The extended deadline to sign up for the UAE’s mandatory job loss insurance scheme is just weeks away. Employees working in the private sector, federal government departments and free zones have to subscribe to the Involuntary Loss of Employment (ILOE) scheme before October 1, failing which fines will apply.
What are the related penalties?
— If an employee does not subscribe to the scheme before the October 1 deadline, a Dh400 fine will be imposed.
— If an employee subscribes to the scheme but fails to pay the premiums for more than three months from the due date, the insurance certificate will be cancelled, and a penalty of Dh200 will be imposed.
How will the fines be collected?
Employees must pay the fines. If they fail to do so for three months from the due date, the amount will be “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.
What are the two ILOE plans and their benefits?
— Category A: Basic salary Dh16,000 or below
Cost: Dh5 + VAT per month
Compensation Benefit: 60% of basic salary; up to Dh10,000 per month
— Category B: Basic salary above Dh16,000
Cost: Dh10 + VAT per month
Compensation benefit: 60% of basic salary; up to Dh20,000 per month
Will non-payment of fines affect one’s job prospects in the country?
Yes. As per a ministerial resolution issued in this regard, the “employee will not be eligible for a new work permit until all due fines are paid within the specified timeframe”.