Insurance Policy to Replace Bank Guarantee in UAE
Private companies in UAE can breathe a sigh of relief, as they need not spend millions on recruitment anymore. Recruiting workers is pretty expensive in UAE as it requires you to deposit an amount of Dh3000 as bank guarantee. A low-cost insurance scheme will replace the current system, which aims to reduce the cost of recruitment and at the same time protect employee rights. The annual charge of the new insurance policy is Dh60 and it will come into effect from mid-October.
The Ministry of Human Resources and Emiratisation plans to refund the bank guarantees, which is worth Dh14 billion. For companies involved in salary-related violations six months prior to renewing work permits, reimbursement will not be applicable.
The Ministry will work in collaboration with an insurance conglomerate led by Dubai Insurance Company. Workers of the private sector companies along with domestic workers registered with the ministry will be issued electronic insurance documents by the conglomerate. It’s not just the employers who get benefited from the insurance scheme, it also aims to protect the benefits of employees.
The positive outcomes expected out of the new initiative are-
- A decrease in cost of doing business
- Easier recruitment process
- Human resources from various nations
- Wage protection of workers
The UAE government has been coming up with a series of initiatives and relaxation in policies, aimed at making the country an investor friendly destination.