Insurance system for employees

On 15 October 2018, Ministry of Human Resources and Emiratisation (MoHRE) implemented a new insurance policy for employees. The new insurance policy was approved by the UAE Cabinet in June 2018 and it is intended as an alternative option to employers keeping a bank guarantee of AED 3,000 upon recruiting a new employee.

Cost of the new insurance policy

The new insurance policy for employees costs AED 60 per year, per employee, which means AED 120 for each employment permit issued for two years.

Whom does it protect?

It protects the benefits and rights of the private sector employees and domestic helpers.

How does the new insurance policy work?

• For employees currently in service

  For employees who are already secured under the bank guarantee of AED 3000, the employer has the option to either change them into the new insurance system or keep them under the old bank guarantee system. However, the employer can shift his current employees into the new insurance system only upon the renewal of their permits and not before.

   

• For new employees

Upon recruiting a new employee, the employer has the option to either submit AED3,000 bank guarantee on behalf of the employee, as per the rules and regulations of the current bank guarantee system already in place, or insure them under the new insurance policy which costs AED 120 for two years work permit.

Coverage and limit of the policy

In case of company’s bankruptcy or failure to pay the employees’ benefits, the new policy will cover a maximum insurance coverage of AED 20,000 per employee against the following benefits in the workplace:

• workers’ end of service benefits
• vacation allowance
• overtime allowance
• unpaid wages
• return air ticket
• work injury after it is determined by a court ruling.

For domestic workers, the policy covers the following:

• the cost of worker’s replacement, in case of work discontinuation
• if the worker is medically unfit
• if the worker decides to terminate employment unilaterally
• unpaid wages and entitlements
• service benefits
• unpaid vacations and overtime
• airfare to home country and work injuries’ compensations.

The coverage of the dues by the insurance company does not relieve the employers from their responsibilities, and they would still have to pay back to the insurance company all dues which the latter paid to the worker. 

If the employer does not repay the insurance company, MoHRE will suspend the employer’s file and freeze new work permits. It will also require the employer to provide AED 3,000 bank guarantee upon renewal of the existing work permits.

Note that health insurance is not covered by this policy.

How to get the bank guarantee refund and register in the new insurance policy?

The insurance document and bank guarantee refund can be processed and obtained from Tasheel and Tadbeer services centres and also through any of the MoHRE apps.

Firms can either reclaim the bank guarantee money when an employment contract is terminated or when a work permit is renewed. However, they must have purchased the new insurance policy before the refund is paid out. Note that any company with violations such as failing to pay salaries in the last six months will not be eligible for a refund.

Source: Ministry of Human Resources and Emiratisation (MoHRE)

Read also news coverage on the labour’s insurance system in the The National and Khaleej Times.