The Ministry of Human Resources and
Emiratisation will begin the implementation of a low-cost insurance scheme in
replacement of the bank guarantee system for private sector employees, starting
from October 15.
The move is in line with the Cabinet decision
on the adoption of the insurance system as an alternative to the bank guarantee
provided by employers, which costs Dh3,000 per worker. In contrast, the
insurance will be priced at Dh60 per year per employee.
The decision was approved by His Highness
Shaikh Mohammad Bin Rashid Al Maktoum, Vice- President and Prime Minister of
the UAE and Ruler of Dubai, during the Cabinet meeting held in June.
The new system will release Dh14 billion back
to private companies and will help lower the cost of doing business.
The insurance policy, as per the new system,
covers the workers’ end of service benefits, vacation allowance, overtime
allowance, unpaid wages, return air ticket and cases of work injury, in which
the insurance coverage amounts to Dh20,000 a person.
The scheme is aimed at securing workers’ rights
in the private sector and reducing the burden on employers, allowing businesses
to recover about Dh14 billion in guarantees, freeing up capital for other
purposes such as reinvestment.
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