Involuntary Loss of Employment Insurance (ILOE) in the UAE

Although many Western nations have a dedicated Involuntary Loss of Employment Insurance (ILOE) scheme, the United Arab Emirates has a number of safety nets and laws in place to assist those who lose their jobs involuntarily. 

About the Involuntary Loss of Employment Scheme

• With the introduction of Federal Decree Law No. 13 of 2022 about the Involuntary Loss of Employment (ILOE), this special scheme offers security to workers who were let go for reasons other than resignation or disciplinary action until they secure employment elsewhere. Up to 60% of their average basic salary for the six months preceding to their termination of employment will be paid out as a monthly cash benefit to the qualified employees.
• Cash benefit shall be provided for maximum 3 consecutive months for a claim only for the workers who pay the monthly premium for at least 12 consecutive months.

This guide will dissect the many components involved:

Labour Law Protection

Under the United Arab Emirates Labor Law, there are stringent regulations that govern the termination of employment contracts without a valid reason. It is not acceptable for an employer to just fire an employee without providing a good cause. Included among the justifications for termination are:

• In the event that the contract is for a fixed duration and is not renewed, the contract will expire.
• Problems with Performance: Poor performance that has been documented and demonstrated after warnings.
• Serious misconduct, such as theft, violence, or violation of confidentially, is referred to as an example of misconduct.
• If an employee's position is no longer necessary as a result of a restructuring of the business, this is known as redundancy.

Severance Pay

Employees who are fired without cause may be eligible for severance pay depending on a number of variables, including their income and length of service. The particular computation differs based on the type of termination.

Compensation Benefits

• The monthly payment is equal to 60% of the average basic salary for the six months immediately preceding the involuntary termination of employment.
• For Category A: Maximum Claim Benefits : 10,000 AED per month
• For Category B: Maximum claim Amount : 20,000 AED per month
• Maximum compensation for any one claim: 3 consecutive months
• Maximum Period of Benefits: Regardless of the quantity of claims filed, the total claim payment for the insurance period and the insured's whole employment tenure in the United Arab Emirates cannot exceed 12 monthly benefits.

Obtaining your ILOE certificate is straightforward with the digital resources available. Let's say that even though you are registered in the insurance plan, your Certificate of Insurance has not yet arrived. If so, you can proceed with the process by following these instructions.

1. Navigate to the ILOE portal or utilise the mobile application.
2. You will be prompted to select your specific sector, ensuring that the services provided are tailored to your industry or individual requirements.
3. To confirm your identification and associate the certificate with the right policyholder, provide your cellphone number and Emirates ID. After that, you'll be prompted to create a one-time password (OTP), which is a security feature that guards your personal data.
4. After entering the OTP, select ‘View Policy Details’. You will be able to download your ILOE certificate and see the particulars of your insurance policy on this page.

Limitations

The ILOE scheme does not cover certain groups, including those on temporary contracts, investors, domestic workers, minors, retirees who have resumed working, and individuals terminated for misconduct.

Failure to pay premiums after a grace period of three months may result in the cancellation of the insurance as well as a fine of two hundred UAE Dirhams.When the insured person reaches the maximum amount of benefits that can be collected or when they pass away, the insurer is no longer responsible for what happens to them.

In accordance with ministerial orders, those who have filed a report of absconding are exempt from making premium payments.

In summary, the United Arab Emirates provides a comprehensive approach to aiding individuals facing involuntary job loss, notwithstanding the absence of a direct ILOE system. Navigating this predicament requires an understanding of the legislative framework, government initiatives, private insurance choices, and individual financial planning.