UAE labour law: New penalties for late payment of salaries announced

The Ministry of Human Resources and Emiratisation (Mohre) issued a decree that introduces new penalties against employers who fail to pay wages on time.

Moving forward, employers will be notified on the third and 10th day after the due date for payment of wages before heftier penalties - including suspension of new work permits, a notice to the public prosecution and fines - are applied.

Employers with 50 or more workers will be subject to field inspections from the ministry and warnings if wages are not paid 17 days after the due date. For smaller establishments, the issuance of work permits will be suspended. Penalties escalate with further delay in paying wages.

Dr Hasan Elhais of Al Rowad Advocates said while the wage protection system (WPS) has been in place in the UAE since 2009, the new resolution seeks to implement stronger measures against non-payment of wages to ensure enhanced compliance.

"If wages are not paid to employees within 15 days from the due date, the employers will be considered late in paying, unless otherwise is specified in the employment contract,” he said.

Under the new decree, an employee’s wage shall be due starting from the first day of the month following the registered payday as specified in the employment contract. If the due date is not mentioned in the employment contract, workers must receive their wage at least once a month.

Elhais added that the new decree, which applies to all companies registered with the ministry in the UAE, annuls the previous resolution No. 739 of 2016. "Therefore, rules and penalties stated in the new decree will apply to violations related to late or non-payment of wages,” said Elhais.

All companies registered with the ministry have a three-month grace period time to comply with the new resolution and avoid possible sanctions.

In a statement, the ministry urged all private companies and firms to pay wages on time through WPS, an electronic salary transfer system that allows institutions to pay wages via banks or exchanges and other approved financial service providers. Other payment systems are approved for certain free zones.

All companies and businesses registered with the ministry must sign up with the WPS, which enables the ministry to monitor wage payment for the entire private sector and, thus, ensuring timely and complete payment of wages.

They are also required to provide all supporting documents requested to prove the payment of wages to their employees.

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sherouk@khaleejtimes.com