It costs less than a coffee, yet it is one of the most commonly missed items on a new hire’s checklist. ILOE, the UAE’s mandatory Involuntary Loss of Employment insurance, is AED 5 or AED 10 a month. Skipping it brings a fine, and an unpaid fine can complicate the next work-permit transaction. If you have staff, this is a five-minute fix that avoids a very annoying delay.
- AED 5 + VAT a month if basic salary is AED 16,000 or less, AED 10 + VAT above that.
- Pays 60% of average basic salary for up to 3 months after involuntary job loss.
- Fine for not subscribing: AED 400. Fine for not paying premiums: AED 200 per MoHRE.
- New joiners should subscribe within 4 months of their work permit being issued.
Cost and payout by category
| Category | Basic salary | Premium | Annual cost | Max monthly payout |
|---|---|---|---|---|
| A | AED 16,000 or less | AED 5 + VAT a month | About AED 60 | AED 10,000 |
| B | Above AED 16,000 | AED 10 + VAT a month | About AED 120 | AED 20,000 |
Worked example. An employee on AED 12,000 basic who loses their job is entitled to 60%, which is AED 7,200 a month, or AED 21,600 over three months, for roughly AED 60 a year in premiums. At AED 25,000 basic (Category B), 60% is AED 15,000 a month, so AED 45,000 over three months for about AED 120 a year.
Who must subscribe, and who is exempt
Subscription is mandatory for private-sector and federal government employees. Commonly listed exemptions are investors working in their own company, domestic workers, temporary-contract workers, people under 18, and retirees drawing a pension who start new employment. Some guides say employees in DIFC and ADGM follow separate rules, so confirm for your zone.
Who is legally responsible?
This is where sources differ. The legal duty to subscribe sits with the worker, and a premium can be paid by the employee. In practice, many employers handle enrolment during onboarding because the penalty and any permit friction land on the company’s day-to-day operations. Adding ILOE to your onboarding checklist is cheap insurance for your HR admin, not a legal grey area worth testing.
Fines and what they can trigger
| Situation | Fine (per MoHRE guidance) | Knock-on effect |
|---|---|---|
| Not subscribed, or past the 4-month window | AED 400 | May hold up work-permit transactions |
| Premiums unpaid | AED 200 (some sources say AED 400) | Policy can be cancelled after about 90 days unpaid |
| Fraudulent claim with employer help | Up to AED 20,000 reported | Legal exposure for both sides |
Claims: the details that decide payout
- You generally need 12 consecutive months of subscription before a claim, and a long gap in cover can break that chain.
- File the claim within 30 days of termination.
- Payout applies to involuntary loss of employment, so resignations and disciplinary dismissals generally do not qualify.
Add it to your onboarding checklist
ILOE sits next to visas, medical insurance and contracts in your first-hire process. See our guide to hiring your first employee, plan the exit side with the gratuity calculator and provisioning guide, and check headcount obligations in Emiratisation quotas.
FAQ
Is ILOE the same as end-of-service gratuity? No. Gratuity is paid by the employer on leaving. ILOE is an insurance scheme that pays after involuntary job loss.
Does the premium come out of salary? That depends on your contract and practice. Many employers pay it as a benefit.
Always check the current rules on the MoHRE website. Want an onboarding checklist for your first hires? Ask BizDaddy.
