UAE recruitment agencies will be forced to ringfence funds to cover employee wages in a move the Ministry of Labour has said is aimed at improving conditions for foreign workers.
Under new rules, effective from January, agencies that hire foreign workers must deposit AED1m in a restricted account, while those that hire labourers for third party firms must deposit AED2,000 per worker.
The funds will be used by the Ministry of Labour to reimburse workers in the event of a default on their wages, a spokesperson said.
“The Ministry of Labour is seeking a healthy labour market,” a spokesperson told Arabian Business. “[The laws are] to protect the employees, the worker’s rights and avoid any malpractice that could happen during the recruitment cycle.”
Agencies that fail to comply with the law could have their licence suspended for a year, the spokesperson said.
The move is the latest in a series of measures aimed at ensuring the UAE’s large workforce of foreign labourers is paid on time.
The collapse of Dubai’s once-booming property market during the global financial crisis took a toll of low-paid migrant workers. A number of construction firms defaulted on wages as developers slowed or cancelled projects, and payment dried up.
In September, Dubai Police said it had collected more than AED52m in unpaid labour wages from construction firms that had failed to pay their staff.
The legislation forms part of a wide shake-up of labour rights in the UAE that has seen labour card validity slashed from three to two years, and the retirement age for expat workers raised from 60 to 65-years.
The review of agencies also reiterated that companies are banned from charging fees to labourers to cover their visa or transport costs – a common occurrence when workers are sourced abroad.
Under the ruling, the owner of the agency must be Emirati and have no history of non-payment of salaries Agencies will be banned from outsourcing labourers for companies are involved in collective labour disputes.
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