Abu Dhabi – 26 July, 2016 The Ministry of Human Resources and Emiratisation has launched a new decree to ensure employees’ wages have been fully paid within a period not exceeding 10 days from the registered due date in the WPS (wage protection system), the decree shall commence October 2016.
H.E Saqr Ghobash, Minister of Human Resources and Emiratisation pointed out that companies employing over 100 workers must pay wages within a period not exceeding 10 days, if they fail, the ministry will stop granting them any additional work permits starting from the 16th day from the date of delay.
“Two main things should be considered in this matter, firstly, salary delays occur usually if the company fails to pay wages a month from the due date, the second, which refers to completely refraining wages, starts after entering into the second month, however, the decree shall refer to each case in a different matter,” he said.
The decree states, if a company delays wages a month from the due date, which means the company has entered into the refrainment phase, the ministry shall inform the judicial authorities and other related parties to take all necessary punitive measures against it, causing a complete strike against the other companies owned by the same employer, plus prohibiting the employer the ability of registering any new companies.
Furthermore, if a company continues to refrain wages, the ministry shall take necessary measures to use the bank guarantee, in addition to downgrading the company into the third category and enable the workers to move to another company.
“If the company fails to pay wages for 60 days from the due date, then administrative fines shall follow, not forgetting the punishments that had been already slapped for failing to pay wages a month from the due date,” Ghobash added.
Administrative fines hit Dh5000 (AE dirhams) per worker’s delayed wage, reaching a maximum of Dh50,000 dirhams in cases that include multiple workers complaining about delayed wages for over 60 days.
On the bright side, the ministry shall lift the ban off violating companies granting them the ability to apply for new work permits only if they immediately pay delayed wages during the first delay month, while the ban lasts for 60 days for companies that failed to pay wages for more than two months, after payment of course.
The decree reiterates that if the company often refrains salaries, the ban duration doubles after paying the wages.
Additionally, if the ministry came across any sorts of salary delays or refrains by companies that employ less than one hundred workers, the current regulations shall apply, from work permits ban to fines then public trial referral if the company fails to pay the money within 60 days, however, if the company notes such violations more than once in one year, then, in this case, the ministry shall apply penalties stated for companies that employ over 100 workers.
The decree clearly states the ministry shall not proceed with any transactions with companies that did not register in the WPS, in addition, to stop dealing with the owners of these companies until they register in the system, all to ensure workers' rights have been met.
There is no minimum salary stipulated in the UAE Labour Law, however it broadly mentions that salaries must cover basic needs of the employees.
Article 63 of the Labour law mentions that the minimum wage and cost of living index is determined either in general or for a particular area or a particular profession by virtue of a decree and consent of the Cabinet.
Basic salary and total salary
The UAE Labour Law does not provide any guidelines on the percentage of the basic salary to be paid by the employer. So it is at the discretion of the company to decide this percentage and the employee may negotiate, accept or not.
How salaries should be paid?
According to Ministerial Decree No. 739 of 2016 Concerning the Protection of Wages, all employers registered with Ministry of Human Resources and Emiratisation (MoHRE) must subscribe to Wages Protection System (WPS) and pay the wages of their employees through the WPS, as per the due dates.
Under this system, salaries of employees will be transferred to their accounts in banks or financial institutions, which are authorised by Central Bank of the UAE to provide the service.
MoHRE will not process any transactions or deal with the owners of the companies that are not registered with the WPS until they register in the system.
Use these resources to register in WPS and understand how it functions:
Watch this video about WPS.
According to Ministerial Resolution No. 15 of 2017, these fines apply for actions involving fraudulent use of the WPS:
Entry of incorrect data in the WPS for the purposes of evasion or circumvention - AED 5,000 for each worker and a maximum limit of AED 50,000 in case of multiple workers
Failure to pay on due dates through the WPS - AED1,000 per employee
Forcing employees to sign fake pay slips showing that they received their salaries – AED 5,000 per employee.
The employer is considered as late in paying wages if the wage is not paid to the employee within 10 days from the due date, which is the next day of the end of the salary period.
The employer is considered as refusing to pay wages if the wage is not paid to the employee within one month of the due date.
Penalties on companies failing to pay salaries
On companies employing over 100 worker
Here are the consequences of companies employing over 100 workers failing to pay wages within a period not exceeding 10 days:
They will not be issued work permits starting from the 16th day from the date of delay.
Such companies delaying wages a month from the due date will be referred to judicial authorities for punitive measures.
Action would be taken against all companies owned by the same owner.
The owner/s will not be able to register any new company.
Employees’ bank guarantees will be liquidated.
The company will be downgraded to the third category.
Workers will be allowed to move to other companies.
In case a company employing over 100 workers delays wages over 60 days, a fine of AED 5,000 per worker whose wage is delayed will be levied with a maximum fine of AED 50,000 in cases of multiple workers’ delayed wages.
On companies employing less than 100 workers
If a company employing less than 100 workers fails to pay the salary within 60 days from due date, penalties will include:
work permits ban
referral to court.
If the company commits such violations more than once in one year, MoHRE will apply penalties stated for companies that employ over 100 workers.