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New employee insurance system starts

From October 15: New system replaces compulsory bank guarantee following UAE Cabinet’s decision

Image Credit: Atiq-ur-Rehman/Gulf News
The new insurance policy covers end-of-service benefits, vacation and overtime allowance, unpaid wages and more.
Gulf News

AT A GLANCE

■ New insurance policy replaces existing bank guarantee system

■ Insurance scheme costs Dh60 annually, providing Dh20,000 coverage per worker

■ It covers their end-of-service benefits, vacation allowance, overtime allowance, unpaid wages, worker’s return ticket and cases of work injury.

■ The insurance policy of domestic workers also covers the cost of replacing the worker in cases of his/her interruption of work, health issues or the desire (of the domestic worker) to cancel the working relationship.

■ In case of non-payment by employer, it also covers a domestic worker's unpaid wages and his/her financial benefits such as end-of-service and leave allowances and overtime allowance

■ Insuranace covers worker's return ticket.


Dubai: The Ministry of Human Resources and Emiratisation (MoHRE) has said that the issuance of employee insurance will begin on October 15.

This comes as per the UAE Cabinet’s decision to scrap the compulsory bank guarantee and replace it with a low-cost insurance system, according to the ministry.

Aisha Bel Harfia, Assistant Undersecretary for Domestic Worker Affairs, said the ministry has taken all necessary measures to begin issuing insurance documents and refunding bank guarantees to the employers, starting from the aforementioned deadline.

She said that establishments registered with the ministry will have two options. The first is to buy insurance that can be issued immediately when typing the work permit application at Tasheel or other establishments that can complete their own applications using the Tasheel e-service.

The other option is to submit a Dh3,000 bank guarantee on behalf of the employee, as per the rules and regulations of the current bank guarantee system, which will be available alongside the new insurance system.

This will allow employers to pick the option that suits them.

Tasheel, Tadbeer service centres

Service Bel Harfia clarified that the insurance document for domestic workers will be issued upon submitting applications through either Tasheel or Tadbeer service centres.

Insurance documents for private sector employees and domestic workers registered with the ministry will be issued through an insurance conglomerate that includes national insurance companies operating in the UAE, which have been chosen according to specific criteria.

Name of imageThe issuance of new employee insurance system kicked off on Monday, October 15, according to the UAE Ministry of Human Resources and Emiratisation (MoHRE). It replaces the compulsory bank guarantee with an affordable insurance system. Gulf News

The bank guarantee is replaced by a new insurance policy that costs Dh60 annually per worker, providing a coverage of Dh20,000 per worker covering their end-of-service benefits, vacation allowance, overtime allowance, unpaid wages, worker’s return ticket and cases of work injury.

The insurance policy of domestic workers also covers the cost of replacing the worker in cases of his/her interruption of work, health issues or the desire (of the domestic worker) to cancel the working relationship.

In addition, it also covers unpaid wages and the worker’s financial benefits such as end-of-service and leave allowances and overtime allowance, in case they have been not be paid by the employer, as well as a return ticket.

Bel Harfia said that the ministry will start refunding bank guarantees to employers, totalling about Dh14 billion as of October 15.

Bel Harfia added that the bank guarantees will be refunded to establishments when cancelling work permits of workers covered by these guarantees, which will thereby end the working relationship between the two parties or when purchasing the insurance policy upon renewal of the employee’s work permit, on the condition that the establishment has not committed violations related to non-payment of salaries during the last six months before the renewal of the expired permit.

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