A landmark law that ensures workers in the UAE receive their salaries on time will come into effect from October 3.
The decree promulgated by Saqr bin Ghobash Saeed Ghobash, Minister of Human Resources and Emiratisation, earlier this year is applicable for companies with 100 or more employees.
As per the new law, such companies must pay wages within a period of 10 days from the registered payday according to the wages protection system (WPS). If a company defaults payment, the ministry will stop granting it any additional work permits starting from the 16th day of delay.
Maher Al Obed, assistant undersecretary for inspections at the ministry, said: “The decree fairly contributes towards labour market stability as it safeguards employees while keeping business owners’ interests. Salaries paid on time is a major contribution towards labour rights protection, which is highly recognised by the UAE.
“Two main scenarios should be considered in this matter. Firstly, salary delays occur usually if the company fails to pay wages for a month from the due date. The second, which refers to completely refraining from paying wages, starts after entering into the second month. However, the decree shall refer to each case in a different manner,” Al Obed said.
According to the decree, if a company delays wages for a month from the due date, the ministry shall inform the judicial authorities and other related parties to take all necessary punitive measures against it. Additionally, the ministry will halt other companies owned by the same employer and forbid any upcoming projects by the same owner.
If a company continues not to pay wages, the ministry shall take necessary measures to use the company’s bank guarantee, and the affected workers would be allowed to move to other companies.
“If the company fails to pay wages for 60 days from the due date, then administrative fines shall follow, in addition to registered fines for failing to pay wages after a month from the due date, as stated above in the first scenario,” Al Obed added.
Administrative fines could be Dh5,000 per worker, up to a maximum of Dh50,000 when multiple workers complain about deferred wages for more than 60 days.
If the company promptly pays the wages during the first month, the ministry would lift the work permit ban, but the ban lasts for 60 days if it fails to pay wages for more than two months.
On the other hand, if the ministry notes salary delays by a company that employs less than 100 employees, the current regulations shall apply, which includes work permits ban to fines and court referrals, only if the company fails to pay wages within 60 days. If the company repeats such violations over the span of one year, the ministry shall apply penalties declared for companies hiring over 100 workers.
The decree clearly states that the ministry shall not proceed with any transactions with companies that did not register in the WPS.