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non payment of salary by employer

Non-payment of Salary by an Employer

As per the new law, UAE companies must pay wages within a period of 10 days from the registered payday disclosed on the wages protection system (WPS). If a company defaults payment of salaries, the ministry will stop granting it any additional work permits starting from the 16th day of delay.

The decree is targeted to contribute towards labor market stability as it can safeguard the interest of employees and employers a like.

Employees shall be remunerated once a month. In case if an employer is not willing to pay the salary within the required period this it can be considered as a refusal of the employer to pay salary to his employees.

Termination of the employment contract without notice

An employee is allowed to leave his workplace without notice if the employer does not fulfill his obligation towards the employee. As per the employment law, an employee may leave his work in either of the following cases:

  • If an employer fails to comply with his obligation towards employees, as provided for in the contract or in this law,
  • If the employee has been assaulted by the employer or employer’s legal representative.

Consequences for delay of payment of salary by the employer

Late or unpaid salaries are penalized under the stipulations of UAE labor law. An employer is considered as being ‘late’ to pay wages if the salary is paid within 10 days from the due date.

Serious penalties are imposed on companies that fail to pay salaries and have not paid dues within a 10-day period, and they are as follows:

  • They will not be issued work permits starting from the date of delay;
  • They will be referred to judicial authorities for punitive measures;
  • Legal action will be taken against all companies owned by the same owner;
  • The owner of the company will not be able to register any new company;
  • Employees’ bank guarantees will be liquidated;
  • Employees/ workers will be allowed to move to other companies

In case of a company employs over 100 workers delays wages over 60 days, a fine of AED 5,000 per worker whose wage is delayed will be levied, and a maximum penalty of AED 50000 to be imposed in case of multiple workers.

If a company employs less than 100 workers fails to pay the salary within 60 days from the due date, penalties will include:

  • Ban on a work permit;
  • fines and;
  • referral to court.

If the company commits such violations more than once in one year, MOHRE will apply penalties stated for companies that employ more than 100 workers.

Penalties for violating laws regarding the wage protection system

According to UAE labor law, these fines apply for actions involving fraudulent use of the WPS:

Actions inviting penaltiesPenalty in AED
The entry of incorrect date in the WPS system for the purpose of evasion or circumventionAED 5,000 for each worker and a maximum limit of AED 50,000 in case of multiple workers
Failing to pay on due dates through the WPS AED 1,000 per employee
Forcing employees to sign fake payslips showing that they received a salaryAED 5,000 per employee

If any employee has faced an issue on salary payment, he/she has full recourse to law.
However, before taking any legal actions, try to understand the reasons behind the non-payment of salary first and look for ways to resolve the issue amicably. In cases where non-payment of wages occurs if the employer company is in some kind of financial difficulty, then the company may have to terminate the employment of all, or at least some, of its staff. In such a case, the company should keep its employees fully informed of developments.

There can be serious reasons for non-payment of remuneration to employees, in full and on time. If you are in this unpleasant situation, you are fully entitled to address your inquiry to a labor lawyer in UAE to ensure all your dues are rightly paid to you.

What is the minimum basic salary in UAE?

As per UAE law, the minimum salary must cover, basic needs of an employee. The Labor law mentions that the minimum wage and cost of living index is determined either in general, for a particular area or a particular profession by virtue of a decree and consent of the Cabinet.

Do you still get paid if you quit without notice in the UAE?

As per the UAE government, an employee can terminate an employment contract without a notice period if one of the following situations has occurred:

  • if the employer has failed to meet contractual or legal obligations towards the worker/employee.
  • The employee has filed a court case against an employer who has failed to secure the employment of the worker;
  • The final ruling for a labor complaint referred to the labor court by MOHRE is in favor of the worker.

What happens to the employer if found guilty of payment delay or refusal to pay?

In case an employer has problems with non-payment of salary, they will be given the following sanctions and fines as per UAE legislation.

Hassan Humaid Al Suwaidi., LL.B. is a Senior Partner in HHS Lawyers. He has 20 years of experience dealing with high-value and complex cases. Frequently featured in local and international legal directories and commended for his ability to attain favorable outcomes for clients, Hassan has been involved in some of the largest legal settlements. A major part of his work is providing expert legal advice on UAE legislation and acting for individuals and businesses during disputes and litigation. Read more