties can be deducted from salary, gratuity

KT Explains: All your questions answered as deadline for getting low-cost job security net weeks away

Published: Mon 11 Sep 2023, 6:00 AM

Updated: Mon 11 Sep 2023, 11:38 PM

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The extended deadline to sign up for the UAE’s mandatory job loss insurance scheme is just weeks away. Employees working in the private sector, federal government departments and free zones have to subscribe to the Involuntary Loss of Employment (ILOE) scheme before October 1, failing which fines will apply.

Close to 5 million people have already subscribed to the low-cost job security net that offers financial support for a limited period.

Here is your ultimate guide to the scheme, eligibility, how to pay, fines and more.

Is it mandatory to subscribe to the ILOE?

Yes, it is. Employees will be fined for failing to subscribe to it.

Can employees who are not registered with the Ministry of Human Resources and Emiratisation (MoHRE) register?

According to an alert posted on the ILOE website, companies that are not registered with the MoHRE “can subscribe on behalf of their employees”. They would need to submit their trade licence along with a request letter to companyreg@iloe.ae

What are the related penalties?

— If an employee does not subscribe to the scheme before the October 1 deadline, a Dh400 fine will be imposed.

— If an employee subscribes to the scheme but fails to pay the premiums for more than three months from the due date, the insurance certificate will be cancelled, and a penalty of Dh200 will be imposed.

How will the fines be collected?

Employees must pay the fines. If they fail to do so for three months from the due date, the amount will be “deducted from their wages through the Wage Protection System, end-of-service gratuity, or any other alternative method deemed acceptable” by the MoHRE, according to a ministerial resolution.

Will non-payment of fines affect one’s job prospects in the country?

Yes. As per a ministerial resolution issued in this regard, the “employee will not be eligible for a new work permit until all due fines are paid within the specified timeframe”.

Who are exempted from the scheme?

According to the ILOE website, these are the exempted categories

— Investors (owners of companies they work at)

— Domestic helpers

— Temporary contract workers

— Juveniles under the age of 18

— Retirees who are entitled to a pension and joined a new job

How do employees subscribe to the scheme?

— Free channels (no service charges):

  • ILOE website and app.

— Other channels

  • Al Ansari Exchange
  • Business centres Tawjeeh and Tasheel
  • Etisalat (coming soon)
  • Kiosks (upay and MBMEPay)
  • Botim (coming soon)

How does the scheme work?

Employees have to pay an ultra-low-cost premium to subscribe to the ILOE. If they lose their jobs due to reasons other than disciplinary action or resignation, they will receive financial support for up to three months.

If I subscribe to the scheme this month and lose my job weeks later, will I get the compensation?

No. Employees become eligible for compensation only if they are subscribed to the scheme for at least 12 months. Subscriptions to the scheme began in January 2023. If a person subscribed to it in January, he/she becomes eligible for compensation only in case of job loss after December 2023. If a person subscribes to the scheme this month (September), he/she becomes eligible only after 12 months from September.

What are the two ILOE plans and their benefits?

— Category A: Basic salary Dh16,000 or below

Cost: Dh5 + VAT per month

Compensation Benefit: 60% of basic salary; up to Dh10,000 per month

— Category B: Basic salary above Dh16,000

Cost: Dh10 + VAT per month

Compensation benefit: 60% of basic salary; up to Dh20,000 per month

NOTE: Insurance premiums can be paid monthly, quarterly, semi-annually or annually.

For how long will the benefits be offered?

For up to three months.

Under what circumstances will the benefits be ceased?

  • If the beneficiary gets a new job.
  • If the beneficiary leaves the UAE.

What are the conditions to claim compensation?

  • Minimum subscription period of 12 months.
  • Payments must have been made on time.
  • The claimant must not have resigned from employment.
  • The subscriber should not have been dismissed from work for disciplinary reasons.
  • The claim must be submitted within 30 days from the date of termination or the settlement of the labour complaint referred to the judiciary.
  • The employee must not have an existing absconding complaint.

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