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Dh1,000 per employee: Fine for UAE firms not paying salaries

Dubai - Know your legal rights when it comes to wage payments.

Question: I am a businessman based in Ajman. I have a small restaurant that employs 11 people. I am unable to pay their salaries due to the current economic conditions. Can I be prosecuted under the wage protection rules in the UAE? I have all documents to prove that I am bankrupt and that my business is in ruins. Please help.

Answer: Pursuant to your query, we assume that your restaurant is situated in the mainland of Ajman. Therefore, the provisions of Federal Law No. (8) of 1980 regulating Employment Relations in the UAE (the Employment Law), Ministerial Decree No. (739) of 2016 concerning the Protection of Wages (the Ministerial Decree) and Cabinet Resolution No. (15) of 2017 on the Service Fees and Administrative Fines in the Ministry of Human Resources and Emiratisation (the Cabinet Resolution) are applicable.

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In response to your query, it may be noted that as per the provisions of the Employment Law, an employee shall be remunerated at least once a month. This is in accordance with Article 56 of the Employment Law, which states: “Employees engaged on yearly or monthly remuneration shall be paid remuneration at least once a month; all other workers shall be paid at least once every two weeks.”

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Consequently, the non-payment of salary by an employer to its employees shall constitute a violation of the Employment Law.

In furtherance, should an employer not remunerate an employee within one month of the employee’s salary becoming due, it shall be considered as a refusal of the employer to remunerate an employee. This is in accordance with Article 1 (b) of Ministerial Decree, which states: “The employer shall be deemed late in paying unless he pays the salary within the first 10 days as of maturity date, and shall be deemed as refusing to pay the salary unless he pays it within one month as of the maturity date, unless a less term is set/provided in the contract.”

Further to the above, Article 2 (2) of the Ministerial Decree, also states that if an employer employing less than 100 employees fails to remunerate its employees within 60 days from the due date, penalties may be imposed upon the employer.

As you have been unable to remunerate your employees through the ‘Wage Protection System’, a fine of Dh1,000 per employee may be imposed on you in accordance with Article 3 (7) of the Cabinet Resolution, which states: “Failure to pay the salary due to the employee through the Wages Protection System within the time limits set out under a decision by the Minister: AED 1,000 per employee.”

In view of the foregoing, you may note that should your employees file a complaint against you with the MOHRE concerning non-payment of salary, you may be penalised. The said penalties may include a ban on the future issuance of work permits to you and/or the imposition of fines and/or referral to the competent court by MOHRE.

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.