30 November 2023
Impact Medium
UAE | Update to the Involuntary Loss of Employment (ILOE) scheme
Summary
Earlier this year, the UAE government announced a new requirement for employees in the private and government sectors to register with an unemployment insurance scheme, called the Involuntary Loss of Employment (ILOE). The initial deadline to register was 30 June, which was subsequently extended to 1 October 2023. Failure to register resulted in fines for employees. The Ministry of Human Resources and Emiratisation (MOHRE) has now made available to employers, company specific reports confirming which employees are yet to subscribe to the Involuntary Loss of Employment (ILOE) insurance scheme, along with the corresponding fines.
We have also had clarification with respect to the validity of a current ILOE policy, in situations where an employee either changes his or her Immigration status in the UAE, or where there is a change in employment.
The Detail
ILOE unsubscribed employee report and fines
The UAE authorities have released reports to Mainland companies listing employees who have not subscribed to the ILOE along with the individual fines applicable; these reports are available on the company’s respective MOHRE and ILOE portal accounts.
Although employers are able to view details of the unsubscribed employee fines, employers are not obligated by the authorities to pay the ILOE fines on behalf of their employees as this remains an employee responsibility. However, the ability of employers to review the list of unsubscribed employees would help to alert employees and ensure subscription with ILOE to avoid non-compliance and recurring fines. Employers in the UAE, do however, have the discretion to pay these fines through the MOHRE portal on behalf of their employees, if they so choose.
If an employee fails to pay the incurred MOHRE fine within the next three months, the MOHRE is expected to deduct the fine amount directly from the Wages Protection System (WPS) at the time of salary or end of service payment, whichever is applicable.
To ensure compliance and avoid potential penalties, the following steps must be taken:
1. Employee Subscription: Unsubscribed employees should register for ILOE without any further delay. They can log on to https://www.iloe.ae/ and explore the available subscription channels to complete the process.
2. Fine Payment: Unsubscribed employees are required to pay the MOHRE fine of AED 400 within the next three months to avoid deductions through WPS. The payment can be made through the MOHRE app or website using the following steps:
a) Log into https://www.mohre.gov.ae/
b) Under the ‘Services’ tab, select ‘ILOE Quick Pay’
c) Enter the necessary details such as Emirates ID Card/Labour Card/UID #/MOHRE Person Number (where applicable)
d) Follow the steps to complete the payment of the AED 400 fine
Change in residence status and employer
The authorities have provided clarification with respect to the validity of the policy under the ILOE scheme, in the following situations where an employee has changed employer or there has been a change in immigration category:
● New Labour card: If an employee’s Labour Card is cancelled and subsequently reapplied (irrespective of category e.g. from a Labour card under an ERP to a Labour card under the Golden Visa category), there is no need for an update to the insurance policy as long as the category (A – basic salary less than AED 16K per month or B – basic salary more than AED 16K per month) remains the same. The existing ILOE policy remains the same.
● Change in employer: If an individual changes their employer, there is no requirement to update the ILOE policy as long as the category remains unchanged. However, if the category changes due to the new employment, the individual must connect with the ILOE – Dubai insurance through email to update their policy accordingly.
● Job change without updating new employer details in ILOE certificate: If new employer details have not been updated in the ILOE certificate, individuals are still eligible for the ILOE claim. However, this is provided that the individual has fulfilled monthly payments for at least 12 months of their subscription to the ILOE insurance.
What this means
The list of unsubscribed employees is available on the MOHRE company portal for notification purposes only.
The update from MOHRE regarding the Involuntary Loss of Employment (ILOE) insurance highlights the importance of compliance for both employers and employees. By promptly subscribing to ILOE and paying the fines within the specified timeframe, employees will ensure adherence to the new regulations.
Non-payment of ILOE fines by employees is not expected to have any adverse impact on the MOHRE portal account of the company and at present, it is advisable that companies make their employees aware of non-compliance to the scheme due to the financial penalties involved and the corresponding WPS deduction that would be made by the MOHRE.
It is also essential for employees to be aware of the updates in respect the validity of a current ILOE policy, in situations where an employee either changes his or her immigration status in the UAE, or where there is a change in employment. Adhering to the guidelines set by the MOHRE is crucial to ensure the smooth processing of claims in case of involuntary job loss. It is recommended that individuals who experience any changes in their employment status or have questions regarding their ILOE policy contact ILOE – Dubai insurance through email for further assistance and clarification. Understanding these updates will help individuals navigate any changes in their immigration status while maintaining the necessary coverage and protection offered by the ILOE insurance.
How we can help
● We can assist with reviewing and validating the ILOE employee subscription status reports uploaded on the MOHRE company portal, and the ILOE portal;
● Provide advice in relation to where a change in employer or job might trigger an action by your employees;
● Provide advice and assistance in relation to your expatriate population, and your immigration compliance in accordance with the UAE’s rules and regulations.
Contact us
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Anir Chatterji
EMEA Immigration Partner
anir.chatterji@vialto.com
Rekha Simpson
Director, Middle East Immigration
rekha.simpson@vialto.com
Umme Salma
Senior Manager, Middle East Immigration
umme.salma@vialto.com
Ananth Prasad
Manager, Middle East Immigration
ananth.prasad@vialto.com
Further information on Vialto Partners can be found on our website: www.vialtopartners.com
For additional alerts, please visit www.vialtopartners.com/regional-alerts
Contact us on the following address – me-immigration@vialto.com