DUBAI: The market is keenly discussing the positives of the government move to replace the employees’ bank guarantee scheme with a new insurance scheme, which will inevitably release about AED15 billion staying with the banks to the companies that have deposited this fund over a period of time.
And in the process, it is widely believed that this will translate into a windfall to thousands of small cash-strapped companies in the UAE as the funds that idled in the banks for years together will come back to them, and that the funds could be substantial for small players at a time when they find it hard to access bank loans.
Interestingly, there is another class of hundreds of small companies, which stand to ‘reap without sowing’ by virtue of the new move as these companies had sourced this fund from their employees themselves at the time of the introduction of the scheme – in 2001, if they wanted to retain the job.
And the big question now is whether these companies will return the funds thus deposited with the banks to the respective employees. On the one hand, these companies are likely to argue that they would take care of the future insurance premium and thus shrewdly pre-empt the employees from staking the claim on that AED3000.
In many other cases, the companies have already been closed down or the employees have left the company or moved on to take up other job assignments elsewhere.
A few former employees from Kerala, the southern-most state of India that historically accounts for a big number of expatriate population in the UAE, have called up businessbenchmark.news to enquire about the possibility of getting their money back since they had paid that money on behalf of their employers.
The fact is that no employee can raise this issue as his/her claim because on paper, the funds have been deposited by the companies. At the time of the introduction of the bank guarantee scheme, about 17 years back, these companies used to place two options before their employees to address the fund-raising part of the bank guarantee – either allow cutting the AED3000 from their salaries in installments in the ensuing months or the employees pay for themselves the AED3000 upfront to avoid risking their jobs.
Several other companies had put up this AED3000 as part of the initial expenses that the prospective employees needed to pay up as a prerequisite for their appointment, especially those opted the agency route to get the job.
Employees in such firms were given strict warning not to reveal the modus operandi of raising deposits during that period.