4th February 2017
The Wage Protection System (WPS) was introduced in 2009 by Ministerial Decree No 788 of 2009. It is an electronic payroll system. All onshore/mainland companies, registered with Ministry of Human Resources and Emiratisation (MOHRE), are required to pay their employees through this system. The system was introduced to ensure that all registered employees are protected get paid on time.
How does WPS work?
The company needs to create a Salary Information File (SIF). The template will be provided by the company’s bank. The SIF needs to include details for each employee in the company:
- Employee’s) number
- Routing code for the employee’s personal bank account
- IBAN number for the employee’s personal account
- Salary amount
- The month for which they are being paid
- Details of any unpaid leave
The SIF also needs to include the company’s details:
- Company’s registration number with MOHRE
- Routing code for the company’s bank
- Month for which the salaries are being paid
- Total amount of salaries being paid
- Date/time of preparation of the file
Each month, the company is required to update the SIF and submit it to their bank. The file is passed via Central Bank. The salaries are taken from the company’s account and deposited into each employee’s account, accordingly.
Penalties for not complying with WPS
In 2016, a further decree was issued, Ministerial Decision No. 739 of 2016 to ensure wages are fully paid within a period not exceeding 10 days from the due date as registered in the system. This decree was effective from 3rd October 2016.
The due date is the day following the date provided in the employment contract. If no date is set, wages must be paid at least once every two weeks. Employers will be deemed to be causing a 'delay' if the wages are not paid within the first 10 days from the due date. Further, they will be considered 'refusing' to pay if the wages are not paid within one month, unless the employment contracts provide for a shorter period. It is mandatory for companies to show proof of payment, whenever required.
For companies with more than 100 employees
In instances where wages are delayed for 10 days from the due date, the company will not be able to organise any new permits from the 16th days of the delay. From the 16th day, the company’s work will be suspended. If the wages remain unpaid into the next month, Judicial and other relevant bodies will be informed to take precautionary and punitive procedures. Such measures could include using the bank guarantee to pay wages and downgrading the company to third category to enable employees to move to another company. Suspension will be extended to all establishments of the employer as per Ministerial Decision No. 703/ 2013. The employer will also be a banned from registering new companies with MOHRE.
If the company delays payment of wages for 60 days from the due date, fines will be imposed at AED5,000 per employee, up to a maximum of AED50,000.
Getting the MOHRE ban lifted
Violating companies will have the ban lifted immediately in instances where the delayed wages are paid within the first month. However, for violators not paying wages for two months or more, the ban will be imposed for a further two months after the payment has been made.
For companies with less than 100 employees
In instances where wages are delayed or refused, the procedures currently applied at MOHRE will continue, including work permit bans, fines, and public trial if the company refuses to pay within 60 days. Should the company violate the regulations more than once in a year, then the same actions will be applied as those described for companies employing more than 100 employees.
For more information about the UAE’s Employment Law please visit: http://www.mohre.gov.ae/en/home.aspx
Related Blogs that you may be interested in:
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Amendments to UAE Employment regulations CLICK HERE
Are you looking to set up a business in Abu Dhabi or to change your local sponsor or service agent? Let Gateway Group of Companies help with your business setup and visa processing requirements. Email us at: info@GatewayToAbuDhabi.com
Jenny Hunt, CEO Gateway Group of Companies