Wednesday, November 18

Employment Insurance or Unemployment Insurance

Unemployment Insurance or Employment Insurance as it is called in some countries provides temporary financial assistance for unemployed citizens while they look for work. In times of distress such as the global financial crisis when people get laid off, this is an effective way to protect people financially, well to an extent at least.
At the same time this does not promote or encourage unemployment among people.

HOW IT WORKS?
This insurance is not applicable for people who have not started working yet. This only applies if you were working as an employee.
Eligibility
Generally you need to be ‘qualified’ to be insured. Qualification includes
Insurable hours - Continuous period of work for a certain minimum hours (eg. 52 weeks)
Unemployment – you need to be without work and without pay for some minimum days (eg 7 days)
No fault – you should have been fired for no fault of yours and should not have left the job without any ‘valid’ reason.

Insurance Premium:
A portion of salary (e.g. 2%) is deducted with your paycheck. Your employer contributes a certain percentage (generally twice your contribution) and deposits this with the government.

Payback:
When you get laid off, depending on how long you worked, your last drawn salary and circumstances which led you to be unemployed, you can be compensated from basic needs to up to 80% of your last drawn salary for a certain period (e.g ranging from 20 to 50 weeks).

When you get another job, you just need to inform the insurer (the government agency) about your employment and they stop crediting the amount to your bank account.

How much will you receive?
The basic benefit rate ranges from 50% to 80% of your last drawn salary (or in many cases, 55% of your average insured earnings) with a maximum yearly cap. Generally this is a taxable income.

Most people are protected by this insurance while some others make arrangements with their employers and enjoy long term unpaid vacations as their finance needs are taken care of by the employment insurance paychecks they claim. They can get fired and re-join the same employer after the vacation.

Reagrdless, this works well in times of distress so that people can protect themselves financially if they are laid off, need to upgrade their skills or need to leave their jobs due to maternity reasons.

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