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Guide · 6 min read

Unemployment Insurance (ILOE) in the UAE: What Startup Founders and Their Teams Should Know

The UAE's Involuntary Loss of Employment scheme is mandatory for most private-sector employees. Here is who it covers, who is exempt (including owners who work in their own company), how subscription works and what founders should tell new hires.

By Startup Roof Editorial ·

When you hire your first employees in the UAE, you quickly meet a list of acronyms: WPS, MOHRE, ILOE. The last one is the Involuntary Loss of Employment scheme, the UAE's unemployment insurance. It is mandatory for most private-sector workers, and new hires often ask founders about it.

This guide explains what the scheme is, who it covers, who is exempt, how subscription works and what a founder should build into onboarding. Facts come from the UAE Government portal, the official ILOE website and Federal Decree-Law No. 13 of 2022, all linked at the end. We have left out premium amounts; check the official pages for the current figures.

General information, not legal or tax advice. Rules change; check the official source.

What the scheme is

The official ILOE website says the scheme was introduced "in implementation of the Federal Decree Law No. 13 of 2022" and "provides security for employees who lost their jobs due to reasons other than disciplinary action or resignation until they find a new job."

The ILOE FAQ describes the aim as providing "a certain degree of protection for individuals in the private sector and federal government sectors by compensating them for a limited duration not exceeding 3 months for each claim in case of job loss because of termination."

The official ILOE flyer states that mandatory subscription started on 1 January 2023.

Who must subscribe

According to u.ae, "all employees in the federal government sector and the private sector are required to participate in the scheme by purchasing an insurance policy." The ILOE flyer says the scheme covers "Emiratis and residents working in the private and federal government sectors."

Note who pays: under the u.ae page, it is the worker who is required to pay the premium for the basic insurance package. That surprises some founders, who assume it works like an employer-paid benefit.

Who is exempt, including founders

The u.ae page lists the categories excluded from the scheme:

  1. investors (the owner of the establishment where they work)
  2. domestic workers
  3. employees with temporary contracts
  4. juveniles (those under the age of 18)
  5. Emirati citizens who have met the conditions for retirement, or retirees who receive a pension and have joined a new job.

The Decree-Law wording for the first group is "Investors (Business owners who own the entire business and manage it themselves)."

What this means for founders: if you own and run your company, you are likely in the investor category. But read the definition carefully. The Decree-Law wording refers to owners who own the entire business and manage it themselves. If you are a minority shareholder employed by the company, or you have co-founders, check with ILOE or MOHRE how your situation is treated rather than assuming you are exempt.

The two categories

The scheme sorts subscribers by basic salary. The u.ae page describes:

  • First category: a basic salary of less than 16,000 AED (the ILOE flyer says "16,000 AED or below").
  • Second category: a basic salary of more than 16,000 AED.

It adds that workers on commission-based pay "may choose either subscription category, if their basic salary is not defined in the employment contract."

The premium for each category is listed on u.ae and the ILOE site. We have not repeated it here; read it at the source so you always see the current amount.

What compensation looks like

According to u.ae, an insured worker is eligible for 60 per cent of the subscription salary for a period of 3 months, up to a monthly cap that differs by category. The ILOE website adds that the compensation is based on the average basic salary over the most recent six months before the job loss.

The ILOE website also says that over the insured person's entire working life in the UAE, total claim payments "shall not exceed 12 monthly benefits (regardless of the number of Claims submitted)."

Conditions for a claim

The u.ae page lists the conditions. In summary, the insured person must:

  1. have been subscribed for at least 12 continuous months
  2. have paid all premiums according to the schedule they chose
  3. prove that they are unemployed for reasons other than resignation
  4. not have been dismissed for disciplinary reasons
  5. submit the claim within 30 days of the end of employment or the resolution of a labour dispute
  6. not have an ongoing work absence complaint
  7. not base the claim on fraud, and the employer must not be fictitious
  8. not have lost the job because of strikes or non-peaceful protests
  9. be present in the country.

Compensation stops if the worker finds a new job during the compensation period.

How to subscribe

The u.ae page lists nine channels for subscribing and paying:

  1. the official ILOE website
  2. the ILOE app on Google Play and the App Store
  3. the ILOE contact centre
  4. business service centres (Tasheel and Tawjeeh)
  5. ATMs and kiosks
  6. exchange companies
  7. mobile apps of some banks
  8. SMS through du and Etisalat
  9. the BOTIM app.

The ILOE flyer lists the documents needed as an Emirates ID or Unified Number and a valid UAE mobile number. Payment can be monthly, quarterly, semi-annually or annually, according to the flyer.

What founders should do

Even though the worker subscribes and pays, the employer is the one new hires turn to with questions. A few simple steps help.

Add ILOE to your onboarding checklist

Alongside the contract, WPS salary set-up and health insurance, add a line reminding each new hire to subscribe to ILOE and pointing them to the official site. Our post on hiring your first employee in the UAE covers the rest of the checklist.

Explain the category clearly

The category depends on basic salary, not total package. If your offer letters separate basic salary from allowances, the basic figure is the one that matters for ILOE.

Point to official sources only

There are look-alike sites and messages for almost every government scheme. Share the official ILOE website and app only.

Check your own status

As a founder, confirm whether you fall into the investor exemption. If you are unsure, ask ILOE directly.

Keep it separate from your own benefits

ILOE is a minimum safety net set by law. It does not replace any benefits you choose to offer, and it does not change your end-of-service obligations under the labour law.

Common mistakes

  • Assuming the employer pays. Under the u.ae page, the worker pays the premium.
  • Using total salary to pick the category. It is based on basic salary.
  • Assuming every shareholder is exempt. The exemption wording refers to investors who own the establishment where they work; check how it applies to you.
  • Forgetting the 30-day claim window. Claims must be filed within 30 days of the end of employment or the dispute resolution.

Official sources

Last checked: 18 October 2026.

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