• Insurance Scheme to Replace Bank Guarantee System in Mainland
  • June 27, 2018
  • Law Firm: - Office
  • The situation

    The Cabinet of the United Arab Emirates has announced that an insurance scheme will replace the bank guarantee system in the mainland, which will continue to ensure that employers can cover the costs of foreign employees’ unforeseen circumstances. The effective date of this policy is not yet clear.

    A closer look

    • Insurance scheme details. The new insurance scheme will provide coverage of up to AED 20,000 per employer in case of unpaid wages and/or various allowances, return tickets and work-related injuries.
    • Previously deposited funds. Employers will be able to retrieve the funds deposited with the Ministry of Human Resources and Emiratisation (MOHRE) under the bank guarantee plan.
    • Cost. The new insurance scheme will only cost employers AED 60 annually per worker.


    Existing regulations require companies in mainland UAE that are registered with the MOHRE to deposit AED 3,000 for each work permit application as a bank guarantee (exemptions exist for the employment of skilled workers and depending on the company category) which covers similar situations that the insurance scheme will cover.


    The new scheme may ease monetary burdens for companies employing foreign nationals.