Payment of Wages through the Wages Protection System

On 20th December 2022, the Ministerial Decision No. 598/2022 (the “Decision No. 598”) was issued pursuant to Article 16 of the Cabinet Decision No. 1/2022 On the Implementing Regulation of Federal Decree-Law No. 33/2021 Regarding the Regulation of Employment Relationships (the “Implementing Regulation”).

Article 16 of the Implementing Regulation pertains to the employer’s obligation to make the timely payments of the employee’s remuneration on their relevant due dates through the Wages Protection System (WPS).

The Decision No. 598 reinforces the employer’s obligations to make the payment of the employees’ wages in a timely manner and further stipulates the relevant repercussions on the employers/ establishments in the event of their non-compliance, thus attempting to ensure and enforce their prompt and effective compliance in this regard.

Before we proceed to evaluate such actions, it is imperative to note that as per the Decision No. 598, the following employees, and the establishments carrying out the following activities, are excluded from the WPS and the procedures thereof:

Employees:

  1. A worker who has a wage-related labour complaint referred to the judiciary.
  2. A worker against whom an absconding report has been filed.
  3. A new worker within a period of (30) days from the due date of payment of the wage.
  4. A worker who is on leave without pay during that leave period; provided that the evidence required by the Ministry of Human Resources and Emiratization is submitted in accordance with the due process. In this regard, and as it relates to the payment of the wages to the relevant employee, Article 4 of the Decision No. 598 mandates an employer to notify the Ministry of Human Resources and Emiratization of such a leave without pay (provided that the duration of the same is determined), according to the relevant mechanisms and channels approved by it.
  5. Seafarers working on board ships through a request submitted by the establishment.
  6. Foreign workers working in foreign establishments or their branches inside the UAE who receive their wages outside the country, after the approval of the workers and through a request submitted by the establishment.

Establishments Carrying Out Following Activities:

  • Fishing boats owned by individual citizens.
  • Public taxis owned by individual citizens.
  • Banks
  • Places of worship.

That being said, Article 1(2) of the Decision No. 598 states that any employer who fails to make the payment of the wages within fifteen (15) days from their due date, shall be considered late, unless the employment contract suggests otherwise.

Article 2 of the Decision No. 598 stipulates the following relevant actions that shall be taken against the relevant establishment/ employer that fails to pay its employees on the relevant due date:

  1. In the event the payment is not made by the due date, then all the establishments shall be followed up electronically to ensure their commitment to paying the wages of their workers.
  1. In the event the payment is not made on the third and tenth days following the due date, then all the establishments shall be sent reminders and notifications in regards to the payment of wage.
  2. In the event the payment is not made on the seventeenth day following the due date, then the following shall ensue:
  • Issuance of new work permits for all the establishment shall be suspended. A notification explaining the reasons for the suspension shall be sent to the employer.
  • All establishments that employ 50 or more workers shall be listed in the Electronic Monitoring and Inspection System and in the schedule of inspection visits. The inspector shall conduct inspection visit to the establishment and issue warnings in accordance with the due process.
  1. In the event the payment is not made by one and a half months after the due date, in relation to those establishments that employ 50 or more workers, the concerned Public Prosecution shall be notified and their data shall be transferred to the competent authorities at the Federal and local levels to take legal measures, and conduct follow-up by the competent teams in the Ministry of Human Resources and Emiratization.
  2. In the event the violating establishment repeats the violation within six months, then the following measures shall be taken against all establishments against which labour complaints related to wages are registered and referred to the judiciary:
  • Imposing an administrative fine in accordance with the aforementioned Cabinet Decision No. 21/2022. As of the date of this article, there is no such Decision No. 21/2022 which pertains to the administrative fines applicable on establishments, and, until and unless the issuance of the same, it is conceivable that the intended cabinet decision hereunder may have been the Cabinet Decision No. 21/2020, which pertains to the Fees of Services and Administrative Fines at the Ministry of Human Resources and Emiratization. According to the Cabinet Decision No. 21/2020, the administrative fine for the non-settlement of the due wage to the worker through the WPS, within the periods indicated in a decision of the Minister of Human Resources and Emiratization, is AED 1000 for every worker, maximum to AED 20,000.
  • Reclassifying the Establishment into the third category in accordance with the Ministerial Decision No. (209) of 2022,

According to Article 3 of the Decision No. 598, the establishments shall be considered as compliant with their obligation, in the event 80% or more of the total wage of the relevant eligible worker is transferred to the same, in accordance with their employment contract. It further goes on to state that a worker is considered as having received its wage, if, in the event of any legal deductions (which can be proven upon request), he/she receives 80% or more of the total wage under his/her employment contract.

Article 7 of the Decision No. 598 stipulates that the under-secretary of Human Resources Affairs shall issue the manual of the procedures required for the implementation of the provisions of the afore-mentioned Decision. No such manual has been issued as at the date of this article.

Notwithstanding the same, Decision No. 598 evidences an active step taken by the Ministry of Human Resources and Emiratization, towards ensuring the protection of the employees’ rights in the UAE. The Decision No. 598 not only reinforces the employers’/ establishments’ obligations to make the timely payment of the wages to their employees, but also explicitly identifies the relevant actions that may be initiated against them in the event of their non-compliance. The applicability of such actions is expected to invite a prompt compliance by the employers of their relevant obligations in terms of the payment of the employees’ wages and is hopeful to counter the existing issues in the labor market, pertaining to the same.

Disclaimer:

This publication does not provide any legal advice and it is for information purposes only. You should not rely upon the material or information in this publication as a basis for making any business, legal or other decisions. Any reliance you place on such material is therefore strictly at your own risk.

Author: Ayesha Zia

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Senior Associate – Ayesha Zia

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Senior Associate – Ayesha Zia

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