To define it in simple terms, workers’ compensation insurance refers to the medical and wage benefits provided to people who are injured or get ill at work. The coverage is mandated by each state, with only the wage and medical benefits varying from state to state. Workers’ compensation is often viewed as a social insurance since it relies on a social contract between management and labor. Basically, by purchasing workers’ insurance, business owners are protected from civil suits from their workers who become injured on the job.

As far as the UAE is concerned, from October 2018 onwards, a new low-cost insurance policy that safeguards privates sector employees’ workplace benefits in case of a job loss, redundancy or an employer’s bankruptcy. This legislation, approved by the UAE cabinet, was first unveiled by Sheikh Mohammed bin Rashid, Prime Minister and Ruler of Dubai, it was preceded by Nasser Al Hamli, Minister of Human Resources and Emiratisation (MoHRE), confirming the changes that were effective from October 15.

New Rules for Low Cost Worker Insurance Policy in UAE

The new insurance policy: The Dh3000 bank guarantee companies that were previously mandated to deposit for each new hire has been replaced by the Dh60 annual policy, payable by employees. While the insurance premium costs 60 dirhams annually, the ministry issues work permits that are valid for two years, which implies that employers must pay 120 dirhams.

Protection offered by the insurance policy: this insurance policy covers all workplace perks, including end-of-service benefits, holiday allowance, overtime allowance, unpaid wages, return air tickets and cases of work injury, in a scenario wherein the employer cannot pay. The maximum payment limit is Dh20,000 per person.

Money already held for bank guarantees: Going by the ministry’s reports, about Dh14 billion held in employee deposits will be released back to companies. If you the owner of a company, you can either reclaim the money at the termination of an employment contract or on the renewal of a work permit. Firms will have to purchase the new insurance policy before the refund is paid out. In this context, however, it should be noted that if a company has any violation against it, such as failing to pay salaries within the last six months, it will not be eligible for a refund.

Scope of the scheme: This scheme applies to all private sector employees, including domestic workers, such as maids, drivers, gardeners, and cooks. As far as private workers are concerned, it covers end-of-service benefits, vacation and overtime allowances, unpaid wages, return air tickets and work injuries. When it comes to domestic workers, the policy encompasses the cost of replacing the worker in the unfortunate event of interruption of work, health inefficiencies, a return ticket to this country, etc.

Which employees will benefit the most?

This system is intended to be of maximum benefit to the vulnerable, low-income employees as the previous system only protected them up to Dh3,000 in the event of an employer not paying salaries or a firm’s insolvency. Thanks to the new policy, they can claim up to Dh20,000 for any payments that are owed to them. However, those on higher-incomes may have to incur losses, as the Dh20,000 will not be sufficient to cover their benefits, such as a gratuity or missing salary payments, if an employer is unable to pay them.

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