The government of UAE replaces its traditional bank guarantee scheme with a new insurance policy. Previously private sector companies had to deposit AED 3000 whenever a new worker is recruited in the company. Now, this has been replaced with a new low-cost insurance policy. So far 14 Million AED has been deposited in banks on AED 3000 bank guarantee scheme, which will be refunded to the companies. The bank guarantee scheme provided only AED 3000 per employee during payout.
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What is a low-cost insurance policy?
Under the Low-cost insurance policy, the employer needs to insure each and every worker in the company by paying a premium of AED 60 per year.
The maximum coverage provided would be AED 20,000. It covers all the workplace privileges like the end of service benefits, overtime allowance, unpaid wages, any injuries at the workplace, etc.
How helpful is a Low-cost insurance policy?
If the employer fails to provide end of service benefits to an employee then the insurance policy would cover the benefits. But this policy does not cover gratitude, missing salaries, etc. Companies going default in paying more than 6 months salary will not be eligible for the coverage.
Is it mandatory to get low-cost insurance?
Private sectors which are willing to continue with AED 3000 deposit as bank guarantee scheme can proceed with it. But it is mandatory to opt any one of the schemes while recruiting an employee. This is applicable to private sector employees, maids, cooks, and other domestic workers as well.
How to register for low-cost insurance scheme?
Employers need to register their employees at any tadbeer or tasheel service centers.