Employee Wages Under Labor Law in UAE

As per Ministerial Resolution No. 43 of 2022 on the Wage Protection Scheme, workers’ salaries should be paid through the WPS by the 15th of each month. Wages Protection System (WPS) is an electronic system for the transfer of salaries that enables businesses to pay compensation through electronic sources such as, financial institutions and other authorized institutions to supply the service. Therefore, it is advisable for employers to seek the services of top employment consultants in the UAE to stay compliant with the Labor Law in UAE.  

Significance of Changes to the Wage Protection Scheme 

The Wage Protection Scheme in UAE confers essential conditions for private-sector employers. The resolution demonstrates that companies having business activities in the UAE are required to review their system for salary payments to guarantee compliance with the labor law in UAE. The scheme guarantees fair and timely payment of employee’s wages are processed accurately and timely and also ensures workers’ rights. The unique Wages Protection System” (WPS) also presents flexibility in time; it provides a 30-day grace period for the employer to incorporate new workers to the WPS system

1. Time Frame to Pay Wages by Employers

As per the employment contract, the employee is privileged to get his salary from the 1st working day following the end of the period as provided. In case no condition is specified in the job/employment contract, remuneration in a month is the right of the employee. The employer is bound to pay the arrears of workers’ wages unless the employment contract provided otherwise a shorter period with the agreement of the parties.   

2. System/Process to pay wages

All registered employers with MoHRE (the Ministry of Human Resources and Emirates) under this scheme are required to incorporate with the WPS wage protection system for the payments of wages to their employees timely. The salaries of employees are disseminated into their bank accounts or other financial institutions having lawful authority provided by the Central Bank of UAE. No trade deals or transactions of businessmen/owners/employers will be processed by MoHRE (the Ministry of Human Resources and Emirates) until they get registered with the will not process transactions or deals with business owners who are not registered with Wages Protection System” (WPS). The transactions are made in any currency on the agreement of the parties as per the job contract, for instance, Dirham/ USD or any currency

3. Sanctions against companies for non-payment of salaries:

Under UAE Labor Law fines and penalties are imposed on the companies that fail to pay their wages on time or any other violation of labor law, UAE. 

4. Excluded Categories from WPS:

The mentioned below categories are not required to comply with the WPS:

  • Wage lawsuits filer
  • Absent Reported People known as “Abort” 
  • New hires in the first 30 days from the salary payment date
  • Persons on unpaid leave provided that the relevant supporting documents are duly presented to the Ministry of Health. 

Compliance with the Wages Protection System” (WPS) is not required for the following categories as listed below:

  • UAE nationals own fishing boats
  • UAE citizens own public taxis
  • Banks
  • Houses of prayer

5. Working System of WPS

The worker’s employment contract with MOHRE is connected to his file number. Companies must pay their employees through their bank accounts, and this is related to the central bank. If the amount is below the salary level specified in the MOHRE employment contract, the company will be excluded from the MOHRE network and the company will have to clarify the payment issue.

6. System for unresolved Issues:

If the suspension is not resolved, the company can be subject to sanctions, leading to a labor lawsuit against the company in the event of unfair compensation.

Seek the Expert Services of Employment Consultants in UAE

WPS is an integral part of UAE labor regulations. It is a system created to ensure that businesses enforce the rights of employees and to timely pay workers. Therefore, it is advisable for employers to seek the services of top employment consultants in UAE to stay compliant with the Labor Law in UAE to which noncompliance accrues hefty fines. Thus, contact us today and we shall be glad to assist you.    

Read More: How to Register for WPS in Dubai