Dubai: If you are a small business owner in the UAE, any employee you hire must be covered by a bank guarantee or employee insurance. This requirement came into effect recently when the Ministry of Human Resources and Emiratization (MOHRE). The resolution also describes four cases in which the employer can request the recovery of the employee`s bank guarantee. Matthew Tailford, Director of Sovereign Corporate Services, said: « This is another progressive step by the UAE to protect workers` rights in the country. The new resolution is good news for private sector workers in the UAE and will provide the highest level of protection to the lowest-paid and arguably most vulnerable segment of the workforce. In the case of a claim under the insurance option, the product can be used to cover unpaid salaries in the last 120 business days, tipping fees at the end of the service or repatriation costs. The bank guarantee of 3,000 Dhs can be refunded to the employer if it is proved that all obligations towards the employee have been fulfilled. According to Natasha Sood, a senior partner at Dubai-based law firm Motei and Associates, the bank guarantee paid by the employer is intended to ensure that the bank will cover any costs that may arise during an employee`s employment period in accordance with the conditions set out in the ministerial resolution. However, if you choose the option of a bank guarantee, which requires you to pay at least 3,000 dirhams at the time of issuing or renewing a work permit, it is also important for a business owner to think about when you can recover these costs. A bank guarantee is a written commitment by the bank to support an obligation that an employer has given to a third party, in this case an employee. The resolution by Dr. Abdulrahman Abdulmannan Al Awar, Minister of Human Resources and Emiratization, offers institutions the opportunity to choose between a bank guarantee and an insurance policy. The new decision is an implementation of Article 8 of Cabinet Decision No.
18/2022 on the Classification of Private Sector Entities, subject to the provisions of the Law on the Regulation of Industrial Relations, which stipulates that all companies that comply with Federal Legislative Decree No. 33/2021 on the Regulation of Industrial Relations (hereinafter referred to as the « Labor Code »), pay a bank guarantee of AED 3,000 for each employee or insure each employee. The first facility can provide a bank guarantee with a validity of at least Dhs 3,000 for each employee, paid through a bank based in the United Arab Emirates. The warranty can be automatically extended and paid without further restrictions at the request of the Ministry of Human Resources and Emiratization. His Excellency Dr. Abdulrahman Al Awar, Minister of Human Resources and Emiratization, issued Ministerial Resolution No. 318 of 2022 on Bank Guarantees and Workers` Insurance in the Private Sector. Learn more on our website t.co/yCzNGe81xq #MOHRE pic.twitter.com/N4nqCKOSR9 Here you will find everything you need to know about the bank guarantee for employees. Private sector companies in the UAE now have two options for obtaining bank guarantees for employees to cover an employee`s end-of-service benefits if an employer does not. Under the new decision, the Department is entitled to deduct all amounts from the insurance or bank guarantee in four situations, such as covering the costs of repatriating an employee to his or her country of origin or in the case of a judgment ordering the settlement of an employee`s claims with the Ministry.
If the employer decides to pay a bank guarantee and subsequently decides to claim the employee`s bank guarantee or the remaining amount, it can submit an application to the ministry. The guarantee must be paid through a bank based in the United Arab Emirates and is automatically renewed for each year of service. `The guarantee shall be paid by an employer to one of the banks authorised by the State to use such a guarantee. In addition, the bank guarantee must be renewed every year to remain effective and sufficient to meet the threshold set by law, » said Mohammed El Dakamawy, an attorney at Dr. Mahmood Hussain Advocates and Legal Consultancy LLC. Although the possibility of covering certain personnel costs through an insurance scheme was recently announced, bank guarantees were a requirement of the past, as the legislation of the United Arab Emirates came into force in 2001. Written for SME10X, you can find the full article, as published, here: MOHRE enacts a new resolution for bank guarantees and employee protection insurance for the private sector. Aisha Belharfia said: « The UAE`s commitment to guaranteeing and balancing the rights of workers and employers reflects national legislation and highlights the country`s active role in key agreements emanating from the International Labour Organisation. » In case of waiting, the court can attach the amount of the bank guarantee to the guarantor. Article 417 of the CTL stipulates that an injunction on the amount of the bank guarantee is only possible if, in the opinion of the courts, the principal debtor requests an injunction for serious and exceptional reasons. The Dubai Commercial Cassation Court ruled on appeal No.
247/2007 that a court will not prevent the bank from paying the money to the beneficiary under the bank guarantee, unless there are exceptional and compelling reasons to do so, the claim is established in its entirety and provided that there are no prior judgments in favor of the principal debtor against the beneficiary on the basis of the same documents. The new rules should offer greater protection to workers. Photo: The National Article also mentions cases in which MOHRE may refuse to refund the bank guarantee to the employer. These include situations where an employee`s claims must be resolved after a labour dispute has been filed against the employer. The bank guarantee also cannot be reimbursed if fines have been imposed on the company or if the issuance of work permits for the operation has been suspended. According to a new decision by the Ministry of Human Resources and Emiratization on Tuesday, private companies can either pay an annual amount for each employee directly to a bank or pay monthly payments as part of an individual insurance policy. A new resolution on a bank guarantee and worker protection insurance for the private sector in the UAE was announced on 9 August. The first option allows an employer to provide a bank guarantee of AED 3,000 for each employee, valid for one year.