UAE unemployment insurance scheme: Fines could impact your work permit

Image credit: WAM

The UAE’s unemployment insurance scheme deadline is fast approaching. Employees working in the private sector, federal government departments and free zones are mandated by the Ministry of Human Resources and Emiratisation (MoHRE) to subscribe to the Involuntary Loss of Employment (ILOE) scheme before October 1, failing which fines will apply.

The number of subscribers have already crossed five million since the scheme was announced.

Here are the most frequently asked questions about the scheme:

Why should you subscribe to the ILOE scheme?

The scheme announced by the UAE government is mandatory for those employed in the country. The government has announced a deadline failing which fines will be imposed for non-subscription.

What is the fine for not subscribing to the unemployment insurance scheme?

The MoHRE had announced October 1 as the last date for applying to the scheme. Failure to subscribe will see a fine of Dhs400 being imposed on the registered worker.

The payment of the insurance premiums is divided into monthly, quarterly, semi-annual or annual plan options. If a subscriber fails to pay the premiums for more than three months from the due date, the insurance certificate will be cancelled, and a fine of Dhs200 will be levied as a late penalty fee.

How to pay the fine? 

Once past the deadline, employees can use the ILOE portal of the app to pay the fines. Failure to do so for three months from the due date, will see the amount “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 impact work permit?

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

Who can register for the ILOE scheme?

According to the ILOE website, citizens and residents working in the private sector as well as with the federal government can avail of the scheme.

The ILOE website has a notification which states, “Companies that are not registered with the MoHRE can subscribe on behalf of their employees” by sharing the required documents to [email protected]. Required Documents are a trade licence along with a request letter.

Who is exempt from subscribing to the scheme?

According to the ILOE website, the exempted categories of workers are:

•  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

What is the ILOE scheme and their benefits?

The unemployment insurance scheme offers a financial safety net for those facing a job loss for up to three months.

— Category A: Basic salary Dh16,000 or below

Cost: Dh5 + VAT per month

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

— Category B: Basic salary above Dh16,000

Cost: Dh10 + VAT per month

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