AED 50,000 if you don’t pay wages on time

50 000 fine for late payment of wages

Pay your employees on time

One of the legal obligations of the employer is to pay wages within 10 days of the usual payment date.

The United Arab Emirates invests a lot in the welfare of workers in order to keep them happy in the country.

These last months, workers are among the top priorities of the country’s authorities.

Several decrees aimed at protecting workers’ rights have been issued.

                      Recruitment, compensation, housing and health.

The Ministry of Human Resources and Empowerment (MoHRE) recently issued a strong reminder to private sector companies to commit to paying their employees’ salaries on time to avoid any sanctions.

What is WPS?

For mainland companies, the payment of salaries must be done through the Wage Protection System (WPS).

The WPS was introduced in 2009 and is an electronic system that ensures timely payment of wages. Private sector companies registered with the Ministry must open an account with a bank in the UAE. The WPS authorizes the bank or the employer’s agent to pay salaries to employees and the bank then transfers the salary to the employee’s bank account.

More info about our HR services here.

Wage transfers can be made through banks, currency exchange offices, and financial institutions that are licensed and authorized to provide this service.

All private companies registered with the Ministry have to join the WPS. If a company doesn’t join the WPS system, it won’t be able to get any new work permits until wages are fully paid.

Fines and penalities

According to the official website of the UAE government, all private sector companies will be penalized for not paying wages on time. A salary is considered “late” if it is not paid within 10 days of the due date.

For example, your salary is usually paid on the last day of each month. Your employer is obliged to pay you your salary within 10 days, i.e. before the 10th of the month. If you fail to do so, your employer is subject to penalties and sanctions.

Here is a list of penalties that employers risk.

          Don’t even think about WPS fraud

When we talk about WPS fraud we are thinking about:

– Entering incorrect data into the WPS system for evasion or circumvention purposes: a fine of up to AED 5,000 per worker to AED 50,000 if multiple employees complain.
– Failure to pay by the due date through WPS: AED 1,000 per employee.
– Forcing employees to sign false pay slips showing that they have received their wages: AED 5,000 per employee.

          Delay in the payment of salaries

                      Companies with more than 100 employees

– If the payment of wages is delayed for more than 60 days, a fine ranging from AED 5,000 per worker to AED 50,000 if several employees complain, will be given to the employer,
– Employers will not be able to receive new work permits from the 16th day from the date of delay,
– Companies that delay wages by one month will be referred to the judicial authorities for punitive measures,
– Measures will be taken against all the companies owned by the same owner,
– The owner will be unable to register a new company,
– Employees’ bank guarantees will be liquidated,
– Workers will be allowed to go to work for other companies.

                      Companies with less than 100 employees

– If the company commits the violation more than once a year, the MoHRE will apply the penalties for companies that employ more than 100 workers,
– Employers will no longer be able to receive new work permits,
– Fines,
– Referral to court.

 

The decree clearly states that the Ministry should not proceed with any transaction with companies that are not registered in the WPS.

If your company is not up to date on the WPS system, we invite you to contact us so that we can check with you if all the legal obligations (there are now 8 of them including audit, VAT, ESR notification, etc.) applicable to your company are well respected.