Losing a job is devastating and may lead to insufficient cash in the account to cater for the monthly overheads such as the monthly mortgage and credit card repayments. A Dubai-based worker lost his job within four months of starting a new job and he was also rejected when he sought job loss insurance claim. One day, his employer forgot to clarify, which led to him working with uncertainty and, as a result, financial difficulties.
Interestingly, job loss insurance UAE has emerged as a subject of increasing concern in the modern world where the economic situation is unpredictable. This insurance serves as a fallback for employees and ensures that they receive a certain amount of security in the case of immediate redundancy.
Syed had become an ILOE subscriber in the hope that the insurance would help him through the next few months. It is under this scheme that the subscribed individuals can access up to 60 per cent of their average basic salary for the 6 years preceding the loss of a job. any employee, who has been contributing the monthly premium for a period of not less than twelve consecutive months, shall be entitled to this cash benefit under these regulations for a period not exceeding three consecutive months.
UAE job loss insurance can be defined as a type of precautionary financial cushion that has been developed with the goal of enabling people to sustain their financial needs in the event they lose their jobs. This insurance is supposed to help reduce the pressures in terms of monetary issues in the time when there is no income and pay the insured money.
One chance the employer takes can deny an employee their job loss benefits which means they do not receive the monthly cash that the insurance promises.
Oversight by the company
“The decision comes as if the shock of losing a well-paid job was not enough, I was informed of a discrepancy and hence will not be eligible for benefits,” said Syed to media addressing the frustration of jobless individuals.
Syed, an Indian expat said: “The company’s letter to me indicated it was a termination, whereas the employment cancellation letter to the Ministry of Human Resources and Emiratisation (Mohre) mentioned that I had quit. It was a mistake by the company during my visa/labour cancellation submission, which I had signed.”
Straining to shed light on the incongruity, Syed went back and forth between his company and ILOE, managed by Dubai Insurance, seeking a solution to this challenge. The company thankfully admitted their involuntary mistake and tried to help Syed, contacting Mohre and Tasheel to settle the issue.
Firms may face legal action
Mohre insisted that every company that is in the private sector should be more transparent when dismissing their employees to ensure that some of the irregularities that are normally witnessed do not happen or lead to the practice being taken to court.
Mohre can identify various irregularities and respond to employers who do not give accurate information which will allow unemployed citizens to get maximum effect out of the Unemployment Insurance Scheme if they meet conditions – which include don’t resign voluntarily or were dismissed for reasons of misconduct.
The Ministry said that if there is any difference between the factual reason for termination of employment and the information given to the Ministry it will amount to false information having been given by the company and this will lead to an investigation as well as prosecution and possible legal proceedings and actions being taken against the company. First, if the violation is proved, a fine will be levied on the company and then the firm will be referred to the Public Prosecution for the rest of the penal procedures.
It has been seen that the ILOE is a relatively new process that employers as well as employees find it difficult to comprehend completely. Sara Khoja, Partner at Clyde and Co’ a Dubai based Law Firm stated, ‘The ILOE is relatively new and therefore the employees and employers have not had the necessary time to familiarize themselves with the provisions as well as the procedures that need to be followed in order to be able to claim unemployment benefits. Originally, it was launched in 2023 and designed to start applying from the moment the individual has contributed for at least 12 months.
Further, for the employee to qualify for such a benefit, his visa must have been cancelled and the basis for termination cannot be as a result of actions of the employee, such as resignation Be that as it may, it is about to be helpful to the employer and the employee to agree on information that is consistent with this position so that the individual can be in a position to claim the benefit.
How to handle mistakes
Concerning the lack of notification to a worker of his/her dismissal due to which the said worker could not receive unemployment compensation due to some unintended mistakes while entering the reason for the cancellation of their working contract, MoHRE added that the worker does not need to complain to the labor authorities or seek technical assistance to rectify the cancellation document.
As for making the process smooth, Sara recommended that, before applying for visa cancellation the employers should consult with ILOE to know its requirements from each employee so as not to let the employee be affected when seeking compensation or that before any application is submitted to MoHRE the employer should indicate that his employee intends to claim insurance under this scheme because the Mohre officials can advice him/her as well.
It encouraged employers and workers to review information and guidance concerning the scheme available on the Insurance Pool website IlOE at www.iloe.ae or contact the call center on 600 599 555 to inquire on any process in relation to subscription and payment of benefits under the scheme.
Lastly, in the situation if the worker has some issues with claiming insurance from ILOE then the worker has to make a complaint to the Ministry which will in turn investigate such case and compel ILOE to respond.
Benefits and eligibility
The UAE job loss insurance has two categories:
The first applies to those earning Dh16,000 or less and where the insurance tariff is Dh5 per month, and the maximum monthly benefit is Dh 10,000.
The second category covers employees with a baseline wage that ranges from Dh10.01 to Dh16,000 per month, which costs Dh10 per month but offers compensation of up to Dh20,000 per month.
The insurance compensation can only be reclaimed provided the employee, who subscribed to the scheme, has spent at least 12 months with the company consecutively. The claim will be processed within a fortnight if submitted to the company. If the employee cancels the residency and departs the country or secures a new employment opportunity, the employee will not be paid a compensation.
The compensation is paid for a maximum of 3 months from the time of the claim for joblessness for each claim more so for the employee who has not being dismissed for cause or dismissed them self.
