Work Permit of the UAE to be Issued after Paying Job Loss Insurance Fines

It has been informed by the MoHRE that unless the job loss insurance fines are paid no new work permit will be provided. Also, a few weeks are left for signing up for the insurance plan. On the failure of this, fines of Dh400 will be imposed by deducting from the salary and gratuity. By October 1st 2023, all those employees working in federal government agencies, private sector and free zones must enrol in the Involuntary Loss of Employment (ILOE) plan. Employees may subscribe to the scheme through any free channels and demand no service charges.

When did the ILOE scheme come into effect?
The scheme offers workers up to three months of compensation when they lose their jobs, came into being on January 1st 2023 and was initially due up to June 30 2023. However, the grace period of 6 months was extended up to October 1st 2023. Currently, around 5 million individuals have enrolled in this net. The low-cost security net provides financial assistance for a limited time. When employees do not subscribe to the low-cost security net, they will be imposed with penalties.

Consequences that Employees have to be met
The insurance certificate of the employee will be invalidated, besides a Dh 200 fine that will be imposed on them, when they fail to pay the premium for 3 months after enrolling for the Involuntary Loss of Employment (ILOE) plan. Even after 3 3-month duration, if they fail to do so, the cash would be reduced from their wages by the MoHRE through the end-of-service gratuity, Wage Protection System or any other acceptable methods.

As per a notice placed on the ILOE website, the companies who are not registered with the Ministry of Human Resources and Emiratisation. Such employees should provide their trade licence and request letter to the department and the ID companyreg@iloe.ae.

The working of the scheme
In order to join the ILOE plan, employees must pay a premium, which is considered to be ultra-low-cost. After which, they will receive financial aid for up to 3 months if they lose their jobs. However, the employees who have resigned or have lost their jobs through any disciplinary actions are excluded. Furthermore, only the employees who have subscribed to the scheme for at least one year have the right to receive the compensation.

Types of ILOE plans
For those who have a basic salary of Dh 16000 or below, the compensation benefit would be 60% of the basic salary, which would be around Dh 10000 per month. Moreover, the cost would be Dh 5 plus VAT per month. The second category of the plan is for the employees who have a salary above Dh 160000. Their compensation benefit would be 60% of the salary. i.e. Dh 20000 per month.

Types of Employees Who Are Excused from Penalties
Based on the information given on the ILOE website, domestic helpers, juveniles who are below 18 years of age, investors who are owners of companies they work at, temporary contract workers and retirees who recently have joined a new job and are entitled to a pension are exempted from paying the fines.

Terms and conditions to claim compensation
A period of one year is the minimum subscription and the payments should be done on time without any lags. Employees who have resigned from their jobs are not eligible for the scheme. Similarly, the claimant should not be the one who is dismissed from the work for any disciplinary actions. The subscriber should not have any previous absconding complaints. Lastly, from the date of termination or the resolution of the labour complaint brought to the judiciary, the claim should be made by the employee within 30 days.

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