UAE: New Resolutions on Bank Guarantee, Employee Insurance Policies – News

This gives companies “the opportunity to choose the product that works best for them”

The UAE has issued a new resolution on private sector bank guarantees and employee protection insurance schemes.

The resolution issued by Dr. Abdulrahman Abdulmannan Al Awar, Minister of Human Resources and Emirate, provides businesses with the option to choose between offering bank guarantees and insurance policies.

This gives companies “the opportunity to choose the product that works best for them and helps reduce operating costs,” a senior official said.

Aisha Belharfia, the ministry’s assistant undersecretary for labour affairs, explained that under the new resolution, businesses have one of two options:

1. Provide a bank guarantee of not less than Dh3,000 per worker paid through UAE banks. The warranty is valid for one year and can be automatically renewed.

2. A 30-month insurance policy worth AED 137.50 per skilled worker; AED 180 per low-skilled worker; AED 250 per worker paid by high-risk institutions not registered with the Wage Protection System (WPS) Ram.

Coverage up to AED 20,000 including workers’ wages for the last 120 working days, end-of-service gratuities, repatriation costs; in the event of a worker’s death, repatriation of the body to the home country as determined by the relevant ministry or labour court , and other rights and entitlements that cannot be realized by employers.

Recover Bank Guarantee

The resolution outlines four situations in which an employer may file a claim to withdraw an employee’s bank guarantee or remaining bank guarantee:

1. Cancel the employee’s work permit and provide an exit certificate;

2. The employee dies and provides proof of the repatriation or burial of the remains in the UAE;

3. Re-employment of employees;

4. Other employers provide proof of the cancellation of the laborer’s work permit and payment of benefits.

The resolution is in line with a legislative framework aimed at protecting workers’ rights and supporting the business community.

Aisha Belharfia said: “The UAE’s commitment to safeguarding and balancing the rights of workers and employers reflects national legislation and underlines the country’s active role in key agreements originating from the International Labour Organization.”

Also read: