The salary, also known as wage, refers to the remuneration received by an employee or the service provider’s allowance. It crucially impacts the personnel’s experience and triggers productivity within the business.
Thus, in the UAE, to keep your employees motivated and avoid penalties, you need to pay your staff’s salaries according to the Wages Protection System (WPS) and industry standards.
The Wages Protection System, alongside other protection mechanisms, is introduced by the UAE’s Ministry of Human Resources and Emiratization to support workers in cases of salary non-payment or delays. Also, building itself as an international business haven, the UAE is hiring ex-pats and attracting businesses that bring employees worldwide.
As an employer, you are responsible for the payment of wages on the due date. You should understand what basis penalties are imposed on your company whenever you fail to pay salaries. You should first identify how salaries are paid and the minimum wages allowed by law.
- How should salaries be paid?
The Ministerial Decree No. 739 of 2016 Concerning the Protection of Wages imposes on employers to register with the Ministry of Human Resources and Emiratisation (MoHRE). It requires them to subscribe to the Wages Protection System (WPS) and pay their employees’ wages through the WPS on due dates.
Employed workers in the UAE must be paid once a month on due dates, in the national currency of the UAE, and no later than ten days after the end of each salary period. Whenever the contract omits such detail, the employer must reimburse his employee once every 14 days.
The pre-mentioned Ministerial Decree also allows employees to contact the Ministry of Human resources And Emiratisation (MoHRE) to share their concerns and/or complaints regarding their salaries.
- Employees minimum wages
UAE’s labor law does not stipulate a minimum salary, nor does it provide guidelines on the percentage of the basic salary to be paid by the employer. It only broadly states that salaries must cover employees’ basic needs.
According to article 63 of the Labor “, the minimum wage and cost of the living index are determined either in general or for a particular area or a particular profession by a decree and consent of the Cabinet.”
- When are penalties imposed?
Under the stipulations of the UAE’s new labor law, companies failing to meet their dues within ten days, resulting in late or unpaid salaries, heavy risk penalties, including:
If your company employs more than 100 workers, you risk:
- Not being granted work permits starting from the 16th day following the date of the delay.
- Whenever the delay exceeds one month, being to legal authorities for punitive measures.
- Not being able to register any a new company, and your bank guarantees may be liquidated.
- Whenever the delay exceeds 60 days, a fine of AED 5,000 per worker and a maximum fine of AED 50,000 in cases of multiple workers’ delayed wages.
If your company employs less than 100 workers and you fail to pay salaries within 60 days from the due date, you risk:
- Getting banned on a work permit.
- Getting fines.
- Getting referred to court
Suppose ever you manage to commit the violation more than once in one year. In that case, you will likely be subject to the penalties imposed on companies that employ more than 100 workers.
