Ministerial Resolutions on Bank Guarantee

Ministerial Decisions
RESOLUTION NO 218, FOR 2001
RESOLUTION NO 373, FOR 2004
RESOLUTION NO 19, FOR 2005

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 UNITED ARAB EMIRATES
MINISTRY OF LABOUR AND SOCIAL AFFAIRS
MINISTER’S OFFICE

Date: 30.4.2001

MINISTERIAL RESOLUTION NO 218, FOR 2001,

ON THE EXECUTIVE REGULATIONS TO THE COUNCIL OF
MINISTERS RESOLUTION NO 14 FOR 2001 REGARDING
THE BANK GUARANTEE REFERRED TO UNDER COUNCIL
OF MINISTERS RESOLUTION NO 14, FOR 1999
( Amended )

The Minister of Labor and Social Affairs:

After having reference to the Federal Law No 1, for 1972, on the

functions of the Ministries and the powers of the Ministers, and
the amending laws thereof;

And to the Federal Law No 8 for 1980, on regulation of labor

relations, and the amending laws thereof;

And to the Council of Ministers resolution No 14, for 2001. on

bank guarantees;

And after consultation with the competent authorities;

And based on the meeting of the Higher Committee for Labor

Affairs, No 33, dated 21.4.2001.

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 RESOLVES AS FOLLOWS

CHAPTER ONE
DEFINITIONS

ARTICLE ONE

The following expressions shall have the meanings shown against

each, unless the context requires otherwise:

The Ministry: The Ministry of Labor and Social Affairs.

The Law: The Federal Law No 8 for 1980, as amended, on regulation

of labor relations, and the executive regulations thereof.

The Resolution: The Council of Ministers’ Resolution No 14 for

2001 regarding the bank guarantee.

The Committee: The Committee set up by Ministerial resolution No

160 for 2001, at the Ministry’s premises in Abu Dhabi and Dubai,
according to geographical jurisdiction.

Bank Guarantee: The guarantee that complies to the format and

conditions shown on Form No (1).

CHAPTER TWO
SUBMISSION OF BANK GUARANTEE

ARTICLE TWO
1. This resolution shall apply to the firms engaged in the following
activities and areas:
Contracting, transport, garment factories, oil field services,
maintenance, private schools, sale and import of vegetables and
fruits, garages, cleaning, garment tailoring and leather products.
Crafts (shown on table 1 attached), groceries. Cafeterias.
Restaurants and cafes.

2. These Regulations shall apply to every firm licensed to practice

any of the activities mentioned under sub-clause (A) hereof, even
if licensed to practice other activities not mentioned in the said
sub-clause.

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3. These Regulations shall apply also to all cases of sponsors and
service agents.

ARTICLE THREE
There shall be excluded from application of these Regulations:

A. Firms where the government is a co-owner.

B. Firms active in the banking sector.
C. Firms active in the insurance sector.
D. Firms active in the oil sector.
E. Firms active as first class hotels (according to the classification of
the competent authorities).
F. The firms mentioned under (A) hereof and to which the status of
sponsor or service agent applies.
G. Companies owned by Nationals, or establishments wholly owned
by Nationals and are directly managed by them, save for those
exclusively mentioned under Article 2 hereof.
H. International representation offices.

ARTICLE FOUR
The bank guarantee that employers have to submit to the Ministry
upon consent to the importation of a labor shall be in strict
accordance with Form No 1, and shall meet the following
conditions:

A. Issued by a bank operating in the UAE.

B. Valid for one year from the date of issue, and renewable
automatically.
C. Can be liquidated or partially refunded at the Ministry’s request, as
per Form No (2) or (6), without claiming the original guarantee,
and without prejudice to the validity of the bank guarantee.
D. Negotiable.

ARTICLE FIVE
The following shall be observed upon submission of bank
guarantees:

1. The Ministry’s employment permit committees stamp applications

for employment permit and those for transfer of sponsorship, while
the production unit stamps applications for issue, or renewal, of
employment cards or requests of those sponsored by their guardians

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 (for firms not subject to the bank guarantee requirement), using a
stamp specially made for this purpose.
2. The Bank Guarantee Section deletes the (GUARANTEE
REQUIRED) phrase from the system and sends the transaction back
to the Production Unit or to the concerned organ in each labor office
to finalize the relevant procedures.
3. The Ministry’s employment permit committees send the approved
permits of firms subject to the bank guarantee requirements to the
Production Unit at the Ministry or to the concerned organ in each
labor office to finalize the relevant procedures.
4. The Production Unit at the Ministry or the concerned organ in each
labor office stamps the applications with a special stamp designating
them as requiring bank guarantee.
5. After recording the transactions and finalizing the pertinent
procedures, the Production Unit or the concerned organ in each labor
office sends a notification to the applicant firm requesting it to
furnish the Ministry with the required bank guarantee according to
form (9).

ARTICLE SIX
1. The firm delivers the bank guarantee to the Production Unit or
the concerned organ in the respective labor office, which checks
it and ensures that its value corresponds with the number of
employees as given in the approved application.
2. The Ministry’s Administrative and Financial Affairs delivers to
the Bank Guarantee Section the bank guarantee receipt form (as
per form No 3). This receipt form is serially numbered for
financial control purposes.
3. The Production Unit or the concerned organ at the respective
labor office enters the bank guarantee data into the computer and
furnishes applicant with two original, system-generated receipts.
4. At the end of the day, the Production Unit sends these guarantees
to the Bank Guarantee Section, according to the system-
generated list of received guarantees.
5. The Bank Guarantee Section checks the received original bank
guarantees against the list of guarantees, before filing them, and
reports any remarks or irregularities to the Under-Secretary.

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 ARTICLE SEVEN
1. The Bank Guarantee Section keeps the original guarantees in
special files:
- Bank guarantees issued by a particular bank shall be filed in
separate file(s) marked with the name of that bank.
- For easy reference, each file shall be marked with the filing
date of the first and last guarantees filed therein.
2. Each firm shall have a separate bank guarantee account under its
name and number. Such an account shall be entered in the
computer, and shall allow additions and reductions, as the case
may be. Special software shall be developed for this purpose.
3. Where a firm delivers a bank guarantee from another bank, that
guarantee shall be added to the firm’s system-registered account
bearing the firm’s name and number, provided that the name of the
issuing bank, the guarantee’s value and the number of employees it
covers shall be clearly stated. Applicant shall be provided with a
system-generated receipt signed by the person authorized to
receive the guarantee as per form No 3.

CHAPTER THREE
GRADUAL APPLICATION OF BANK GUARANTEE
ARTICLE EIGHT
1. For the purpose of implementing the Council of Ministers’
Resolution No 14 for 2001, the firms that are subject to the Federal
Law No 8 for 1980, as amended, shall be grouped into five
categories as follows:
- Category One: sponsoring over 10,000 employees.
- Category Two: sponsoring 5,001 to 10,000 employees.
- Category Three: sponsoring 1,001 to 5,000 employees.
- Category Four: sponsoring 101 to 1,000 employees.
- Category Five: sponsoring 1 to 100 employees.

2. Categories one, two and three shall submit a lump sum bank
guarantee of AED 500,000, covering all their workforce, before
they can apply to the Ministry for issue of new employment
permits. Thereafter, these firms will not be required to submit new
bank guarantees.

3. Category four shall submit a lump sum bank guarantee of AED

300,000, covering their entire workforce. This guarantee shall be

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 paid gradually within one year from the date on which the
resolution comes into force, as follows:

A. These firms shall pay the prescribed bank guarantee for any new
employment permit to be approved by the Ministry, at the rate
of AED 3,000 per employee.
B. They must have submitted bank guarantees for at least AED
150,000 during the six months following the date of
effectiveness of the resolution, and shall complete the required
guarantee value within the year specified in the resolution.
After the lapse of this period, dealing with such firms shall be
suspended, and they may be sued too if the said period lapsed
before they could complete the guarantee value.

4. Category five shall submit a bank guarantee of AED 3,000 for

each one of their employees, according to their actual number, to
be made either once or in several installments upon renewal of
employment cards. The bank guarantee for the entire workforce
shall be fully paid within three years from the start of gradual
application of the bank guarantee arrangements. Thereafter, these
firms shall pay the prescribed bank guarantee for any new
employment permit to be approved by the Ministry.

ARTICLE NINE
Applications for transfer of sponsorship or for issue of employment
cards for those sponsored by their guardians shall be treated as
application for new employment permit and shall be subject to the
same conditions specified under Article 8 hereof.

ARTICLE TEN
Upon renewal of an employment card, the staff in charge at the
Production Unit or the competent labor office shall check the firm’s
category as per Article 8 hereof and shall observe the following:

1. Ensure that the first three categories, sponsoring 1,001 employees or

more, have paid the required bank guarantee (AED 500,000), before
proceeding with renewal of employment card.
2. Employment cards for category 4 firms, sponsoring 101 to 1,000
employees, may be renewed during the first year of implementation of
the resolution, provided that the firm submit a bank guarantee of no
less than AED 150,000 during the first six months of the resolution’s
effectiveness date, and shall complete the value to AED 300,000 by
the end of the year.

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3. Category 5 firms, sponsoring 1 to 100 employees, shall pay the bank
guarantee upon renewal of each employment card for which no
guarantee was paid when these regulations became effective.
CHAPTER FOUR
LIQUIDATING THE BANK GUARANTEE

ARTICLE ELEVEN
A. A bank guarantee may be charged, by virtue of a liquidation or
partial payment order (Form 4) to be generated from the system by
the Ministry’s concerned department or the manager of the
competent labor office. This shall apply exclusively to the following
cases:
1. Cost of employee’s repatriation to his point of origin or to the
point agreed upon with the employer.
2. The amounts that the employer admits before the competent
labor department are due to the employee.
3. Where a ruling is issued by a UAE court in favor of fulfillment
of the employee’s rights.

B. The liquidation or partial payment form (form 3 or 6) shall be

signed by the official in charge of the bank guarantee section and
manger of the department concerned, or by the manager of the
competent labor office. In all cases, the manager of the proponent
department and the official in charge of the bank guarantee section
shall, before giving their approval, ensure that the liquidation or
partial payment of the bank guarantee has been processed according
to the provisions of the resolution and the regulations.
C. The form shall be generated from the system in original and two
copies. The firm’s account shall be automatically adjusted in the
system upon issue of the form:
D. The original: to the payee for cashing the amount from the
concerned bank.
E. Copy: to the concerned department.
F. Copy (plus attachments) to the bank guarantee section.
G. The liquidation/partial payment form shall be delivered to the payee
by the proponent department.

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 ARTICLE TWELVE
Liquidation of the bank guarantee shall not be resorted to unless the
employer is notified in writing of the existence of a financial claim,
which he fails to settle within ten days from the claim date, without
prejudice to any legal remedies the Ministry is allowed to adopt.

ARTICLE THIRTEEN
A guarantee may be liquidated in favor of any of the firm’s
employees, whether those for whom the bank guarantee was paid upon
approval of their importation, or any of the existing employees who
were not covered by the guarantee, if the employer fails to honor the
rights of any of his employees,

ARTICLE FOURTEEN
Employer may not recover the bank guarantee in whole or in part if he
has not honored all his obligations to the Ministry.

ARTICLE FIFTEEN
Without prejudice to Article 14 hereof, an employer may recover
the bank guarantee in whole or in part in the following cases:
1. The whole guarantee (if presented for a single employee) may
be recovered in the following cases:
A. Canceling an employee’s sponsorship and deporting
him (subject to submission of proof of deduction).
B. Upon the death of the employee (subject to
submission of substantiating documents and proof of
deduction).
C. Upon consent to the transfer of an employee’s sponsorship to
another employer.
D. Any of the other circumstances where the sponsor is required to
submit proof of deduction.
2. A part of the guarantee (covering more than one employee) may
be recovered in the same circumstances noted above, provided
that the said guarantee is replaced by another whose value
corresponds to the number of remaining employees.
3. An employer may claim refund of the entire or remaining portion of
the bank guarantee, in case the firm’s card is cancelled and employer
has paid all his obligations to the Ministry as per form No 7.

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 ARTICLE SIXTEEN
The department concerned at the Ministry or at the competent labor
office receives applications for refund or reduction of bank guarantee,
as per form no 5, checks and verifies the submitted documents, and
issues refund or reduction order to the bank guarantee section which
accordingly issues a letter to the issuing bank, using form no 7 or 8, as
the case may be.

ARTICLE SEVENTEEN
The bank guarantee may be deducted wholly or partially from the
employee’s salary or other dues.

CHAPTER FIVE
GENERAL PROVISIONS
ARTICLE EIGHTEEN
The Ministerial Resolution No 70 for 1992 on obligating employers
reporting the escape of their employees to provide bank guarantee to
cover the ticket fare for those employees, shall apply if the employees
who allegedly deserted their employment are not covered by bank
guarantee. The employer may recover the bank guarantees submitted
in connection with reporting the escape of employees that occurred
before these regulations came into force, if he has fully paid the bank
guarantee whether or not his firm is subject to the said resolution.

ARTICLE NINETEEN
Any firm that violates any of the provisions of these Regulations shall
be liable to the legal actions specified in the Federal Law No 8 for
1980, its amendments and executive regulations.

ARTICLE TWENTY
The Ministry’s Administrative and Financial Affairs Department shall
oversee the enforcement of these Regulations in accordance with the
financial and accounting policies in force.

ARTICLE TWENTY ONE

The Under-Secretary shall submit a periodic report showing:
1. Number and total value of letters of guarantee submitted, according
to the classification mentioned in the resolution.
2. Number of employees who were imported or had their sponsorship
transferred during the report period, compared to corresponding
periods of the years before the Resolution was put into force.

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3. The cases where the guarantees could or could not be liquidated, and
the reasons for such action.
4. Any other information necessary for evaluation and annual review.

ARTICLE TWENTY TWO

This resolution shall come into force on the date hereof and shall be
put into effect by the concerned parties in so much as it applies to
them.

Mattar Humaid Al-Tayer

Minister of Labor and Social Affairs

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 UNITED ARAB EMIRATES
MINISTRY OF LABOUR AND SOCIAL AFFAIRS
MINISTER’S OFFICE

MINISTERIAL RESOLUTION NO 373, FOR 2004,

DATED 7.6.2004,
AMENDING THE EXECUTIVE RULES OF BANK
GUARANTEE ISSUED UNDER MINISTERIAL RESOLUTION
NO 218, FOR 2001
( Amended )

The Minister of Labor and Social Affairs:

After having reference to the Federal Law No 1, for 1972, on the

functions of the Ministries and the powers of the Ministers, and
the amending laws thereof;

And to the Federal Law No 8 for 1980, on regulation of labor

relations, and the amending laws thereof;

And to the Council of Ministers resolution No 14, for 2001. on

bank guarantees:

And to the Council of Ministers resolution No 21, for 2003. on

bank guarantees:

And to the Ministerial resolution No 218, for 2001. on the

executive regulations of bank guarantees:

And to the Ministerial circular No 9, for 2001, on the Executive

Regulations issued under Ministerial Resolution No 218, for 2001;

And to the minutes of the meeting No 51 of the Higher Committee

for Labor Affairs, dated 25.5.2004.

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 RESOLVES AS FOLLOWS

ARTICLE ONE
All labor departments shall collect the lump sum bank guarantee
stipulated in the Council of Ministers’ resolution No 21, for 2003,
before receiving transactions from firms that are subject to the said
resolution according to the provisions of these Regulations.

ARTICLE TWO
All labor departments shall collect the bank guarantee applicable to
new employment permits, at the rate of AED 3,000 per employee,
upon approval of employment permit requests. This shall apply to all
firms that are operating in the UAE and not excluded by virtue of
these Regulations.

ARTICLE THREE
Article 2 of the abovementioned Ministerial Resolution No 18 for
2001 shall be recalled and replaced with the following: “The banking
guarantee rules shall apply to all firms that are subject to the cited
federal Law No 8, for 1980”.

ARTICLE FOUR
Article 3 of the abovementioned Ministerial Resolution No 218 for
2001 shall be amended to read as follows:
“The following firms shall be excluded from application of the rules
of banking guarantee:
A. Industrial projects licensed under an industrial license issued
by the Ministry of Finance and Industry, having priority to
privileges and exemptions, and employing Nationals who
constitute at least 25% of their total workforce, pursuant to the
Federal Law No 1 for 1979 on regulation of industry affairs.

B. Companies established or co-owned by the Federal

Government or the local governments.

C. Public authorities, corporations and companies operating in

the oil, gas, mining, banking, tourism or hotels sector.

D. Individual establishments solely owned by Nationals who are

directly managing their own establishments, provided that
these establishments are supported by the organizations and

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 funds devoted for supporting youth and Emiratisation
schemes.

E. Public interest societies, cooperative societies and national

private institutions operating under the Ministry’s supervision
in the area of social welfare and development.

F. Firms where Nationals constitute no less than 25% of their

total workforce, according to the firm card records maintained
with the Ministry.

ARTICLE FIVE
Article 8 of the Ministerial Resolution No 218 for 2001 regarding the
executive regulations of bank guarantee shall be called off and
replaced with Articles Six and Seven of this Resolution.

ARTICLE SIX
For the purpose of implementing this Resolution, the firms that are
subject to the Federal Law No 8 for 1980 shall be categorized as
follows:
A. Large firms: sponsoring 1,001 or more employees.
B. Medium firms: sponsoring 101 to 1,000 employees.
C. Small firms: sponsoring 1 to 100 employees.

ARTICLE SEVEN
The bank guarantee rules shall be applied to firms, according to the
above categorization, as follows:
First: Large Firms:
1. That do not have a credit balance of AED 500,000: Shall
submit a bank guarantee in that amount before submitting any
transaction to the Ministry, and a bank guarantee of AED
3,000 for each new employment permit.
2. That do have a credit balance of AED 500,000: shall submit a
bank guarantee of AED 3,000 for each new employment
permit.

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Second: Medium Firms:
1. That do not have a minimum credit balance of AED 300,000:
Shall submit a lump sum bank guarantee of AED 300,000, or
raise their credit balance to that amount, before submitting any
transaction to the Ministry. Furthermore, they shall submit a
bank guarantee of AED 3,000 for each new employment
permit.
2. That do have a credit balance of AED 300,000: shall submit a
bank guarantee of AED 3,000 for each new employment
permit.

Third: Small Firms:

Small firms shall submit a bank guarantee of AED 3,000 for each new
employment permit and for each renewal of an employment card, and
shall, within one year after enforcement of this Resolution, replenish
the bank guarantees balance to the level of AED 3,000 for each
employee.

ARTICLE EIGHT
The Ministry may accept payment by firms of bank guarantees that are
not yet mature at the time of submission. The paid value shall be
credited to the balance of that firm with the Ministry.

ARTICLE NINE
A new article, under no 21 duplicate, shall be added to the Ministerial
Resolution No 218 for 2001, as follows:
“The Ministry, being the named beneficiary, may request the court to
obligate the debtor to pay all or part of the bank guarantee value.
Likewise, the employee may request the court to order payment of his
entitlements and charge the amount to the bank guarantee, on the
grounds that he is the third party beneficiary of the guarantee although
notwithstanding that his name is not mentioned in the guarantee
document”.

ARTICLE TEN
A new article, under no 21 duplicate 1, shall be added to the
Ministerial Resolution No 218 for 2001, as follows:
“Based on a request by the employee or the Ministry, the court may
order the payment of all or part of the bank guarantee value, pursuant
to the provisions of chapter eleven of the Federal Law No 11 for 1992

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on civil procedures. It may order that its ruling on the labor case be
instantly enforced against the bank guarantee pursuant to the
provisions of the said Law”.

ARTICLE ELEVEN
This resolution shall come into force on its date of publication and
shall be published in the official Gazette. All employees of the
Ministry shall strictly adhere to it in so much as it applies to them.

Mattar Humaid Al Tayer,

Minister of Labor and Social Affairs

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 COUNCIL OF MINISTERS’ RESOLUTION NO 19, FOR 2005,
AMENDING FEE, PENALTY & BANK GUARANTEE
REGULATIONS ENFORCED BY MINISTRY OF LABOUR &
SOCIAL AFFAIRS

The Council of Ministers;

• After having reference to the Constitution;

• And to the Federal Law No 1, for 1972, on the functions of the

Ministries and the powers of the Ministers, and the amending
laws thereof;

• And to the Federal Law No 8 for 1980, on regulation of

labour relations, and the amending laws thereof;

• And to the Federal Law No 5 for 1983, on nurseries;

• And to the Cabinet Resolution No 80/4 for 1989, on

amendment of fees being applied by the Ministry of Labour
and Social Affairs;

• And to the Cabinet Resolution No 9 for 1989, on imposition of

fees on nurseries;

• And to the Cabinet Resolution No 10 for 1993, on imposition

of fees on nurseries;

• And to the Cabinet Resolution No 14 for 2001, on bank

guarantees;

• And to the Cabinet Resolution No 21 for 2003, amending

Cabinet Resolution No 14 for 2001 on bank guarantees;

• And to the Cabinet Resolution No 7 for 2002, on consolidation

of fees and fines imposed by the Ministry of Labour and
Social Affairs;

• And to the Cabinet Resolution No 444/2 for 2005, on

amendment of the fee, fine and bank guarantee regulations
enforced by the Ministry of Labour and Social Affairs;

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 • And based on the submission of the Minister of Labour and
Social Affairs and the approval of the Council of Ministers;

Resolves as follows

ARTICLE ONE
This Resolution shall be applied to all firms upon applying for any
transaction.

ARTICLE TWO
The Ministry may classify the firms that are subject to this Resolution
into three categories- “A”, “B”, and “C” – based on their adherence to
the law and executive orders, and to the Emiratization and
multicultural work environment requirements

ARTICLE THREE
The fees and penalties applicable to a firm shall be determined according
to its classification category (A, B, or C).

ARTICLE FOUR
A firm shall be classified in class “A” if it fulfilled its Emiratization
requirements and kept its cultural diversity default at or below 30%, and
had a violation-free record at the effective date of this Resolution.

ARTICLE FIVE
1. A firm is classified in class “B” if it had a cultural diversity
default in the range of 31% to 74%, or had on record
violations other than those specified under Article 6
herebelow.
2. A firm originally classified in class “B” due to violations but
then managed to clear those violations shall be promoted to
class “A’ six months after clearance of the violation.
3. A firm originally classified in class “B” due to a default of
the cultural diversity formula, but then achieved at least 2%
of Emiratisation or cleared its default, shall be promoted
directly to class “A” six months after the date of clearing the
default or satisfying the Emiratisation rate.

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 4. A firm originally classified in class “B” due to a default of
the cultural diversity formula and to violations, but then
managed to clear both defaults shall be promoted directly to
class “A” six months after the date of clearing both defaults;
if it cleared only one default, it shall not be transferred to
class “A” except after six months from clearance of the other
default.

Article six

1. A firm is classified in class “C” if it had a cultural diversity

default of 75% or more, or had on record violations related
to Emiratisation or employment of defaulting employees.
2. A firm originally classified in class “C” due to default in
Emiratisation or cultural diversity but then managed to meet
the Emiratisation rate shall be promoted to class “A’ six
months thereafter.
3. A firm originally classified in class “C” due solely to a
default of the cultural diversity formula, but then managed to
clear that default shall be promoted to either class “A” or
“B”, as appropriate, six months after the default clearance
date, provided no other violations are recorded against it.
4. A firm originally classified in class “C” due to employment
of defaulting personnel, but then managed to satisfy the
required Emiratisation percentage shall be transferred to
class “A” six months after the violation clearance date.
5. A firm originally classified in class “C” due to employment
of defaulting personnel and a default of the cultural diversity
formula, but then managed to clear both defaults shall be
promoted directly to class “B” six months after the date of
clearing both defaults; if it cleared only one default, it shall
not be transferred to class “B” except after six months from
clearance of the other default.

Article seven

General provisions
1. A firm shall be adjudged to have satisfied the Emiratisation
target if it:
a. proves that it is recruiting Nationals at the rate
of 4% per year (for banks).

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 b. proves that it is recruiting Nationals at the rate
of 5% per year (for insurance companies).
c. proves that it is recruiting Nationals at the rate
of 2% per year (for trade sector firms
employing 50 workers or more).

2. Firms that do meet the Emiratisation target but fail to prove

that shall still be classified in class “C”.

3. Firms that are not bound by Emiratisation quota under the

law and the Council of Ministers resolutions, but nonetheless
prove that they are recruiting Nationals at the rate of 2% per
year shall, without prejudice to this Resolution, be classified
in class “A’.

4. Firms that are bound by Emiratisation quotas and prove that

they have surpassed their prescribed quotas shall be
classified in class “A”, subject to the actual excess achieved
and the violation provisions of this Resolution.

Article eight
Where a firm has committed, while in class “B” or “C”, another
violation or recommitted a previous one, it shall be retained in its
respective class for another six months for each violation.

Article nine
Where a firm remains in class “B” or “C” for three years, the Ministry
may revoke its enterprise card pursuant to the Ministerial Resolution
No 851 for 2001 on suspension of dealings with defaulting firms.

Article ten
The Minister shall establish incentives for those firms that maintain
their “A” classification for three years or more.

Article eleven
The value of the bank guarantee that employers shall undertake to
submit to the competent Labour Office, as security for workers’ rights,
shall be fixed pursuant to the conditions and circumstances stipulated in
this Resolution.

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 Article twelve
The bank guarantee provisions provided for in this Resolution shall
apply to all firms except:
A. Industrial projects issued with industrial
licenses by the Ministry of Economy &
Industry, and have priority right to privileges
and exemptions.
B. Companies incorporated or co-owned by the
Federal or a Local Government.
C. Authorities and public corporations operating
in the oil, gas, mining, banking, insurance,
tourism or hotels sectors.
D. An individual firm wholly owned and directly
managed by a National, if it is supported by the
youth and Emiratisation support
organizations/funds.
E. Charitable and cooperative societies, and
private social welfare organizations operating
under the supervision of the Ministry.
F. firms classified under class “A” pursuant to
the classification of the Ministry of Labour and
Social Affairs.

Article thirteen
The bank guarantee referred to under Article 11 hereof shall be
submitted prior to submission of any transaction to the Ministry of
Labour and Social Affairs, or upon approval of importation of a worker
(for new work permits).

In all cases, the bank guarantee may be paid in advance to the Ministry
of Labour and Social Affairs for all work permit applications a firm
may submit during the year.

Article fourteen
The bank guarantee shall be made through a bank operating in the
UAE, valid for one year from its date of issue, and payable on demand
by the Ministry of Labour and Social Affairs, without objection by, or
recourse to, originator. It shall be automatically renewable, using a
special form to be developed by the Ministry of Labour and Social
Affairs, and shall remain valid and at the Ministry’s disposal.
The issuing bank may not refund the guarantee or reduce its value except
under an official letter issued by the Ministry of Labour and Social
Affairs.

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 Article fifteen
The Ministry of labour and Social Affairs may not liquidate the bank
guarantee if the employer has paid the prescribed amount due to the
employee. The Ministry may not liquidate the bank guarantee or deduct
any amount therefrom and pay to the employee except in the following
three cases:

First: The cost of employee’s repatriation to his home country or

to the point of return agreed with the employer.
Second: The amounts that the employer or his representative admits
before the competent labour office are due to the employee.
Third: Where a ruling is issued by a UAE court in favour of
fulfillment of the employee’s rights.

In case a bank guarantee is liquidated for the purpose of fulfilling an

employee’s entitlements, the employer shall pay such amounts as are
necessary to replenish the value of the bank guarantee to the original
level.

Article sixteen
An employer may not recover the bank guarantee in whole or in part
unless he has replenished the bank guarantee he is required to make to
the Ministry of Labour and Social Affairs.

Article seventeen
Without prejudice to Article Sixteen hereof, an employer may recover
the bank guarantee in whole or in part in the following cases:
1. The whole guarantee (if presented for a single employee) may be
recovered in the following cases:
A. Canceling an employee’s sponsorship and deporting him
(subject to submission of proof of deduction).
B. Upon the death of the employee (subject to submission of
substantiating documents and proof of deduction).
C. Upon consent to the transfer of an employee’s sponsorship
to another employer.
D. Any of the other circumstances where the sponsor is required
to submit proof of deduction.

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2. A part of the guarantee (covering more than one employee) may
be recovered in the same circumstances noted above, provided
that the said guarantee is replaced by another whose value
corresponds to the number of remaining employees.

Article eighteen
1. For the purpose of implementing this Resolution, the firms that are
subject to the Federal Law No 8 for 1980 shall be grouped into
three categories pursuant to Article 2 hereof, as follows:
1- Class “A” firms.
2- Class “B” firms.
3- Class “C” firms.

2. The bank guarantee shall apply to the above categories as follows:

- Class “A”: shall be exempt from the bank guarantee

requirement so long as they manage to maintain themselves in
that classification.
- Class “B”: shall submit a bank guarantee equivalent to AED
3,000 per worker (if employing one to 500 workers) plus a
bank guarantee equivalent to AED 1,000 for each additional
worker, subject to a maximum limit of AED 3 million.
- Class “C”: shall submit a bank guarantee equivalent to AED
3,000 per worker, subject to a maximum limit of AED 5
million.
-

Article nineteen
The Ministry, as the nominated beneficiary, may request the court to
obligate the debtor to pay the bank guarantee value in whole or in part.
Likewise, the employee - being a third party beneficiary of the
guarantee, although not named therein- may request the court to order
payment of his dues and charging the cost to the bank guarantee.

Article twenty
The court may order payment of the guarantee value in whole or in
part, based on a petition by the worker or the Ministry, pursuant to
Chapter 11 of Federal Law No 11 for 1992 on civil procedures. It may
order prompt payment against the bank guarantee pursuant to the
provisions of the said Law.

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 Article twenty one
This Resolution shall supercede all previous Council of Ministers’
resolutions on fees, penalties and bank guarantees. However, the
guarantees collected and procedures adopted pursuant to the said
Resolutions shall remain valid until revoked or amended pursuant to
this Resolution.

Article twenty two

This resolution shall become effective on the date of issue of the
Executive Regulations by the Minister of Labour and Social Affairs.

Article twenty three

Pursuant to the Council of Ministers’ Resolution No 441/7 for 2003,
the Minister of Labour and Social Affairs shall have the authority of
exempting from the fees and penalties stipulated in this Resolution.

Article twenty four

This Resolution shall be published in the official Gazette.

The Prime Minister

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