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One of the major challenges associated with microgrid protection is to devise an appropriate protection strategy that is effective in the grid-connected as well as islanded mode of operation. This paper proposes a protection strategy based on microprocessor-based relays for low-voltage microgrids. Further, the structure of a new relay enabling the proposed protection strategy is presented. One of the salient feature of the developed protection scheme is that it does not require communications or adaptive protective devices. Moreover, it is to a large extent independent of the fault current magnitude and the mode of operation. Transient time-domain simulation studies are conducted to demonstrate the effectiveness of the proposed protection strategy and its enabling relay, using the PSCAD/EMTDC software package.