Lesson 6 — ILOE: the worker's own obligation that you collect
ILOE is the one item in this course that is not your legal liability, and the distinction changes how you should configure it and how you should talk about it.
The obligation. Federal Decree-Law 13/2022 established the Involuntary Loss of Employment insurance scheme. The premium is the worker's own legal obligation — the employer facilitates collection through payroll, and that is the whole of the employer's role. Subscribing, keeping the subscription current and claiming are all things the worker does. Say so plainly to employees, because a worker who believes their employer handles it is a worker who finds out otherwise at the worst possible moment.
| Category | Basic salary | Monthly premium | Premium with 5% VAT | Monthly compensation cap |
|---|---|---|---|---|
| A | AED 16,000 or below | AED 5 | AED 5.25 | AED 10,000 |
| B | above AED 16,000 | AED 10 | AED 10.50 | AED 20,000 |
What the scheme pays. Compensation is 60% of the average basic salary over the six months before the loss of employment, capped at AED 10,000 a month for Category A and AED 20,000 a month for Category B, for up to three consecutive months per claim, with a lifetime limit of 12 monthly benefits. It is a bridge between jobs, not an income replacement, and the arithmetic below shows how far it actually stretches.
Who qualifies, and when to claim. The minimum qualifying period is 12 consecutive months of subscription with premiums paid, and a claim must be made within 30 days of the end of employment. Both conditions catch people out: a worker who lapsed on premiums has a subscription that does not pay, and a worker who takes a month to think about it has a claim window that has closed.
Who is exempt. Article 3 of the Decree-Law places five groups outside the scheme entirely:
- investors who own the facility they work in
- domestic workers
- workers on temporary contracts
- juveniles under the age of 18
- retirees who receive a pension and have taken new employment
The mental model and the click path. ILOE handling is a field on the employee form, in the same UAE Payroll & Social Security group, and it is off unless the worker asks for it. That default is correct precisely because the obligation is the worker's. At company level, Settings › Payroll carries ILOE premium includes VAT, which adds 5% VAT to the deduction and defaults on. Leave it on: the deduction should match what the worker actually pays, and rounding it down to a tidier figure creates a shortfall the worker owns.
The worked example. Two subscribed workers, one in each category.
| Worker | Monthly deduction | Cost over a year | Monthly compensation on a valid claim |
|---|---|---|---|
| Category A, basic AED 12,000 | AED 5.25 | AED 63 | AED 7,200 |
| Category B, basic AED 40,000 | AED 10.50 | AED 126 | AED 20,000 |
The Category A worker receives 60% of AED 12,000, which is AED 7,200 and sits below the AED 10,000 ceiling, so the ceiling never bites — 60% of the AED 16,000 category boundary is AED 9,600, which is still below it. The Category B worker receives the AED 20,000 ceiling rather than 60% of AED 40,000, because that would be AED 24,000. Across the maximum three consecutive months, one claim is worth AED 21,600 to the first worker and AED 60,000 to the second, against annual premiums of AED 63 and AED 126.
MISSING FACT: the administrative penalty for failing to subscribe to ILOE or to pay its premiums under Federal Decree-Law 13/2022, and the instrument that sets the amount.
The failure mode. Two configuration habits cause the trouble. Turning ILOE handling on for everyone as a matter of policy makes an employer decision out of a worker's own obligation, and it produces deductions that some of those workers never asked for and some are exempt from. Turning the VAT setting off to make the deduction a round number produces a payslip figure that does not match what the scheme collects, and the gap is the worker's to settle. Configure it per worker, on request, with VAT on.