SHARJAH, 25 January 2005 — The UAE government has collected Dh2.2 billion in bank guarantees from employers as deposits in case of labor disputes with foreign employees.
Under a regulation laid down in 2002, every employer has to furnish a bank guarantee of Dh3,000 per employee at the time of applying for an employment visa or renewing existing work permits.
The provision was introduced when the Ministry of Labor and Social Affairs found it difficult to handle cases where the employer had gone bankrupt or did not settle dues to the workers for one reason or the another.
The bank guarantee will remain effective until the time the employer cancels the work permit of the employee after settling all dues and furnishes air passage home to the employee.
Whenever disputes arise and remain unsolved, the ministry would encash the bank guarantee and use the money to buy a ticket home for the employee and settle dues, if any, and return the rest to the employer. No detail was available of bank guarantees that were appropriated to settle disputes since the introduction of the mandatory requirement.
According to officials at the Ministry of Labor and Social Affairs, contracting companies furnished most of the bank guarantees as they recruit more workers.
Such companies recruited about 500,000 workers last year, of whom 300,000 were issued work visas over the last six months, said the officials.
Certain categories of companies as well as the government and its various agencies and departments are exempted from furnishing the guarantee, but the number of people they recruit was relatively insignificant, said the officials.
The amount covered by bank guarantees went up by Dh1 billion in the last six months after the ministry made certain amendments to the exempted categories.
The overall figure showed that the number of work permits issued and renewed was much higher than those which were cancelled in the last six months.
