Job Loss Insurance Scheme in UAE

UAE is transforming the social, economic, and governance of the country intending to attract new foreign talent. Also, provide required benefits and incentives to the wide expatriate base in the country. There is a Job Loss Insurance Scheme for Employees in the UAE Public and Private Sector applicable from 2023.

The announcement of Job Loss Insurance scheme, the introduction of 9% corporate tax, long-term residence, and a host of residence visa and employee visa changes, etc., are all paving the way to a better future for global talents in the country.

Job Loss Insurance Scheme in UAE – Key Highlights

The Job Loss insurance scheme is aimed to strengthen the labor market’s competitiveness and providing a social umbrella for workers. Also, it focuses on providing a stable working environment for all. UAE workers in the public and private sectors will enjoy unemployment insurance from 2023.

The UAE Cabinet approved the unemployment insurance scheme to provide unemployed individuals with income support for a limited period.

There are certain exemptions in the scheme and those are the investors, domestic workers, workers with temporary contracts, people under the age of 18, and retired persons with a pension who joined a new job.

How the Employer Can Apply for the Job Loss Insurance Scheme in UAE?

As per the source u.ae, the employer can opt for buying the Unemployment/Job Loss insurance scheme for their employees.

Previously for the mainland companies, there was a bank guarantee of AED 3000 submitted to the Ministry of Human Resources and Emiratisation. The Insurance coverage will be about 60% of the basic salary up to a maximum of AED 20,000 for a limited period.

The Job Loss Insurance Scheme in UAE aims to protect the employee from the company’s bankruptcy or failure in providing the entitled employee benefits.

Cost of the Job Loss Insurance Policy

The Job Loss Insurance policy costs AED 60 per year, per employee. Depending on the visa validity, the premium has to be paid to the insurance company.

How to Enroll in the Job Loss Insurance Policy?

The Job Loss Insurance Scheme in UAE Can be enrolled in two ways:

1. For Employees Currently in Service

Employers have the option to either change to a Job Loss insurance system or retain the bank guarantee scheme for their current employees.

Also, the current employees can be moved to a Job Loss Insurance scheme only after renewing their permits.

2. For New Employees

The employer can either submit the bank guarantee on behalf of the employee for a recruit or opt for the unemployment insurance scheme that cost AED 120 for 2 years.

Unemployment/ Job Loss Insurance Policy Coverage and Limits

The Unemployment/ Job Loss Insurance will cover certain benefits entitled to the employee. In case the company files for bankruptcy and fails to settle the employee dues, the new policy will be helpful.

The new scheme will support employees against the denial of the benefits such as:

• Unpaid dues
• End of service benefits
• Vacation Allowance
• Overtime Allowance
• Unpaid wages
• Return Air Ticket
• Work Injury Compensation

Hence, in a nutshell, Job Loss Insurance is a safety net for everyone who works in the country. The final law and regulations for the unemployment insurance scheme will be announced later.

The Involuntary Loss of Employment Scheme (ILOE) – Steps to Apply

The job loss Insurance or the Involuntary Loss of Employment Scheme (ILOE) is formulated to provide an incentive for employees who lost their job due to unforeseen circumstances such as company bankruptcy.

The employees will benefit by receiving up to 60% of their average basic salaries for up to 3 to 6 months. The scheme will be active, provided the premium for one whole year is paid up in full.

There are various ways to apply for the Involuntary Loss of Employment Scheme (ILOE). The applicant can submit their details through the following platforms.

1. The Involuntary Loss of Employment (ILOE) Scheme Website

2. The ILOE smart application

3. Bank ATMs and approved Kiosk Machines

4. Business Centers

5. Money Exchange companies in UAE

6. Telecom Providers – Du, Etisalat

Applying for the Job Loss Scheme is a relatively straightforward process and can be easily done via the ILOE website. There are a few documents to be kept ready by the applicant before they start the process.

For applicants working in the Mainland of UAE, they will have to require the labour card number and Emirates ID. There are a few more details to be provided, such as mobile number, full name, date of birth, etc.

For employees working in Free Zones, they must select the ‘Non-Registered MOHRE’ option and fill in their credentials as per the form fields.

The payment plan must be selected as per the basic salary range, and the mode of payment is to be selected. The frequency of the payment is set as Monthly/Quarterly/half-yearly/ Annually. The applicant can pay the amount using a credit or debit card.

Additional Visas Information for Employees in UAE

The new reforms are aimed at speeding up the hires as well as the quality of the recruits. It will make the local job market more competitive.

Here are five changes that employees in UAE need to know.

1. Longer Grace Period after residence Expiry

Residents can avail of a longer, flexible grace period that allows them to stay in the country for up to 6 months after the cancellation or expiry of their residence permit.

2. 6 months stay outside of UAE for Golden Visa Holders

The Golden Visa holders can stay outside of UAE for any period without affecting their residency. There is no six-month limit to the stay outside of the UAE.

3. Green Visa

5 Year residency is granted to skilled professionals, freelancers, investors, and entrepreneurs. It is a self-sponsored visa and the recipient can enjoy all residency benefits in UAE.

4. New Type of Visit Visas

The scope of new visit visas has been expanded. Some of the visit visas do not need a sponsor now. All entry visas are available as single or multiple entries that can be renewed for a similar period. They are valid for 60 days from the date of issuance.

There are new visit visa categories for finding a job, coming for business opportunities, visiting friends and relatives, studying, etc.

There is a multiple-entry tourist visa without a sponsor that will allow the person to stay in UAE for up to 90 days. it can be extended for a similar period up to 180 days in a year.

5. Family Visa Changes

UAE residents can now sponsor sons until they are 25 and there is no limit for unmarried daughters. Children of determination are granted a residence permit regardless of their age.

To know more about the new Employee Insurance Scheme and Changes to the UAE Residence Visa, talk to our expert Business Consultants right away!

Contact Us: Aurion Business Consultants