Low-cost insurance initiative for workers starts today
dubai — The new low-cost insurance system, which takes effect today, will ensure long-term employee protection and enhance companies’ capital across the country, experts have said.
Starting Monday, the Ministry of Human Resources and Emiratisation (MOHRE) will start refunding bank guarantees of Dh3,000 per worker to employers, replacing it with a new insurance policy that costs Dh60 per worker.
The new low-cost insurance, implemented based on a cabinet decision made in June, is expected to pump Dh14 billion back into the private sector.
While officials said the ministry had taken necessary measures to begin issuing insurance documents and refunding bank guarantees to the employers, companies wait for the process to be applied smoothly. Industry professionals said the ma- jor cash liquidity would not only enhance their capital, but also ensure employees’ rights are upheld.
Manerker Sarvottam, finance manager at Emirates Logistics LLC in Dubai, said spending Dh3,000 as bank guarantees out of the budget had taken a toll on the company’s accounting. “We had no account over what was spent, which was a hurdle. But now, this new system secures the future of workers even more,” said Sarvottam.
With more than 250 employees in the free zone area, Emirates Logistics expects about Dh750,000 to be refunded to its accounts. Sarvottam said the huge amount could be invested in granting workers other types of benefits, such as a better medical insurance plan or better accommodation services.
“The budget can also be allocated for the overall business development and expansion,” he said.
With the Dh60 that will be paid to insure each worker annually, the system will offer a coverage of Dh20,000 per worker to include their end-of-service benefits, vacation allowance, overtime allowance, unpaid wages, worker’s return ticket, and cases of work injury.
“This will be of direct benefit to workers and will give them justice, even in the long run. The old system applied wasn’t directly linked to their rights,” he said. “However, the most important thing about the system is the actual documentation and implementation.”
The most important thing about the system is the actual documentation and implementation.” Manerker Sarvottam, finance manager
Such an amount can be used in investing in employees that are the company’s biggest gain.” Hisham Khalil, HR manager
Meanwhile, Hisham Khalil, Human Resources Manager at Team Engineering Enterprises in Dubai, said the new system frees companies from the burden of guarantees deposited to the bank annually. The system is expected to bring over Dh4.3 million back to their company that operates with 1,460 employees.
“Such an amount can be used in investing in employees that are the company’s biggest gain. It will provide better healthcare, safety on our sites, and improved accommodation camps,” said Khalil.
He added that the government made a “great call” in introducing the new system that will allow the private sector to benefit from the amounts usually deposited and kept at the bank without providing much advantage to the industry.
Khalil said his company would avail of the new scheme, which will automatically appear on the ministry’s platforms. Private firms will be able to apply for the policy immediately by typing in the work permit application.