Wages Protection System(WPS) in the UAE – All You Need to Know

Are you aware of your rights as an employee in the UAE? Did you know that if your salary is late, there are penalties that the employer may face?  And do you know about the Wages Protection System(WPS) in the UAE?

If you do not have enough information on this subject, then you should read this article.

The Ministry of Human Resources and Emiratisation (“MOHRE”) is the authority responsible for regulating labor and employee affairs in the UAE. The ministry has established laws that guarantee the rights of employers and employees alike. These rights relate to, amongst others, negotiations about wages, vacations, incentives, the work environment and conditions.

What is the Minimum Wage in the UAE?

The Federal Law No. 8 of 1980 for the regulation of Labour relations (“Labour Law”) does not prescribe a minimum wage, however, provides generally that salaries must cover the basic needs of employees.

How Must Salaries be Paid?

In accordance with the provisions of Ministerial Resolution No. 739 of 2016 regarding wage protection as published by MOHRE, all companies/institutions registered with MOHRE are obliged to pay the wages of their employees on the specified due date via the so-called Wages Protection System (“WPS’).

In terms of the WPS, all employees will receive their salaries into accounts held with banks or financial institutions authorized by the UAE Central Bank. MOHRE will only process transactions or deal with companies if they are registered with the WPS.

Late or non-payment of salaries and the penalties related thereto

The employer is considered as late in paying an employee’s salary if the salary remains unpaid within 10 days from the due date. The due date is considered to be the next day after the end of the salary period.

In addition to the aforesaid, should the employer continue in his failure to pay the employee’s salary within one month of the due date, the employer is considered as ceasing payment of the salary entirely.

The penalties for the aforementioned contraventions include, but are not limited to, work permit bans, fines, referral to judicial authorities for punitive measures etc.

What is the Wages Protection System?

The WPS, which was developed by the Central Bank of the UAE in conjunction with the MOHRE, is an electronic salary transfer system that allows registered employers to facilitate payment of their employees’ salaries via banks, bureau de change and financial institutions authorized to provide the service.

The WPS provides the MOHRE with the ability to establish a database that accounts for all salary payments in the private sector thereby ensuring that the correct payment of agreed-upon wages is made to employees in a timely manner.

Fines for Evading or Defrauding the WPS Registration

Pursuant to Ministerial Resolution No. 15 of 2017, the following fitness may be levied in the event of the fraudulent or inappropriate use of the WPS:

• Entry of incorrect or false information in the WPS for the purposes of fraud, evasion or circumvention, may attract a fine of AED 5000 per employee, but not exceeding AED 50,000 for several employees;
• Failure to make payment of salaries on the due date may attract a fine of AED 1000 per employee;
• Placing duress on employees to sign false documentation as proof of receipt of salaries may carry a fine of AED 5000 per employee.

if you have any question regarding labour disputes contact our labour lawyers in Dubai.