Private sector companies in the UAE now have two options to secure bank guarantees for workers, which aim to cover an employee's end-of-service benefits if an employer fails to do so. Under a new resolution issued by the Ministry of Human Resources and Emiratisation on Tuesday, private companies can either pay a yearly sum direct to a bank for each employee or pay monthly instalments under an individual insurance policy. A bank guarantee is a written commitment from the bank to support an obligation an employer has given to a third party, in this case, an employee. Option one allows an employer to provide a bank guarantee of Dh3,000 for each worker, valid for one year. The guarantee should be paid through a UAE-based bank and will be automatically renewed for each year of service. The second option would require a private firm to set up a 30-month <a href="https://www.thenationalnews.com/uae/government/2022/07/27/uae-doubles-down-on-penalties-for-employers-who-pay-wages-late/" target="_blank">insurance policy</a> for an employee. This will be paid monthly at a value of Dh137.50 for each skilled worker, Dh180 for each low-skilled worker and Dh250 for each worker paid by high-risk establishments that are not registered with the Wages Protection System. The insurance coverage amounts to up to Dh20,000 per worker and will protect them if their employer fails to fulfil their end-of-service commitments. In this case, the insurance policy will ensure that a worker is paid for his or her last 120 working days, receives an end-of-service gratuity, a return ticket to their home country, and expenses related to the repatriation of his or her body to their home country in the case of death. Ministerial Resolution No. 318 of 2022 was issued by Dr Abdulrahman Al Awar, Minister of Human Resources and Emiratisation, and is aimed at securing workers' rights in the private sector and reducing the burden on employers. “Offering establishments the option of choosing between providing a bank guarantee or an insurance policy gives them the opportunity to choose what is most suitable for them and helps in reducing the operational costs, enabling employers to fulfil their legal obligations towards their workers,” said Aisha Belharfia, assistant undersecretary for Labour Affairs at the Ministry. If the employer chooses to pay a bank guarantee and later decides to reclaim the worker’s bank guarantee or the remaining amount, they can submit a request to the Ministry. The resolution outlines four cases where the employer may submit a request: in the event of cancellation of the employee's work permit and providing proof of their departure from the country; in case of the employee's death and providing proof of the body's repatriation or burial in the UAE; if the employee is transferring to a new employer; or any other case in which the employer provides proof of cancellation of the employee's work permit and payment of entitlements due to the employee. The Ministry has the right to refuse the request if the private sector company is part of a labour dispute that involves many workers, has unpaid labour violation fines, or if the company’s work permits have been suspended. In some cases, the employer can get the reimbursement when the workers’ entitlements are settled.