Workers Compensation Insurance

According to the UAE labor law, all employers in the UAE should provide compensation to their employees in the event of injury or death due to work-related causes. In many UAE free zones, basic workmen’s compensation policy is mandatory. It would cover the employer against the risk of work exposure. 

In some organizations, workers are exposed to the risk of accidents in the workplace. This may be due to the high risk in the nature of work that they perform. Administration employees may also be exposed to work-related accidents. Therefore organizational employees are protected under the UAE Federal Law No.8 of 1980 and other amendments related thereto. 

According to the Federal Law No.8 of 1980 of UAE, it is mandatory for the employers to pay compensation to the employees due to an accident that occurred during the course of work and during the tenure of the employment.

Workers Compensation Insurance extends to the following:

  1. Medical Expenses
  2. Expenses for Repatriation
  3. Employers Liability

1. Medical Expenses
For work-related accidents, treatment at Government hospitals or clinics is reimbursable. The amount of reimbursement depends on the premiums paid by employers.

2. Expenses for Repatriation
Repatriation expenses are the expenses incurred in transporting the deceased body to the home country. The expenses are covered in the worker compensation insurance and higher amount limits can be considered as per the premium paid.

3. Employer’s Liability
An employer can get protection for himself against the claim made by the employee under common law or Sharia Law. 

The premium amounts are applicable based on the estimated annual earnings of the employees in the company. This amount is adjustable at the end of the policy based on the actual earnings. 

There are various factors considered for estimating premiums such as the nature of work, location of the organization, risk in the business, and other factors. 

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What is covered under the Workers Compensation Insurance?

Worker’s compensation insurance is a protection for the employer. It is designed to safeguard the employer against payment of liabilities to employees. 

The main benefits of workers compensation insurance are as follows:

  1. Occupational death
  2. Permanent total disability
  3. Permanent partial disability
  4. Temporary Total disability
  5. Medical expenses

1. Occupational death

Compensation limited to twenty-four month’s remuneration. This amount is limited and subject to a minimum amount of AED 18,000 and a maximum amount of AED 35,000.

The territorial limit for the policy is UAE only and it can be extended to areas of work where the organization is involved such as Gulf Cooperation Countries (GCC).

2. Permanent total disability

If an employee is not able to work due to the work-related injury for a period of more than 12 months, this would be considered as permanent total disability. Compensation shall be paid which would be equal to a work-related death. 
This policy is included for work-related accidents and it can be extended to non-work accident disability.

Examples of permanent total disability are loss of both arms, loss of eyes, complete paralysis, etc.

3. Permanent partial disability

A partial disability may be due to work-related injury. Compensation shall be paid which would be a percentage of death amount and this is subject to the injury. 
Scale pay is as per schedule 2 of  UAE labor law or according to the govt doctor’s medical report. It can be extended to nonwork accidental disability.

Examples of Permanent partial disability are loss of one eye,  loss of one finger, injury to the leg, etc.

4. Temporary Total Disability

For temporary total disability compensation is paid by the employer. The time period from which the employee is unable to work compensation for lost wages is paid. A full amount of wages for the first 6 months and a half wages from the next 6 months will be paid. 

The amount will be paid until the worker fully recovers from the injury or is declared disabled or declared dead as the case may be. 

5. Medical Expenses

Expenses incurred by the injured employee for the treatment of the injury or disease such as rehabilitation expenses, surgeries, x rays, medicines, diagnostic tests, purchase of artificial limbs, etc. A specified amount per person per accident is provided. 
Example AED 15,000 to AED 30,000 per person per accident.

Terminal illness and critical illness expenses are not covered in this worker’s compensation insurance and hence medical expenses are not covered for critical illness or terminal illness. Terminal illness is a condition that will lead to death within 12 months in terms of the medical profession. 

An add on benefit can also be provided by the employers to the employees to cover the workmen’s compensation insurance. 

The cover can be extended to include accidents within the territorial limits but outside the working hours and this is in line with the benefits which are paid under the labor law.

Along with the above-discussed worker’s compensation insurance cover, employers can also add benefits to worker’s compensation insurance and employees can get benefits such as 

  • 24 hours of personal accident cover, this includes death or disability benefits which can be extended to accidental injury which has not occurred during the working hours or in the workplace
  • Death or injury resulting from sunstroke
  • Injury to employees during travel to the workplace or from the workplace to home. This travel is subject to transportation provided by the employer.
  • Increased death benefits amount to the employee

Any other accidental medical expenses and life insurance benefits as part of the policy package can be taken by the employer. This forms part of the overall employee benefits program for employees. 

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What is not covered in Workers Compensation Insurance?

The following are the major exclusions found under the worker’s compensation insurance in the UAE.

  • Natural death of the employee
  • Suicide or suicidal attempt of the employee to claim benefits
  • Any deliberate attempt for self-injury to claim insurance benefits
  • Any diseases or injuries resulting from the narcotics, alcohol and other intoxicants
  • Injury or death due to the exposure of nuclear radiation or electromagnetic fields
  • Injury or death due to the exposure of toxic mold, genetically modified organisms
  • Death due to the transmissible spongiform Encephalopathy
  • Death or injury due to the AIDS
  • Any violation of UAE or US or UK or UN or EU sanctions
  • Injury or death outside the territorial limits regardless of the work specified.

Take away

Employers should discuss with the insurance provider considering the size of the organization, number of employees, aggregate annual salaries payable in AED. Employers should also inform the insurance advisor about the physical working conditions and nature of work to analyze the risk. Based on these aspects insurance advisors will provide you competitive and comprehensive options for the insurance. 

Meet the author
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Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It’s a commercial mortgage banking company. He has a “Doctoral Degree in Commerce” and two master’s degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.







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