E-guarantee service for labour permit

The service will be optional for companies and the authorities will continue to issue guarantee letters to banks manually for companies not using the service.

The procedures to be followed by the Ministry of Labour and Social Affairs for issuing bank guarantee letters electronically in cooperation with banks with which the government has signed agreements to the effect were specified in a circular issued earlier this month by Khalid Ali Al Bustani, Assistant Under-Secretary for Resources and Budget Affairs.

Earlier companies were free to deal with any bank for obtaining the bank guarantee required by the Ministry of Labour to issue work permits for newly recruited expatriates. Companies are required to deposit an amount of Dh 3,000 for each employee they want to recruit as a safeguard for employees' rights in the event of bankruptcy. The bank guarantee rule also applies for employees whose sponsorships are being transferred from one company to another and, at a later stage, will also apply in cases of renewal of the labour card of employees already working in the country.

The previous system had many loopholes and produced some adverse effects and several cases of forged bank guarantees were detected. Recently, the The Ministries of Finance and Labour adopted a new system for the bank guarantee which will be issued through specified banks.

The e-guarantee system has been introduced with the objective of simplifying the procedure. The Finance Ministry circular outlines the guarantee rules and measures to be followed by the Ministry of Labour and the specific banks.

The circular says that the Ministry of Labour should apply the e-guarantee system only in cases of companies wishing to avail of the service. It also explains procedures for issuing the bank guarantee letter to the banks electronically.

It says that the ministry should issue a letter to a bank allowing the it to issue the bank guarantee. The letter should specify the name of the company, its file and licence numbers, the numbers and names of employees for whom the ministry decided to issue employment permits, the amount of the bank guarantee required and other necessary information.

The letter can be delivered by the ministry to a representative of the company concerned to hand over to the bank or it can send the letter online directly to the bank, in which case it has to give the customer the number of the payment order so that he can check and follow up with the bank.

The specified banks assigned to issue bank guarantees also have to follow certain procedures, including accessing the Epos system for the issuance of e-bank guarantees, filling in the form of the government customer (the Ministry of Labour) with the amount of guarantee required by the customer, and after completing the downloading of the information in the ministry's letter, deposit the required amount in the account of the Ministry of Finance.

The circular specified measures for liquidating, reducing or cancelling the e-bank guarantee on the request of the Ministry of Labour which has to provide the bank with a letter to the effect stating the number of the certificate, the amount of money to be liquidated or reduced and the name of the beneficiary; the bank will then deduct the amount from the e-bank guarantee account and inform the Ministry of Finance about it.