Latest Visa Insurance Changes Ensure Employees Get Their Gratuity
19th August 2022
In the latest effort to protect employee's getting their gratuity (end of service benefit, EOSB) owed to them when leaving their job, the Ministry of Human Resources And Emiratisation (MOHRE) has issued a resolution updating the obligations of employers in respect of providing either insurance or a bank guarantee when processing new visas.
UAE's Visa Bank Guarantee System - The History
Traditionally, employers deposited a visa bank guarantee of AED3,000 at the time of processing a new employee's visa. This was held for the duration of the employee's employment. The employer could then either request it to be refunded or keep it deposited for use against a future visa.
The Transition to Visa Insurance
In October 2018, as part of the government's plans to boost the economy and overhaul the UAE's visa system, an annual insurance scheme was introduced with the intention of compensating workers for their gratuity, flight ticket back to their home country, unpaid wages, notice pay, and expenses related to the repatriation of their body or local burial in the case of their death, in the event the employer is unable to pay, e.g in the instance that a company is in financial difficulty.
Latest Visa Insurance and Bank Guarantee Changes - 2022
Under Ministerial Resolution No. 318 of 2022 concerning bank guarantees and employees protection insurance scheme, companies registered with MOHRE are required to provide either an insurance policy or a AED3,000 bank guarantee valid for one year and automatically renewable for each employee at the time of processing their visa.
Whilst the Resolution doesn't stipulate the specifics of the amended insurance scheme, and we haven't been able to confirm the requirements first hand, local news reports are suggesting that the insurance scheme will change from employers paying a minimal annual premium, which is currently purchased for the longevity of the visa (2 years) when processing a new visa or renewing an existing visa, to a 30-month insurance policy.
New Visa Insurance Policy
As per The National and SME10x companies which opt for the insurance policy, rather than the AED3,000 bank guarantee, will be required to set up a 30-month insurance policy for each employee as follows:
Skilled workers - AED137.50 per month
Low skilled workers - AED180 per month
Workers of High Risk Establishments not registered with MOHRE - AED250 per month.
Similar to the existing scheme, the insurance will provide coverage of up to AED20,000 per employee in the event the employer is unable to meet their end of service obligations.
How companies can reclaim their visa bank guarantees
Companies which opt for the AED3,000 bank guarantee, rather than the insurance policy, will be entitled to reclaim the bank guarantee in the following four instances:
Cancellation of the employee's work permit and evidence of their departure from the country.
In the event of the employee’s death and evidence of the body's repatriation or burial in the country is submitted.
If the employee transfers to a new employer.
Any other cases in which the employer provides a proof of cancellation of the employee’s work permit and payment of entitlements due to the employee.
Instances when companies can't reclaim their visa bank guarantees
It should be noted that MOHRE can refuse a company reclaiming their visa bank guarantees in the following two instances:
If the employer is a party to a collective labour dispute, until the employee’s entitlements are settled.
If evidence of due fines against the company is proven, or in the event that work permits have been suspended. (Check out our recent article about the penalties for companies which are not compliant with the UAE's Wage Protection System.)
When does this resolution take effect?
Once the resolution has been published in the Official Gazette, it will come into force.
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Whether you are a solo-preneur, small business or larger organisation, outsourcing your visa processing saves you time and money; whilst removing the burden of keeping up-to-date with regulatory changes; and, abolishing the hassle and frustration associated with changes to processes. Gateway Group's concierge, on-the-ground business support services are designed to provide a seemless extension to our clients' in-house teams ensuring you stay compliant and managing your government transactions so you never over look an expiry date again or have to worry about where to go and what to do. Connect with us to discuss outsourcing your new visas and visa renewals to Gateway Group and learn how our visa service will provide reassurance to your business in Abu Dhabi and Dubai.
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Written by: Jenny Hunt
Founder, Gateway Group, Abu Dhabi & Dubai, United Arab Emirates
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