Middle East GES update: United Arab Emirates Extended deadline announced to register to the Involuntary Loss of Employment Scheme

What is the change?

20 June 2023 - On 15 June 2023 the Ministry of Human Resources and Emiratisation (MoHRE) announced an extension to 30 September 2023 for employees to register to the Involuntary Loss of Employment (ILOE) Scheme. Employees were previously required to register by 30 June 2023, but this has now been extended. Registration to the scheme is mandatory for employees working in the UAE.

Reminder of the ILOE Scheme

What is it?

• The ILOE scheme was announced on 12 October 2022 and came into effect from 1 January 2023.
• The aim of the scheme is to provide security for employees who lose their jobs due to reasons other than disciplinary action or resignation.

Who does it apply to?

• From 1 January 2023 it applied to employees working in federal government and private sectors in UAE mainland. 
• Effective from 3 May 2023 the scheme extended to employees working in freezones and semi-government entities.
• Note that employees include UAE citizens and expats, making this a mandatory contribution for employees in the UAE. 
• Investors, domestic helpers, temporary workers, children under the age of 18 and retirees who are entitled to a pension and have started a new job are exempt from the scheme. 

How does it work?

• Depending on the employee’s salary, employees contribute either AED 5 or AED 10 (+VAT) per month into the scheme (paid for one year in advance when subscribing through the government portal).
• Employees must pay into and subscribe to the scheme for at least 12 consecutive months to be eligible for a pay-out. 
• Should the employee lose their employment (for valid reasons per the ILOE guidance), they will be compensated with a monthly cash benefit up to 60% of their average basic salaries of the 6 months prior to loss of employment.
• The compensation is paid out for a maximum of 3 consecutive months and does not exceed either AED 10,000 or AED 20,000 depending on the relevant plan that the employee subscribed to. 
• Payment can be made directly on the ILOE website, or via subscription channels. 

Why is it important?

Subscription to the scheme is mandatory and there can be fines and penalties that can be levied on employees for not registering and/or keeping up with instalments.