The UAE’s labour market continues to grow, and with that growth comes more stable framework of employee protections. One of the most significant, yet frequently overlooked, is the Involuntary Loss of Employment (ILOE) insurance scheme, mandatory for all private sector and federal government employees in the UAE since January 2023.
For business owners, HR teams, and company administrators, ILOE carries no direct financial obligation. But understanding the scheme, and proactively informing your employees about it, reflects the kind of corporate governance that serious employers in the UAE have come to expect.
This guide sets out everything you need to know: what ILOE is, who must subscribe, how much it costs, and how your organisation can incorporate it into new hire onboarding.
What Is the UAE ILOE Insurance Scheme?
The Involuntary Loss of Employment scheme was introduced under UAE Federal Decree-Law No. 13 of 2022. It provides a government-backed financial safety net for employees who are terminated through no fault of their own, offering temporary income support while they seek new employment.
ILOE is administered through a dedicated insurance pool and is accessible via the official portal at www.iloe.ae. It is tied to the employee’s Emirates ID rather than to any specific employer, meaning coverage follows the individual across jobs.
Who Is Required to Subscribe?
ILOE applies broadly. All employees in the UAE private sector and federal government sector are required to subscribe, including those working under free zone entities. This means employees of DMCC, JAFZA, Dubai Multi Commodities Centre, and all other mainland and free zone companies are covered by the obligation.
The following categories are exempt:
- Business owners and investors (in the company where they work)
- Domestic workers
- Employees on temporary contracts
- Employees under 18 years of age
- Retirees already receiving a pension who have joined a new employer
- DIFC and ADGM employees (for whom subscription is voluntary)
| Important: Free Zone Employees Are Included |
| Employees working under DMCC, JAFZA, or any other UAE free zone are subject to the same ILOE subscription requirement as mainland employees. The obligation rests with the employee, not the employer. |
How Much Does ILOE Insurance Cost?
ILOE premiums are intentionally low, structured across two salary categories. As of January 2024, new subscriptions require a minimum two-year upfront payment.
| Category | Basic Salary | Monthly Premium | 2-Year Cost (incl. VAT) |
| Category A | AED 16,000 or below | AED 5 | ~AED 126 |
| Category B | Above AED 16,000 | AED 10 | ~AED 252 |
Payment is made directly by the employee through the ILOE portal, MOHRE app, Al Ansari Exchange, Etisalat, or other approved channels. There is no financial or administrative cost to the employer.
The Employer’s Role: No Obligation, But a Smart Practice
Employers have no financial or administrative duty under the ILOE scheme. The subscription obligation rests entirely with the employee. However, companies that invest in structured onboarding processes are increasingly incorporating ILOE guidance as a matter of best practice.
The rationale is straightforward. An employee who subscribes late, or not at all, faces two consequences: an AED 400 fine from MOHRE, and potential blocks on work permit renewals. Neither outcome reflects well on an employer’s duty of care. More practically, employees who are aware of their rights and protections from day one tends to feel more secure, and more committed to the role.
At Altus Citadel, we have seen the scheme work as intended. We now recommend to all our clients that ILOE guidance be included in new hire onboarding documentation, giving employees the information they need to subscribe promptly and correctly.
Frequently Asked Questions About ILOE in the UAE
What is ILOE insurance in the UAE?
ILOE, or Involuntary Loss of Employment insurance, is a UAE government-backed insurance scheme that provides eligible employees with temporary financial support if they lose their employment involuntarily, subject to the scheme’s eligibility and claim conditions.
Is ILOE mandatory in the UAE?
ILOE is mandatory for eligible employees covered by the UAE unemployment insurance scheme. The subscription obligation generally applies to employees in the private sector and federal government sector, subject to specific exemptions and applicable employment frameworks.
How much does ILOE insurance cost in the UAE?
ILOE premiums are based on the employee’s basic salary. Category A, for employees earning a basic salary of AED 16,000 or below, costs AED 5 plus VAT per month. Category B, for employees earning above AED 16,000, costs AED 10 plus VAT per month.
Who is exempt from ILOE insurance?
Exempt categories include certain business owners and investors, domestic workers, employees on temporary contracts, employees under 18, and pensioners who have joined a new employer. Employees working under separate employment frameworks, such as DIFC and ADGM, should check the rules applicable to their jurisdiction.
Is ILOE mandatory for free zone employees?
ILOE generally applies to eligible private-sector employees, including employees working for businesses in UAE free zones. However, employment frameworks can differ in certain jurisdictions, particularly financial free zones such as DIFC and ADGM. Employees and employers should confirm the rules applicable to their specific jurisdiction.
How much compensation does ILOE provide?
Eligible employees can receive compensation of up to 60% of their average basic salary for the six months preceding unemployment, subject to the scheme’s conditions and applicable limits. Category A compensation is capped at AED 10,000 per month, while Category B compensation is capped at AED 20,000 per month.
How long do you need to subscribe to ILOE before making a claim?
Generally, an employee must have subscribed to ILOE for at least 12 consecutive months to qualify for compensation, subject to the other eligibility requirements under the scheme.
What happens if an employee does not subscribe to ILOE?
Failure to subscribe to ILOE can result in an AED 400 fine. Separate consequences may apply for failing to pay the required premiums. Employees should maintain an active policy and make payments on time to remain compliant and preserve their eligibility for benefits.
Who pays for ILOE insurance — the employer or employee?
The ILOE premium is paid by the employee. Employers do not generally bear the cost of the employee’s ILOE subscription. However, employers are expected to encourage and direct eligible employees to subscribe and can include ILOE information as part of their employee onboarding process.
How can employees subscribe to ILOE?
Employees can subscribe through the official ILOE website and other approved channels. Employees should use their correct Emirates ID and employment details and keep their policy active by paying premiums on time.
Further information is also available on the UAE Government Portal.
How Altus Citadel Services Can Help Your Business
Altus Citadel Services FZCO supports business owners and HR teams across the UAE with end-to-end corporate service, from company formation and visa processing to PRO services, payroll compliance, and employee onboarding documentation. If you are setting up a new entity, expanding your team, or reviewing your onboarding processes, our team can help ensure your employees receive the right guidance from day one, including information on ILOE subscription, WPS compliance, and UAE labour law obligations.
Contact us at: www.altuscitadelservices.com | +971 50 961 6354 or +971 50 161 9605 or info@altuscitadelservices.com
