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UAE to begin refunding Dhs14bn of deposits to private sector firms

UAE to begin refunding Dhs14bn of deposits to private sector firms

The country is abolishing a worker guarantee system that requires a mandatory deposit of Dhs3,000 per employee

The UAE’s Ministry of Human Resources and Emiratisation said on Wednesday it would begin refunding billions of dirhams of bank-guarantees paid by private sector firms when they recruit workers.

The country’s cabinet approved a decision to abolish the mandatory deposit of Dhs3,000 ($817) private sector firms must pay when they hire employees in June.

Read: UAE announces new visa rules for residents, jobseekers and tourists

It is being replaced with a new insurance scheme that costs companies Dhs60 ($16) annually per employee.

UAE Vice President and Prime Minister Sheikh Mohammed bin Rashid Al Maktoum said at the time that the change would allow businesses to recover approximately Dhs14bn ($3.81bn) in guarantees already paid out.

The Ministry of Human Resources tweeted it would begin refunding businesses from the middle of October.

It said companies would be able to recover their bank guarantees upon cancellation of a worker’s declaration of guarantee or the renewal of the worker’s permit and purchase of the insurance policy.

“The new insurance system will allow private sector enterprises to recover the amount of bank guarantee they have paid,” the ministry said, adding the change will facilitate and reduce the cost of work.

The new insurance policy will cover workers’ end of service benefits, vacation allowance, overtime allowance, unpaid wages, return airline ticket and instances of work injury – in which the coverage amounts to Dhs20,000 ($5,445) per worker.

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