Involuntary Loss of Employment Insurance in UAE

Everything You Need to Know About UAE ILOE Insurance

Experiencing sudden unemployment can give financial stress, especially if it's not within the employee's control. Many employees working in the UAE have experienced this financial stress. To reduce the risk for the employees, the UAE government announced the roll-out of the Involuntary Loss of Employment Scheme - ILOE under Federal Decree Law No. 13 of 2022 to provide employees with protection from such an experience.

The scheme provides a safety net for employees who are involuntarily made redundant, and want to insure for the risk of a loss of employment. The purpose of this article is to explain the ILOE scheme, how it works, who must register, how claims work, and the significance of this for employees and employers.

What is the ILOE Scheme?

The ILOE Scheme is a mandatory unemployment insurance system for employees in the UAE who are working in the private and federal government sectors in the UAE. This insurance covers the involuntary job loss, which is job termination and not caused by registration. This scheme came into effect on 1 January 2023.

Under this scheme, the employees have to pay a small monthly premium. If they lose their jobs involuntarily after having been subscribed to this scheme, they will get a monthly compensation for a limited time while they seek a new job.

Purpose of Introducing the Scheme

The UAE’s labor market is fluid and globalized, with both nationals and expats employed in multiple sectors. The ILOE scheme was introduced to:

• Provide a safety net for employees to prevent them from suffering hardships caused by unfounded job loss.
• Help create stability in the workforce, as well as strengthen worker confidence in knowing they would not be left unsupported in the case of redundancy.
• Support the UAE’s wider goals of social protection and economic resilience by ensuring that transitions from work do not move directly to financial distress.
• For employers and business setup advisors, this will also ensure compliance; employee enrolment in the scheme is mandatory and non-compliance can charge fines.

Who Should Subscribe to ILOE?

Who's Included:

• Employees working in the private sector within the UAE.
• Employees in federal government authorities.
• Employees in Free Zones and semi-government authorities, from May 2023 onwards.

Who is Excluded:

• Investors or owners of companies who work in those companies.
• Domestic helpers.
• Temporary contract workers, as defined.
• People below the age of 18.
• Retirees already receiving a pension are returning to work.

Employers and service providers are responsible for their documented employees having an ILOE subscription when starting a business in the UAE.

What is The Cost and What Are the Benefits of ILOE?

Cost for premium:

There is a two-tiered system quoting the employee’s basic salary:

• Category A - Basic salary up to AED 16,000 per month = Monthly premium approx. AED 5 + VAT
• Category B - Basic salary over AED 16,000 a month = Monthly premium approx. AED 10 + VAT

Benefit of Compensation:

1. If you qualify and your claim is approved, the scheme will pay:
2. 60% of the average basic salary from the last 6 or 12 months prior to the loss of employment.

• Category A - Maximum benefit capped at AED 10,000 per month
• Category B - Maximum benefit capped at AED 20,000 per month

2. The benefit can be paid for 3 consecutive months per claim.
3. At the same time, there is also a lifetime cap of 12 monthly benefit payments in total under the scheme across their employment history.

Eligibility Criteria and Claim Conditions for This Scheme

To submit a valid and correct claim under ILOE, the employee has to satisfy the following key conditions:

1. The employees should have subscribed to the scheme for 12 consecutive months before the job loss.
2. All the premiums of this scheme should be paid and up-to-date.
3. The job loss should be involuntary, e.g, lay-off, termination, redundancy. The employee can not submit a claim if they have voluntarily resigned and been dismissed for involuntary reasons.
4. The claim should be filed within 30 days of the termination of employment and settlement of the labour dispute.
5. The employee should be legally residing in the UAE during the claim submission.
6. The termination of the employee should not be due to the non-peaceful strikes, wars, nuclear events, or other specially excluded situations.
7. The employees have to submit the proper documents and certificates, e.g., work permit cancellation. With this, the employee can claim the compensation only with the correct submission of information.

How to Subscribe & Pay the Premium for IOLE

It is simple to subscribe to the ILOE You have to follow the below mentioned guide below:

1. Go to the Official ILOE portal iloe.ae.  Or you can download the mobile app.
2. You have to choose the correct category from A or B, which depends on the salary.
3. Select the premium payment frequency: monthly and annual. And pay it via available channels like the portal, exchange centres, SMS, etc.
4. Receive a certificate of insurance that confirms your subscription.
5. It is important to keep a record of your subscription and the payment receipts, especially if you want to claim in the future.

What Happens If You Don’t Pay or Subscribe?

A non-compliance can result in penalties for the employees:

1. A fine, for example, AED 400, can be imposed on the employees who have failed to subscribe by the deadline.
2. The policy can be canceled, and a fine will be charged if the premiums are not paid for more than 3 months.
3. The employers are not strictly required by the law to pay the fines for the employees.
4. The employees need to register promptly, and records are maintained to avoid exposure to fines or employee risk.

Why It Matters for Employees and Employers

For Employees:

• It gives peace of mind by providing a financial buffer if job loss occurs by no fault of their own.
• It helps to maintain stability during the job transition so that rent, bills, and living costs can be easily paid while searching for a new job.
• It also encourages job-market mobility by providing a safety net for the future of employees.

For Employers and Business Setup Consultants:

• Ensure the companies follow the UAE labour and issuance regulations. It can prevent legal or financial exposure.
• It shows your staff that you are aligned with the social protection frameworks. It also shows that the company takes care of employee welfare.
• It also facilitates smooth HR operations because the subscription and claim processes are clearly defined.

Practical Advice & Tips for Employees & Employers

For Employees

1. Choose the correct category: The employees have to check the basic salary without allowances to select the category. A is for below AED 16,000, and Category B is above AED 16,000. Choosing the wrong category can affect your claims.

2. Keep Payment Records Up-to-Date: It is necessary to have your premium payments' receipts, SMS confirmations, or email confirmations saved. These may be needed as proof when a claim is made.
3. Maintain 12 Months of Continuous Subscription: It is urged that you stay on the scheme for one entire year in order to be able to apply for reimbursement. Do not let there be any delays or discontinuities in payments.
4. Submit Your Claim on Time: Claims should be submitted within 30 days of losing your job. Otherwise, they can reject your application.
5. Understand the Exclusion Rules: If you resign voluntarily, are fired due to misconduct, or leave the UAE permanently, then you are eligible for compensation.
6. Stay Legally Resident in the UAE: To receive the monthly payments then your residence status and Emirates ID should remain valid.

For Employers

1. Ensure All Eligible Employees are Subscribed: Employers who fail to register can receive fines, and this can create internal issues for the company.
2. Educate Employees About the Deadlines and Payments: You have to send the reminder and explain the responsibilities clearly during the onboarding.
3. Maintain Documents at Termination: The company has to maintain the documents for the employee’s claim. Make sure the cancellation paper and experience letters are provided on time.
4. Monitor Compliance in Bulk for Large Teams: Use HR tracking tools to avoid missing subscription deadlines.

Flyingcolour Business Setup Can Help?

Flyingcolour Business Setup can help the HR department and businesses to deal with the regulations of the UAE, such as the  ILOE insurance scheme. We assist the companies with the subscription process. Additionally, we can help the employees by assisting them in selecting the right category and advising them on record-keeping to prevent penalties. Partnering with us allows employers to remain compliant, reduce the administrative load, and provide a safe working environment for their employees.

Frequently Asked Questions About the ILOE Scheme

1. Is ILOE insurance compulsory in the UAE?

Yes, it is necessary for all employees in the private and federal government sectors to participate in the ILOE scheme.

2. How long until I can make a claim after my job loss?

You may declare your entitlement within a month from the end of employment or settlement of the labour dispute.

3. What happens in the case of voluntary resignation or dismissal for misconduct?

In case of voluntary resignation or dismissal for misconduct, you will not be entitled to claim the benefit under the scheme.

4. What will be the amount I will get through the scheme?

Depending on your selection, you can get up to 60% of your basic salary averaged for a limited time.

5. What happens if I change jobs or change visa status?

If you have changed employer or visa status but your salary category remains the same your existing policy may remain valid. You have to always check the ILOE official portal to ensure your subscription. 

Therefore, to learn more about the ILOE Insurance in UAE, Book a free consultation with one of the Flyingcolour Business Setup team advisors.

 The article was published on 08/12/2025. It is important to note that the federal policies and updates mentioned may have changed since then. For the most current information, please contact our consultant!