Published On: March 16th, 2022 / Last Updated: March 24th, 2022 / 2.6 min read /

UAE Labor Law and Late Payment of Salaries (WPS)

‘Salary’!!! The word is enough to take you on a roller coaster ride. Salary can be defined as a fixed regular payment, typically paid monthly by an employer to an employee.  We really don’t have to talk much about the importance of salary. We all know how eagerly we wait for the salary to get credited to our account. You just felt that tingle just by thinking about it right? Exactly my point!

According to Ministerial Decree No. 739 of 2016 Concerning the Protection of Wages, all employers registered with Ministry of Human Resources and Emiratization (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 authorized by the Central Bank of the UAE to provide the service.  Timely payment of Salary will improve the stability of work relations and contributes to increased productivity in the employees, which will have a positive impact on the broader work in the UAE.

Below is the list of fines that can be imposed for Late Payment:

  • Third and 10th day after the due date: Companies will receive official reminders to pay wages.
  • 17th day after the due date: Issuance of new work permits will be suspended. Companies with 50 or more employees will be subject to inspections from the ministry and warnings.
  • 30 days after the due date: Notification to be issued to the public prosecution for the legal measures to be initiated against the company. These measures will be initiated against companies employing 50 to 499 workers, firms with 500 or more workers and those that have been classified as high-risk establishments by the ministry.
  • 60 days after the due date: Issuance of new work permits is suspended for the breaching establishment, as well as any other firm exclusively under the same owner of the breaching establishment.
  • For repeated non-compliance: In case a company repeats any of the violations or accumulates more than one violation, then it can be subject to inspections from the ministry, a downgrade to a lesser category and fines.
  • Three months after the due date: Requests for issuing or renewing work permits shall be suspended. Company to be referred to public prosecution and fined if an inspection visit after six months of non-compliance reveals the absence of a working relationship.
  • Referral to Public Prosecution and fines: If an inspection visit after six months of non-compliance revealed the absence of a working relationship.

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