A directive from the Ministry of Human Resources and Emiratization (Mohre) imposes new sanctions on companies that fail to make timely wage payments. In the future, employers will be informed before harsher sanctions, such as the suspension of new work permits, a notice to the public prosecutor, and fines, are implemented on the third and tenth day following the due date for payment of wages.

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Conditions

If wages are not paid 17 days beyond the due date, employers with 50 or more employees will be subject to field inspections from the ministry and warnings. Work permits will no longer be issued for smaller businesses. Penalties increase as wages are paid later and later.

Although the wage protection system (WPS) has been in existence in the UAE since 2009, according to our labor law experts, the new resolution aims to put harsher sanctions against wage non-payment in place to ensure greater compliance.

Except as otherwise provided in the employment contract, employers are regarded to be in default if wages are not paid to employees within 15 days of the due date.

How does this work?

With effect from the first day of the month after the registered payday as provided in the employment contract, the new order requires employees to start paying themselves. Workers must be paid at least once each month even if the due date is not specified in the employment contract.

The previous resolution No. 739 of 2016 is nullified by the new decree, which is applicable to all businesses registered with the ministry in the United Arab Emirates. “Accordingly, the guidelines and sanctions outlined in the new decree will be applicable to offenses involving the late or non-payment of salaries.

All businesses that are registered with the ministry have three months to abide by the new resolution before facing potential penalties.

Ministry Recommendation:

The ministry recommended all private businesses use WPS, an electronic salary transfer system that enables institutions to pay wages via banks, exchanges, and other authorized financial service providers, to make timely wage payments. Certain free zones are permitted to use other payment methods.

Every company and corporation that registers with the ministry is required to join the WPS, which gives the ministry the ability to track the timely and full payment of salaries for the whole private sector.

In order to demonstrate the payment of salaries to their employees, they must also supply any supporting documentation that is needed.

According to the government, prompt payment of wages enhances the stability of working relationships and helps employees become more productive, both of which have a good effect on the UAE workplace as a whole.

Lists of penalties:

Lists of penalties and fines that can be levied against a business for not paying employees on time are applicable sanctions:

  • Official reminders to pay wages will be sent to companies on the third and tenth day following the due date.
  • On the 17th day following the deadline, the issuance of new work permits will be halted. Companies employing 50 or more employees will be the target of ministry inspections and advisories.
  • 60 days after the deadline: The issuance of new work permits for the violating establishment and any other business that is solely owned by the violating establishment is suspended.
  • For persistent non-compliance: If a business commits the same infraction repeatedly or accumulates multiple infractions, it may be subject to ministry inspections, downgrading to a lower category, and fines.
  • Requests for awarding or renewing work permits must be postponed three months after the deadline. If an inspection visit after six months of non-compliance confirms the absence of a working relationship, the company will be reported to public prosecutors and punished.

If you are having trouble with your employer and want to take legal action against your employer you can consult expert lawyers at Sara Advocates and Legal Consultants. Our lawyers will take your case to court and make sure justice is served to you.