Low-cost insurance system takes effect

Anew low cost insurance system providing coverage of Dh20,000 for employees officially came into effect yesterday.

Announced in June by the UAE Cabinet, the policy replaces the compulsory Dh3,000 bank guarantee that companies had to spend for employees. The Ministry of Human Resources and Emiratisation (MoHRE) will start refunding bank guarantees to employers worth up to Dh14 billion in total.

Employers can now buy insurance for employees at Dh60 annually per worker, providing coverage for the employee’s end of service benefits, vacation allowance, overtime allowance, unpaid wages, worker’s return ticket and work related injuries.

For domestic workers, the insurance policy will cover the cost of replacing the worker in cases of health issues or the desire of the domestic worker to cancel the working relationship, in addition to unpaid wages, end-of-service benefits, leave and overtime allowance, in case they have been not be paid by the employer, as well as a return ticket.