16 May 2023
Impact High
Summary
Pursuant to the client alert we published earlier in January 2023 on the Involuntary Loss of Employment (ILOE) Scheme, initially introduced on 12 October 2022 and mandatory for all employees working in the private and the federal sectors in the United Arab Emirates (UAE) Mainland jurisdiction, the authorities have now extended the scope as of 3 May 2023, the ILOE scheme has been rolled out to all employees working in Free Zones and semi-government entities in the UAE. The scope of the scheme aims to provide security to UAE residents as well as Emirati and GCC nationals in case of redundancy or contract termination from the employer, with the exception of those employees who lose their jobs on disciplinary action and/or resignation.
The Detail
All Free Zone and semi-government based employees can now register for the Involuntary Loss of Employment (ILOE) or Unemployment Insurance Scheme, by visiting the designated ILOE website (iloe.ae). The steps that will need to be followed are slightly different in comparison to Mainland based employees; the ‘non-registered in MOHRE’ option will need to be selected. The premium can be paid monthly, quarterly or on a (semi) annual basis.
There are two categories for registering under the scheme, depending on the employee’s salary:
Category A: For all employees who earn a basic salary of AED 16,000 or less, their monthly compensation will be calculated at 60 percent of their basic salary and will be capped at AED 10,000 per month for a maximum period of three months from the date of termination.
Category B: With respect to employees who earn a basic salary of AED 16,000 or more, their monthly compensation will be calculated at 60 percent of their basic salary and will be capped at AED 20,000 per month for a maximum period of three months from the date of termination.
Under the ILOE scheme, the employee must fulfill the monthly insurance payments for at least twelve months in order to qualify for financial support for a period of no more than three months from the date of termination. The insurance scheme and its benefits will cease from the date the employee secures new employment in the UAE or three months from the date of redundancy/termination. Employees who resign from their employment or those terminated for disciplinary reasons will not be eligible to benefit from the scheme.
What this means
Free Zone employees must sign up for the Involuntary Loss of Employment scheme (ILOE) starting from 3 May 2023, and will have time to enroll until 30 June 2023. Failing to register will result in a fine of AED 400 per employee.
There are a number of selected insurance providers in the UAE to register under the scheme, however, it is recommended to use the official website iloe.ae. As Stated in our previous alert, employers are not obliged to enroll their employees in the insurance scheme or pay any contributions to the scheme but should make employees aware given the consequences of failing to enroll.
How we can help
We will continue to closely monitor and provide timely guidance on any new updates by the UAE Immigration authorities and highlight the impact of any changes that may impact your expatriate workforce.
Contact us
Should you have further questions on this update, please reach out to:
Rekha Simpson – Director, Middle East Immigration: rekha.simpson@vialto.com
Dounia Fathi-Benbrahim – Senior Manager, Middle East Immigration: dounia.fathi-benbrahim@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
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