UAE New Labor Insurance Hearing to Swap Bank Guarantee System
UAE Government leaves no chance to surprise business investors, employers, and workers. The cabinet is highly sensitive when it comes to workers’ rights and securities. In past, many such schemes were found by Cabinet to enforce employee and employer benefits. Recently announce UAE New Labor Insurance scheme is one of them, it aims to supplant bank guarantees for workers. UAE companies and business owners will get bank guarantees refund for each worker with this scheme. Alternatively, this initiative will generate a bait of nearly Dh14 million to improve the nation’s economy and shrink the cost of business operating in the UAE.
Six-Fold Insurance Coverage Provide Best of Both Worlds
Starting mid-October, this ‘low-cost insurance’ scheme worth Dh60 estimate to provide coverage of Dh20,000 for each worker. Covering numerous ‘End of Service’ benefits, such as vacation grant, overtime stipend, due salaries, transit fees, return ticket to the home country, and work-related injuries. According to some officials, at present Dh3, 000 bank guarantee. The system considers as a red-tape that does not provide any privileges to employees. Such as notice, gratuity, and holiday. The move envisioned to provide more security to workers’ rights and reduce the recruitment cost of employers.
Employers can use the freed-up capital in many other ways, such as reinvestment. It anticipates that ‘vulnerable employees’, especially the less-paid blue-collar workers will attain more benefits out of this scheme. In case of any non-payment complaints of minimum entitlements, the Ministry of Human Resources and Emiratisation can withdraw the amount of insurance coverage to pay out employees.
Sources state that the jobseekers or individuals who get the ax or lose their job are permitted to avail six-month visa without any fee. The purpose of changing their visa status within the UAE at the time of secured employment. Also, there will an exemption over transit visas. Now transit passengers are not required to pay any entry fees for the first 48 hours.
UAE Government Go Over to Boost Economic system
Over the past three years during the oil price downer, there has been a hard time for the small and medium-sized enterprises. This newfangled scheme will support these companies to rise from ashes and smooth sailing with minimal entree to bank funding. The innovative approach to cost reduction will surely attract more businesses.
This cost-effective scheme will definitely help UAE to enhance economic competitiveness and remain in the good books. The highest global ranking systems in the ease of doing businesses. Certainly, the move will create more job opportunities and relief for job seekers and employers. The visa system will also be easy and simple with the induction of this new law. Officials stated that there will be no need for leaving and re-entering the country for the purpose of visa renewals.
Note: Bank Guarantee refund scheme is applicable only to UAE Mainland companies. And most important, the employer/company will be able to get a bank guarantee refund at the time of labor card renewal /cancellation. From 16 Oct 2018, a company did not require to submit a bank guarantee at the time of new employee hiring.
In case, you need assistance or support to understand this new labor low-cost insurance law, worker bank guarantees refund system and its benefits to your business, consult Business link UAE, an agency that helps in all legal processes of starting a business in Dubai, PRO & visa services for individuals and companies. Our well-experienced consultants will guide you through the entire process of bank guarantees refund given by companies.