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Dubai's compulsory employee medical insurance scheme gets underway for largest firms

Dubai's largest companies will be required to register their staff with an accredited health insurance provider by the end of this month as a staggered enrolment programme gets underway, an expert has said.

Employment law expert Luke Tapp of Pinsent Masons, the law firm behind Out-Law.com, said that the phased programme would give smaller employers "plenty of time to transition their arrangements in accordance with the legal requirements". Companies with 1,000 employees or more must have their staff covered before the end of October 2014, but smaller employers will have until the end of June 2016 to comply with the new law.

"The introduction of the mandatory health insurance requirements for Dubai employers is an extremely positive development from an employment law as well as a general socioeconomic perspective," he said. "It demonstrates the importance that the Dubai authorities place on the health and well-being of its residents."

"The intention is to enforce the new provisions via the visa application process; insofar as if an individual is not properly insured, the Dubai-based employer or sponsor will be unable to obtain a residence visa for that individual. This is a fair and effective way to police the new regime. From my discussions with clients, the market seems generally prepared for and comfortable with the introduction of the mandatory health insurance for employees," he said.

The Dubai Health Insurance Law No. 11 of 2013 was finalised in November 2013 and requires all employers operating in Dubai to provide their employees with minimum levels of medical insurance. The requirements come into force by the end of October 2014 for employers with 1,000 employees or more; by the end of July 2015 for employers with 100-999 employees; and by the end of June 2016 for employers with fewer than 100 employees.

Under the new law, medical insurance companies which intend to provide cover to Dubai employers must apply for a permit from the Dubai Health Authority (DHA). The insurance policies that they provide will also have to comply with the legislation and with DHA requirements. As of 17 April 2014, 50 insurance companies had obtained the necessary permit; 43 with 'approved' and seven with 'participating' status. Only approved insurers can provide full plans, while participating companies are only able to provide basic plans for low-paid workers.

Employers that fail to comply with the new requirements can be issued with fines up to a maximum of 500,000 emirati dirhams (AED) (approximately £84,000). The provision of medical insurance will also be directly linked to an employee's visa application and renewal. This means that employers will not be able to recruit and retain workers if they fail to comply with the requirements.

"Our aim is to provide everyone in Dubai with access to essential health cover and to empower them by providing the right to choose their health provider within the private or public sector," said Essa Al Haj Al Maidoor, director-general of the DHA. "The health insurance mandate will provide a significant boost to the health insurance industry. It will attract investment in the healthcare sector and will generate health competition between providers as well as health facilities."

"It is a very dynamic policy and it is going to drive economic investment in the emirate as well as provide quality healthcare services, happiness and satisfaction to all residents," he said.

Employment law expert Luke Tapp said that the new law was not as comprehensive as that adopted in Abu Dhabi, where employers must provide cover for staff and their families. However, he said that it was "common practice" for Dubai companies employing 'white-collar', professional workers to provide cover for employees and their families.

"In addition, because of the strict visa rules regarding visa sponsorship of dependants, it is unusual for low paid workers to have their families and dependants living with them in Dubai," he said. "Therefore, the provision of medical insurance for low paid workers' families in Dubai is unlikely to become a significant issue," he said.

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