When an employer goes bankrupt or does not pay its staff, what does a worker have to fall back on? The UAE has two tools for this: a bank guarantee for each worker, or an insurance policy that does the same job. It matters for employers too, because they must have one of the two for every worker. This article is based on the "Insurance against defaulting/non-compliant employers" page of the official UAE Government portal (`u.ae`), checked on 25 October 2026.
The employer's two options
The Ministry of Human Resources and Emiratisation has applied this scheme since 15 October 2018 and treats it as an alternative to the mandatory bank guarantee.
| Option | Condition |
|---|---|
| Bank guarantee | At least AED 3,000 for each worker, for one year and renewed automatically, payable at the ministry's request |
| Worker insurance policy | Bought from the "Insurance pool" website; the policy is issued instantly when the work permit application is filed through approved centres |
Workers registered under the AED 3,000 guarantee can move to insurance only after their permit is renewed.
What the insurance covers
| Private sector employees | Domestic workers |
|---|---|
| Unpaid wages for up to the last 120 days before the last working day | End-of-service gratuity and unpaid wages, at most the last 120 days |
| End-of-service gratuity | Unpaid repatriation costs and unpaid treatment of occupational injury or disease |
| Repatriation costs | Repatriation of the body in case of death |
| Repatriation of the body in case of death | The ticket of an absconding domestic worker, if reported and found during the cover |
| Treatment of occupational injury or disease | Other financial dues under Federal Law No. 10 of 2017 |
| The ticket of an absconding worker, if reported and found during the cover | — |
Health insurance is not part of this policy.
Cap and premiums
| Subject | Amount |
|---|---|
| Cover cap, private sector | AED 20,000 per worker |
| Cover cap, domestic workers | AED 20,000 per claim, including the total of all claims during the cover |
| Premium, skilled worker | AED 137.5 |
| Premium, low-skilled worker | AED 180 |
| Premium, high-risk establishments not compliant with the Wage Protection System | AED 250 |
| Premium, domestic worker | AED 105 |
| Policy validity | 30 months |
The premium is per certificate or transaction, and the page does not call it "annual".
Repaying the insurer
The insurer's payment does not release the employer; the employer must repay the insurer what it paid the worker. If it does not, the ministry suspends the establishment's file, blocks new work permits and requires an AED 3,000 bank guarantee on permit renewal. This rule is for companies, not domestic workers.
Recovering the bank guarantee
The employer may recover the bank guarantee in these cases:
- the work permit has been cancelled and proof of the worker's departure provided;
- the worker has died and the body was repatriated or buried in the UAE;
- the worker has moved to a new employer's sponsorship;
- any other case in which the employer proves cancellation and full payment of dues.
The condition for a refund on renewal is no salary payment violation in the six months before renewal. Insurance documents and refunds are handled through business service centres, domestic worker recruitment offices or the ministry's app.
Three separate kinds of cover for a worker
This insurance should not be confused with unemployment insurance. The UAE Government portal explains the two on separate pages:
| Subject | Worker protection insurance | Unemployment insurance (ILOE) |
|---|---|---|
| Buyer | The employer, for each worker | The employee; per the portal page, all private sector and federal government employees must buy a policy |
| Risk covered | The employer not paying wages and dues | Losing a job for a reason other than resignation or disciplinary dismissal |
| Cap | AED 20,000 per worker | AED 10,000 or 20,000 a month, for at most 3 months |
| Cost | AED 105 to 250 per certificate | At most AED 5 or 10 a month |
Health insurance is separate too and is in neither of these.
Two examples
These examples are hypothetical and only apply the official rules above.
Example 1: a company with 10 skilled workers. The employer wants to compare the bank guarantee and insurance.
| Option | Calculation | Amount |
|---|---|---|
| Bank guarantee, money locked up | 10 × 3,000 | AED 30,000 |
| Insurance policy, premiums for 30 months | 10 × 137.5 | AED 1,375 |
Example 2: a worker owed four months' salary. A worker with a monthly salary of AED 4,000 has not been paid for the last four months and the employer has disappeared.
| Item | Calculation | Result |
|---|---|---|
| Unpaid salary | 4 × 4,000 | AED 16,000 |
| Salary cover | Up to the last 120 days | Four months is about 120 days |
| Overall cover cap | — | AED 20,000; about AED 4,000 left for the gratuity and repatriation |
How exactly the insurer counts the days is not on the page; the figures are estimates.
Practical points
- Employers: have either a guarantee or insurance for every worker; insurance locks up less money.
- Employers: if the insurer has paid a worker, repay it on time so your file is not suspended.
- Workers: this insurance goes up to AED 20,000; for larger claims, see the complaint route in the article "Labour complaints and disputes in the UAE".
- Health insurance is separate and not covered by this insurance.
- Unemployment insurance is a separate subject too; see the article "Compulsory unemployment insurance in the UAE".
Royal Golden does not give legal or insurance advice. This article is general information, and the decision on any claim rests with the insurer and the Ministry of Human Resources and Emiratisation.
Sources
- UAE Government portal, Insurance against defaulting/non-compliant employers — https://u.ae/en/information-and-services/jobs/Workplace-regulations/insurance/insurance-system-for-employees-in-the-private-sector (checked on 25 October 2026)
- UAE Government portal, Unemployment insurance scheme — https://u.ae/en/information-and-services/jobs/Workplace-regulations/insurance/unemployment-insurance-scheme (checked on 25 October 2026)