The new low-cost insurance system, which takes effect today, will ensure long-term employee protection and enhance companies’ capital across the country, experts have said.

Low-cost Worker Insurance

Starting Monday, the Ministry of Human Resources and Emiratisation (MOHRE) will start refunding bank guarantees of Dh 3,000 per worker to employers, replacing it with a new insurance policy that costs Dh 60 per worker.

The new low-cost insurance, implemented based on a cabinet decision made in June, is expected to pump Dh 14 billion back into the private sector.

While officials said the ministry had taken necessary measures to begin issuing insurance documents and refunding bank guarantees to the employers, companies wait for the process to be applied smoothly. Industry professionals said the major cash liquidity would not only enhance their capital, but also ensure employees’ rights are upheld.

With the Dh 60 that will be paid to insure each worker annually, the system will offer a coverage of Dh 20,000 per worker to include their end-of-service benefits, vacation allowance, overtime allowance, unpaid wages, worker’s return ticket, and cases of work injury.

However, the most important thing about the system is the actual documentation and implementation.

A guide to the new insurance scheme

• >Dh 60-Amount that companies will pay for each worker’s insurance starting on October 15; instead of depositing         Dh 3,000 as bank guarantees per worker
• >Dh 14B-Amount of bank guarantees that will be refunded to the private sector
• >Dh 20K-Each worker’s coverage per the new scheme

For private workers, it covers end of service benefits, vacation and overtime allowances, unpaid wages, return air tickets and work injuries

For domestic workers, the policy covers the cost of replacing the worker in cases of interruption of work, health inefficiencies, or the domestic worker’s desire to cancel the work relationship, in addition to the unpaid wages and the worker’s end of service benefits, vacation allowance and overtime allowance if not paid by the employer,  a return ticket to his country as well as work injury cases

Establishments registered with the ministry will have two options:

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

Submit a Dh 3,000 bank guarantee on behalf of the employee, as per the rules and regulations of the current bank guarantee system

Safety net

The new insurance scheme would stimulate cash flow for businesses.The Dh 20,000 coverage would serve as a safety net for employees in case they didn’t receive their salaries on time or their employer went bankrupt.