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Involuntary Loss of Employment Insurance (ILOE) In The UAE

Mar 15, 2024 | Finance

ILOE insurance in the UAE is a critical financial safety net designed to support employees who face unexpected job loss due to circumstances such as redundancy. The insurance scheme caters to both UAE nationals and expatriates, covering various sectors and offering benefits based on a percentage of the employee’s average basic salary. As a mandatory provision, it ensures workers are not left vulnerable during periods of unemployment while maintaining a sense of security that can enhance job market attractiveness and economic stability in the region.

We are here to guide you through the basics of ILOE insurance, including coverage details, the importance for businesses, cost considerations, and the claim process, providing a comprehensive overview of this essential protective measure in the UAE.

What Is ILOE Insurance In The UAE?

In the United Arab Emirates, the Involuntary Loss of Employment (ILOE) insurance scheme acts as a financial safeguard for employees who unexpectedly lose their jobs due to reasons such as redundancy. This is distinct from job loss through voluntary resignation, disciplinary action, or dismissal. The insurance provides a monetary cushion in the form of a monthly cash benefit, calculated at up to 60% of your average basic salary over the six months preceding your unemployment. You must have contributed to the scheme for at least 12 consecutive months to qualify for this compensation.

ILOE insurance extends its coverage to Emirati nationals and expatriate residents, as well as private sector employees and those working across the federal government and private sectors. The scheme is divided into two categories: Category A offers a maximum monthly benefit of USD 2,723 (AED10,000), while Category B provides up to USD 5,446 (AED 20,000). However, there’s a cap on the duration of benefits. The total claim payments are limited to a maximum of 12 months over your working life in the UAE.

The Importance of ILOE Insurance for Businesses

ILOE insurance is a key element for businesses in maintaining a stable and secure workforce. It provides a financial safety net that aims to ensure a dignified life for individuals who have lost their jobs, enhancing the competitiveness of the Emirati workforce. The scheme is also instrumental in attracting and retaining top global talent, contributing to the UAE’s overall economic stability and growth.

How ILOE Insurance Differs from Traditional Insurance

ILOE insurance is specifically designed to address the risk of job loss, unlike traditional insurance policies that may cover a wide range of risks. The premiums are modest—you’ll pay 5 AED plus VAT if you earn a basic salary of USD 4,357 (AED 16,000) or below and USD 2.70 (AED 10) plus VAT for higher salaries. It’s mandatory for all employees in both the private sector and federal government sectors to subscribe to the ILOE insurance scheme. You could face policy cancellation and fines if you don’t pay the premium.

The Role of ILOE Insurance in Risk Management

ILOE insurance plays a crucial role in employee risk management, helping mitigate the financial impact of sudden unemployment. This allows you to maintain your livelihood while searching for a new job or employment opportunities. The Ministry of Human Resources and Emiratisation (MOHRE) has worked with nine local insurance companies to establish a robust and effectively managed framework for the ILOE program.

Claims must be submitted within 30 days from the termination date, and you must prove that the job loss wasn’t due to resignation or disciplinary reasons. Additionally, you must not be subject to an absconding complaint or have attempted to defraud the system. The insurer’s obligation ends if you reach the maximum benefit limit or in the unfortunate event of your death. If an absconding complaint is registered, you’re exempt from paying the premiums as determined by ministerial decision.

Businessman Whose Lost His Job

What Does ILOE Insurance Cover?

ILOE, the unemployment insurance scheme, also provides financial assistance to eligible employees, including Emiratis and expatriates in various sectors. The benefit is calculated based on 60% of the average basic salary from the half-year period before unemployment, with support available for up to three consecutive months per claim.

Exclusions and 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.

Non-payment of premiums beyond a three-month grace period can lead to policy cancellation and legal penalties. The insurer’s responsibility ceases upon the insured reaching the aggregate limit of benefits or in the event of their demise. Those with an absconding complaint are exempt from premium payments as per ministerial rulings.

Customising ILOE Insurance to Your Business Needs

Employees with variable incomes, such as those earning commissions, can select a contribution category that aligns with other channels of their compensation structure. Employers are instrumental in promoting awareness and compliance with the ILOE scheme to prevent penalties, which can affect the renewal of work permits.

Claims should be lodged within a month of job loss through the designated channels, including the ILOE portal, mobile app, or call centre. Approved claims are generally paid out within two weeks, offering prompt economic relief.

How Much Does ILOE Insurance Cost in UAE?

The cost of ILOE insurance is directly tied to your basic salary. For those earning monthly compensation up to USD 4,357 (AED 16,000), the monthly premium is USD 1.35 (AED 5) plus VAT. The premium for salaries above this threshold increases to USD 2.70 (AED 10) plus VAT. Policyholders have the option to choose between one or two-year policy periods, with the total VAT included in the first payment.

Factors Influencing ILOE Insurance Premiums

The primary determinant of your ILOE insurance premium is your basic salary, which places you into one of two categories for premium rates. The duration of your policy also affects the premium.

Deductibles and Policy Limits

While deductibles do not apply to the ILOE insurance, maximum benefit limits exist. The monthly cash benefit is capped at USD 2,723 (AED 10,000) for Category A and USD 5,446 (AED 20,000) for Category B. Compensation is restricted to three consecutive months for a single claim, with a lifetime limit of 12 monthly benefits across all claims.

Tips for Reducing ILOE Insurance Costs

Adhering to your premium payment schedule is essential to be an insured worker and avoid policy cancellation and penalties. Maintaining a clean employment record and legal residency status is necessary to remain eligible for benefits.

Comparing ILOE Insurance Quotes

When evaluating ILOE insurance quotes, consider the maximum claim benefits relative to the total premium for the policy term. Understand the terms and conditions, such as the minimum subscription period and the deadline for claim submission. Be informed about circumstances that could invalidate your coverage, like abscondment complaints or fraudulent claims. Comparing offers from various insurers and scrutinising policy details will help you select the most suitable ILOE insurance for your financial situation.

Unemployment Insurance Form

How do I claim my UAE ILOE insurance?

If you’re facing unemployment in the UAE, it’s important to act quickly and follow the right steps to claim your ILOE. Doing so ensures your claim is valid and processed without a hitch.

Filing an ILOE Insurance Claim

You’ve got to file a claim for your ILOE insurance pool within 30 days after your job ends. The UAE has made this easier with options like an online portal, a mobile app, a call centre, and other methods set up by MOHRE in coordination with the Insurance Pool.

Before you file:

  1. Ensure you’ve been part of the scheme for at least a year.
  2. Check that all your insurance premiums are paid up according to your plan.
  3. Make sure you weren’t let go because you quit or were fired for disciplinary reasons, as these circumstances are not covered.

Documentation and Evidence

When you’re ready to file your claim, collect all the documents that prove you lost your job through no fault of your own. This means showing you weren’t fired for disciplinary reasons, there are no abscondment complaints against you, and your last employer wasn’t a sham. Plus, you must be legally in the UAE, and your job loss shouldn’t be due to non-peaceful labour actions.

Sign in to the ILOE portal or app with your Emirates ID and mobile number to check your policy details. Get a One-Time Password (OTP) and choose to view your policy details. This will clue you in on what your coverage includes and any limits you might face.

How to Navigate Disputes in ILOE Claims

If you run into a dispute over your ILOE claim, know the conditions that could make it invalid, like fraud or an absconding complaint. If you hit a snag, it’s smart to get in touch with MOHRE or the Insurance Pool. They’ll guide you through resolving any issues and making sure your claim goes through properly.

The Role of Insurance Adjusters and Appraisers

Insurance adjusters and appraisers are key in the ILOE claim process. They’re the ones who look into your claim to see if it’s legitimate and how much coverage you’re entitled to. They gather information, check out your policy’s terms, and determine the financial impact of your unemployment insurance amount.

They also handle settlement negotiations and compile detailed reports of their findings. Understanding their role helps you know what to expect as your claim is processed and assists you in setting realistic expectations for the outcome of one claim.

How do I get an ILOE certificate?

Obtaining your ILOE certificate is straightforward with the digital resources available. Suppose you’re enrolled in the insurance program and have yet to receive your Certificate of Insurance. In that case, the following steps will guide you through the process.

  1. Navigate to the ILOE portal or utilise the mobile application. These interfaces are designed for ease of use, allowing policyholders to manage their insurance information efficiently. After accessing the platform, you will be prompted to select your specific sector, ensuring that the services provided are tailored to your industry or individual requirements.
  2. Enter your Emirates ID and mobile number to verify your identity and link the certificate to the correct policyholder. You will then be asked to request a one-time password (OTP), which serves as a security measure to protect your personal information.
  3. After entering the OTP, select ‘View Policy Details’. On this page, you can review the specifics of your insurance policy and download your ILOE certificate. This document is essential, as it serves as proof of your insurance coverage and may be required for various official procedures.
  4. Ensure that the details on your certificate are accurate. If you discover any discrepancies, contact your insurance provider immediately to address the issue.

Following these instructions lets you easily acquire your ILOE certificate, giving you peace of mind that your insurance documentation is in order and accessible when needed.

Navigating Towards Financial Security with ILOE

The Involuntary Loss of Employment insurance is pivotal to the UAE’s commitment to workforce welfare and economic stability. It is a testament to the country’s foresight in creating an environment where employers and employees can operate with an added layer of financial security.

Navigating through a job loss can be daunting, but ILOE insurance makes the journey less turbulent. Equipped with the knowledge of how it works, what it covers, and how to claim it, you’re better prepared to face unexpected employment challenges.

We encourage employees to stay informed and employers to ensure compliance, fostering a mutually beneficial landscape for all parties involved in the UAE’s vibrant labour market. Remember, ILOE insurance isn’t just a necessity—it’s an investment in your future resilience.

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