Job Loss Insurance Scheme in UAE
The UAE is undergoing a significant transformation, aiming to attract foreign talent while offering enticing benefits and incentives to its diverse expatriate population. Notably, starting in 2023, a Job Loss Insurance Scheme will be implemented, providing coverage for employees in both the public and private sectors. This initiative showcases the country’s commitment to enhancing its social, economic, and governance landscape.
The introduction of the Job Loss Insurance scheme, the implementation of a 9% corporate tax, and the implementation of changes to long-term residence, residence visas, and employee visas are all contributing to a brighter future for global talents in the country. These measures are paving the way for increased opportunities and a more welcoming environment for international professionals.
Job Loss Insurance Scheme in UAE – Key Highlights
The Job Loss insurance scheme aims to enhance the competitiveness of the labor market while offering a social safety net for workers. It prioritizes the establishment of a stable work environment, benefiting both public and private sector employees in the UAE. Starting in 2023, these workers will have the added assurance of unemployment insurance.
The UAE Cabinet has granted approval for the implementation of an unemployment insurance scheme, aimed at providing temporary income support to individuals who find themselves without employment. This initiative seeks to offer a safety net for those affected by unemployment, ensuring they receive the necessary financial assistance during this challenging period.
The scheme provides exemptions for specific groups, including investors, domestic workers, individuals with temporary contracts, those under 18 years old, and retired individuals receiving a pension who have started a new job.
How Can Employers Apply for the Job Loss Insurance Scheme in the UAE?
According to the source u.ae, employers have the option to purchase the Unemployment/Job Loss insurance scheme for their employees.
In the past, mainland companies were required to provide a bank guarantee of AED 3000 to the Ministry of Human Resources and Emiratisation. The insurance coverage offered would amount to approximately 60% of the basic salary, with a maximum limit of AED 20,000 for a specified duration.
The Job Loss Insurance Scheme in the UAE strives to safeguard employees from the financial repercussions of a company’s bankruptcy or failure to provide entitled employee benefits. This initiative aims to provide a safety net, ensuring that individuals are protected during challenging times and receive the support they deserve.
Cost of the Job Loss Insurance Policy
The Job Loss Insurance policy carries an annual cost of AED 60 per employee, providing coverage in the event of job loss. The premium payment is based on the visa validity and must be submitted to the insurance company.
How to Enroll in the Job Loss Insurance Policy?
There are two enrollment options available for the Job Loss Insurance Scheme in the UAE.
1. For Employees Currently in Service
Employers can choose between transitioning to a Job Loss insurance system or maintaining the existing bank guarantee scheme for their employees. This decision allows them to strike a balance between safeguarding their workforce and ensuring financial security.
Additionally, the existing employees may transition to a Job Loss Insurance scheme once their permits have been renewed.
2. For New Employees
Employers have two options when it comes to providing financial security for their recruits. They can either submit a bank guarantee on behalf of the employee or choose the unemployment insurance scheme, which costs AED 120 for a period of 2 years.
Unemployment / Job Loss Insurance Policy Coverage and Limits
The Unemployment/Job Loss Insurance provides coverage for specific benefits that employees are entitled to. This policy proves invaluable in situations where a company declares bankruptcy and is unable to fulfill its obligations towards its employees.
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
In summary, Job Loss Insurance serves as a safety net for all individuals employed within the country. The official legislation and regulations regarding the unemployment insurance program will be revealed at a later date.
The Involuntary Loss of Employment Scheme (ILOE) – Steps to Apply
The Involuntary Loss of Employment Scheme (ILOE), also known as job loss insurance, is designed to offer support to employees who have experienced unexpected job loss, such as due to company bankruptcy. This initiative aims to provide an incentive and financial assistance during challenging times.
Employees can enjoy receiving up to 60% of their average basic salaries for a duration of 3 to 6 months. This beneficial scheme remains active as long as the premium for a full year is paid in its entirety.
There are multiple avenues to apply for the Involuntary Loss of Employment Scheme (ILOE). Applicants have the option to 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
Accessing the Job Loss Scheme is a simple and straightforward procedure that can be conveniently completed through the ILOE website. Prior to beginning the process, applicants should ensure they have the necessary documents prepared.
Applicants working in the UAE mainland are required to provide their labour card number and Emirates ID. Additionally, they need to furnish a few more details, including their mobile number, full name, and date of birth, among others.
To cater to employees working in Free Zones, they should choose the ‘Non-Registered MOHRE’ option and provide their credentials accordingly in the designated form fields.
The payment plan should be chosen based on the employee’s basic salary range, and the preferred mode of payment should be specified. Payment frequency options include monthly, quarterly, half-yearly, or annually. Applicants have the convenience of paying the amount using either a credit or debit card.
Additional Visas Information for Employees in UAE
The latest reforms have a twofold objective: to expedite the hiring process and enhance the caliber of recruits. These measures will foster greater competitiveness in the local job market.
Here are five changes that employees in UAE need to know.
1. Longer Grace Period after residence Expiry
Residents have the option to enjoy an extended and adaptable grace period, granting them the ability to remain in the country for up to six months following the cancellation or expiration of their residence permit.
2. 6 months stay outside of UAE for Golden Visa Holders
Golden Visa holders have the flexibility to stay outside of the UAE for any duration without jeopardizing their residency. It’s important to note that there is no limit of six months for staying abroad.
3. Green Visa
Skilled professionals, freelancers, investors, and entrepreneurs are eligible for a 5-year residency in the UAE. This self-sponsored visa offers a multitude of benefits, allowing recipients to fully enjoy the privileges of residency in the country.
4. New Type of Visit Visas
The scope of new visit visas has been expanded, and now some of them no longer require a sponsor. All entry visas are available as single or multiple entries, which can be renewed for the same duration. These visas 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.
The UAE offers a convenient multiple-entry tourist visa option that allows individuals to stay for up to 90 days without requiring a sponsor. Moreover, this visa can be extended for an additional 180 days within a year. Experience the wonders of the UAE for an extended period, hassle-free.
5. Family Visa Changes
Residents in the UAE now have the opportunity to sponsor their sons until the age of 25, with no restriction for unmarried daughters. Furthermore, 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!