Dubai’s Jebel Ali to return Dh1.3bn to businesses in wage protection push

Free zone will pay back cash and bank guarantees provided by employers

Jebel Ali Free Zone is rolling out a new wage protection programme for employees of Jafza-registered business, from September 2019. Pawan Singh / The National

Dubai’s Jebel Ali Free Zone, the emirate’s largest free trade zone, said it will return Dh1.3 billion in cash and bank guarantees it originally secured from businesses to protect their employees’ wages, as part of a new salary insurance scheme to be rolled out this year.

“Our people are our greatest assets, and we are committed to providing them with a fair work environment, which ensures they receive all the rights, privileges and protections that should be afforded to them as core contributors to the nation’s economy,” said Sultan Ahmed Bin Sulayem, chairman of the Ports, Customs and Free Zone Corporation and the Jebel Ali Free Zone Authority, in a statement.

Under previous Jafza rules, companies registered at the free zone had to give a cash or bank guarantee, or other type of security, as a way of providing insurance to their employees in the event of non-payment of wages.

However, Jafza is launching a new Workforce Protection Programme this September, to align the free zone’s wage protection policies with those of the UAE Ministry of Labour, which introduced a new employee salary insurance scheme applicable to ‘onshore’, or non-free zone, companies last year. As part of the transition to the new scheme, the ministry will be returning the guarantees it holds to non-free zone businesses.

Under Jafza’s initiative – intended to “promote ease of business” and strengthen workers’ rights, it said on Saturday – the free zone will become the first in the UAE to return cash and bank guarantees to its registered companies under such a scheme.

Companies will instead avail of approved insurance coverage that will help protect the workers in case of wage default. The insurance will extend to all Jafza-sponsored employees and apply by default to any new workers from the time they receive their work visas to the time the visa is cancelled.

"This move is our way of aligning more closely with the new employee insurance initiative the UAE government rolled out late last year for non-free zone companies," a spokesman for Jafza told The National via email.

“As a free zone entity, we are not obliged to take this move. However, we feel that the government has taken a step in the right direction by providing increased protection for employees, and we think it would be a good idea to strengthen our existing employee protection schemes along similar lines.”

DP World UAE and Jafza together account for 16.2 per of the emirate’s total workforce, the statement said. Jebel Ali port and free zone employees contributed over 33 per cent of Dubai’s gross domestic product in 2017, according to a DP World-commissioned report by Oxford Economics published in March.