Category Archives: Employment Law

There are only two main incentives to work; Wages and fear of losing it! Henry Ford

Understanding the Wage Protection System (WPS)

The Wages Protection System in the UAE is a state-of-the-art electronic salary transfer system that enables institutions and organisations in the private sector to facilitate payment of salary to their employees via banks, exchange bureau and through other financial institutions approved and authorized by the UAE Central Bank as a payment system.

The wage protection system was developed by the Central Bank of the United Arab Emirates in conjunction with the Ministry of Human Resources and Emiratisation (MOHRE). The system provides MOHRE with the ability to establish a reliable database that records all salary payments in the private sector thereby ensuring timely payment of agreed-upon wages.

Compliance to Wages Protection System (WPS) is a mandatory legal requirement under Ministerial Decree No. 739 of 2016 concerning Protection of Wages, for all private organisations registered under the MoHRE, therefore, all such organisations must subscribe to Wages Protection System (WPS) and pay the wages of their employees through the WPS by delivering records of employee’s salary to their respective banks for salary distribution, thereby allowing MOHRE to ensure that all employees’ dues are paid correctly.

The WPS covers all institutions registered with MOHRE across various businesses in multiple sectors and industries to benefits different categories of labours. However, government organisations and public sector institutions are exempted from WPS compliance.

Major Advantages of Wage Protection System;

• Ensure timely payment of agreed-upon wages to employees.
• Making a seamless salary process system that helps employers to protect their interests and reduce the time and effort required to pay due wages and salaries.
• Improves job security, strengthens work relationships and protects the rights of employers and employees in the private sector.
• Ensure transparency and competitiveness in work relationships.
• It provides protective and proactive measures to employees and avoids labour or industrial disputes regarding the payment of wages.
• Ensures that the UAE Ministry of Labour is updated on new wages data in the private sector which helps effective administration of the labour market.

Registration Process for WPS in the UAE

In the UAE, private-sector employers can simply register for the Wages Protection System. The entire system is accessible through MoHRE’s official website, where employers may create an account using their company’s details as provided by the Ministry. Employers may then log in to their account and update the lists with the following information;

• Bank account details.
• A list of workers, together with information about the bank or agency with whom the company works.
• The bank or agency with which an employee has a bank account.
• The specific date on which the salary must be paid.

Payment Process of WPS;

The employer is required to perform the following procedure to transfer the salary of the employees;

• Open a bank account with an approved bank (or agent in case it does not hold a bank account in the UAE).
• Enter into a WPS Agreement with the bank or agent.
• Provide salary transfer instructions to the bank or agent.
• The bank or an agency notifies the UAE Wages Protection System, which sends employee information, wages, and salary transfer instructions to the UAE Central Bank via an electronic system to the UAE Central Bank.
• The UAE Central Bank then forwards all of the required information to MOHRE for verification.
• WPS provides authorisation to the employer’s bank or agent permitting it to pay the salary of the employees.
• Finally, the salary is transferred to the employee’s bank account by the bank.

Fines for evading WPS

In accordance with Ministerial Resolution No. (15) of 2017, the following sanctions shall apply for activities involving fraudulent use of the WPS;

• Entry of incorrect data in the WPS with intent to avoid or circumvent shall be punishable with a fine of AED 5,000 for each worker and a maximum of AED 50,000 in case of multiple workers.
• Failure to pay on due dates through the WPS shall be a punishable fine of AED 1,000 per employee
• Forcing employees to sign on fraudulent payslips claiming that they have received their salaries shall be punishable with a fine of AED 5,000 per employee.

Laws regarding Payment of Salary in UAE;

• Workers in the UAE who are employed on a monthly or annual basis must receive their salary once a month on due dates and no later than 10 days after the end of each compensation period.
• In case the contract does not specify such times, the employer must pay the employee once every 14 days.
• Payments must be made in the UAE’s national currency and on working days.

Penalties on companies failing to pay Salaries;

 A. Penalty on companies employing over 100 workers;

In case the company employs more than 100 workers and fails to remit their wages within a period not exceeding 10 days, the consequences will be as follows;

• The Company will not be issued work permits starting from the 16th day from the date of delay in wages.
• Companies delaying wages a month from the due date will be referred to judicial authorities for punitive measures.
• Action would be taken against all companies owned by the same owner.
• The owner(s) will not be able to register any new company.
• Employees’ bank guarantees will be liquidated.
• The company will be downgraded to the third category.
• Workers will be permitted to find other job opportunities

Additionally, if a company delays salaries for more than 60 days, the company will be fined AED 5,000 per worker (whose wages are delayed), with a maximum fine of AED 50,000 in case multiple workers’ wages are delayed.

B. Penalty on companies employing less than 100 workers

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

• Barred from issuing work permits.
• Liability to pay monetary fines issued by MOHRE
• referral to Court proceeding.

In case the company commits such violations more than once a year, penalties stated for companies that employ over 100 workers shall be applied by MOHRE.

Source:

https://u.ae/en/information-and-services/jobs/payment-of-wages https://www.bayut.com/mybayut/wps-uae-guide/

The UAE’s Ministry of Human Resource and Emiratisation (MoHRE) passed Ministerial Decision No 31 of 2018, which establishes legal frameworks that allow companies to recruit qualified employees from inside or outside the country, under multi-employer contracts (part-time contract).

Under the new regime, part-time workers may work several part-time jobs without obtaining approvals from their primary employers, however, it is mandatory to obtain an official work permit from the MoHRE.

Eligibility for Part-time work permit in UAE

The employee must be;

• UAE nationals or expatriate worker
• At least 18 years old or above
• residing in the UAE to carry out a certain work
• skilled first and second-tier workers in the UAE only, namely holders of university degrees or higher and those who completed two or three years diploma in any technical or scientific field.

People with tourist visas and UAE residents aged 65 years and above cannot work part-time in the UAE.

Part-time work Permit

To be able to apply for a temporary work permit, the employer must obtain a part-time work permit from the UAE Ministry of Human Resources and Emiratisation (MOHRE) by submitting all the required documents along with prescribed fees on behalf of the worker.

Required Documents for a temporary work permit;

1. A copy of trade licenses of both establishments’ (current and applying)
2. A colour (white background) photograph of the applicant.
3. A passport copy of the applicant.
4. A copy of the applicant’s residency visa, which must be valid for at least 6 months.
5. Copy of academic qualification authenticated from Ministry of Foreign Affairs – if required.
6. Approval letter from the competent authority (doctor, pharmacist, nurse, and teacher)
7. A copy of the employment contract.
8. A NOC (No objection certificate) from the old sponsor (Primary employer)

Payments

The initial application fees to request a new electronic (Part-time) work permit is AED 100 (one hundred dirhams) and on approval payment of AED 500 (Five hundred dirhams)

Duration

The Part-time work permit is valid for a period of 6 months.

Working hours under the Part-time system;

A part-time employee must work at least 20 hours per week for the principal employer and is then free to work extra hours for other employers as long as the total working hours must not exceed 8 hours per day or 48 hours per week. Working hours may be increased to 60 hours per week in exceptional circumstances if the employee is granted at least one day off per week.

Responsibilities of the Primary employer

Under the part-time contract, the Primary employers are responsible to bear all the costs associated with

1. sponsoring the part-time contract fees as administered by MoHRE
2. the employee’s end-of-service gratuity,
3. the employee’s annual leave
4. any other financial obligations provided by the UAE Labour Law No 8 of the Year 1980 (UAE Labour Law) in proportion to the number of actual working hours and the amount of the wage.

Additionally, the primary employer may not compel the worker to work longer than the agreed-upon hours or prohibit him from working at a similar facility under the non-competition provision.

Responsibility of Secondary employer

The secondary employer must provide a salary for the hours worked as well as cover the fees of the part-time work permit. Under UAE Labor Law, the secondary employer is not obligated to give any further statutory benefits, although on a discretionary basis the secondary employee may provide any such benefits.

Laws governing the Part-time contracts 

Part-Time Employment contracts shall be governed by the same rules, controls, penalties, renewal and termination as of the ordinary employment contracts in the UAE Labour Law No 8 of the Year 1980 (UAE Labour Law).

Legal consequences of working part-time without a permit.

The 2007 Federal Decree-Law No.2 penalises any corporation that hires part-time workers without an official part-time work permit. An immediate fine of AED 50,000 (Fifty thousand dirhams) shall apply to the employer in default. In case the offence is repeated in future, it may lead to further penalties.

Sources;

https://u.ae/en/information-and-services/jobs/types-of-employment-contracts

https://www.mohre.gov.ae/en/our-services/temporary-part-time-work-permit-issuance.aspx