New UAE Labour Laws: Penalties for Delayed Salary Payments

uae wps system

The introduction of the UAE WPS System, guaranteesfair and timely payment for the workers of a company. Therefore, it is a system that became the central axis of Emirati labor laws. Hence, its use is necessary for compliance with labor laws for late payments in the UAE.

In this article, we will talk about salary payments and the laws regarding non-compliance. In addition, you will know the role that WAS plays and how it is useful to check the status of your business through it.

Essential Insights into UAE Salary Payments

uae wps system

In the country, the companies must pay to their employees promptly on the salary date in UAE. Similarly, you must pay your salary no later than 10 days after the end of each payment period. Likewise, if the payment is not monthly, you will have to agree to pay the employee every 14 days.

On the other hand, salary payment must be in the official currency of the emirates, the AED. In addition, payments will be based on the minimum wage or net basic salary. Similarly, in the United Arab Emirates, there is no minimum wage according to the labor law of the country. However, each employee must receive a salary payment that covers all their basic needs.

Equally, the labor law establishes that the cost of living and salary will vary over time but. Also, by Cabinet decree, the determination of the salary of a worker may be based on the profession or work area in which he or she works.

Additionally, the law does not have a fixed percentage for the basic salary. Therefore, the employer and employee will have to agree and set it down in an employment contract. Otherwise, your employee will have a way on how to complain salary delay in UAE before the law.

Reasons behind the pivotal role of WPS in the UAE

The UAE WPS system exists to ensure that the employer complies with labor laws and in the protection of the rights of the workers. Likewise, it guarantees that companies that work in the private sector pay their workers fairly and on time. Additionally, before this system was implemented, it was common for employers to withhold or delay payment of wages.

Therefore, the introduction of the WPS seeks to address the wage delay in the UAE that was causing difficulties. Consequently, avoiding the negative impact on employee morale and therefore on their productivity.

This system was first implemented by the UAE Ministry of Human Resources and Emiratization or MOHRE, in 2009. From this date, all private sector companies will have to deposit the salaries of the workers in their bank accounts. In this way, employees will have their salary payment fully guaranteed.

Another advantage of using the system is that when the account is due, you will have the guarantee that it will be completely transparent. Concerning this, the UAE WPS system allows obtaining a digital record of salary transactions that makes it easier for the employee to track their salary. Likewise, the system relates employee payments, which reduces administration costs.

Consequently, employers can dedicate more time to other sectors of their company without worrying about paying salaries. Additionally, by being more efficient, they attract international investors, which increases business competitiveness in the UAE.

How to check WPS salary

As a business owner, you must know how you can check your status in UAE WPS System and be sure that you did not violate any regulations. This way, MOHRE, made it easier to view the WPS status, by following these simple steps:

  1. Head to the official MOHRE platform as it is available in both Arabic and English.
  2. Select the tab that says SERVICES and then click on the drop-down menu where it says New Consultation Services.
  3. Now, the page will take you to another MOHRE sector where you will select how to check the WPS status of the company
  4. Next, in the drop-down menu, click on company information.
  5. Write where the system indicates, the company number.
  6. Next, the page will give information about the company, including its status.

Additionally, workers and employee candidates may contact MOHRE customer services. To do this, they will have available channels, like email, Whatsapp, and online chat, among others. Thus, they will know all the information about the status of a particular company, using the aforementioned system.

On the other hand, if you use an adequate payroll system, you will not need to do all of these steps. Therefore, to see your WPS status you just have to go to your account panel and do the following:

Click on where it says WPS Status or on the status report on the left side and you will immediately see the status of your company in the UAE WPS System.

Strategies for companies to comply with salary payment regulations

As a private business owner registered with MOHRE, you must register in the UAE WPS system for salary payment processes. In the same way, as we have said, the system will allow you to transfer the payment to your bank accounts. Likewise, to make salary payments, you must follow the following steps:

  1. If you do not have approved bank accounts, you will need to do a bank opening at an authorized bank.
  2. Then, at the chosen bank, start the agreed session.
  3. You can now give instructions to the bank for the payment of salaries.

Then, once these steps are done, the bank will notify the system to send the details of the serial salaries as well as the instructions regarding this. Also, the information will be sent by electronic means to the Central Bank of the United Arab Emirates. Next, the Central Bank will send the information to MOHORE for cross-checking.

Finally, the UAE WPS System will authorize the bank to pay the salaries of the workers by transferring them to the accounts of the employees directly.

Details about the new penalties for delayed payments

MOHRE has implemented new WPS rules in UAE regarding penalties for late salary payments. In this case, as an employer, you cannot delay employee payments if you do not want to pay penalties. Otherwise, you will have to face serious legal problems as well as paying high fines.

Likewise, it will have additional consequences such as the suspension of work permits, a warning from the Public Ministry, as well as fines. However, before the sanctions are imposed, you will be notified on the 3rd day and the 10th day, after the salary payment period.

Similarly, employers with more than 50 employees will have to pay a maximum of 17 days after the payment date. Thus, if you do not comply, MOHRE will conduct an inspection and give you a warning. Also, for companies with fewer employees, your work permit may be suspended and the sanctions for both will increase with each day of delayed salary in UAE.

UAE Labour Law Punishment and Penalties

In the case of late payment of salary, there are certain exact penalties imposed by law that are worth delving into. This way, you will have more clarity about the scope of the penalty payments for each case. Below you will find out in detail what sanctions you may face if you do not pay your salaries on time:

  • For 3 and 10 days of late payment, they will send you reminders to pay the salaries of your employees.
  • If you are 17 days late in paying your salary, the issuance of new work permits will be suspended. Likewise, if you have more than 50 employees, you will receive warnings and MOHRE will inspect your business.
  • In the case you are already 30 days late in paying your salary, legal measures will begin against you if you have more than 50 to 499 workers. Similarly, if it has 500 or more, the Ministry will classify it as a high-risk establishment.
  • If you are 60 days late, your work permits will be suspended and applied to any other company you own.
  • If you are 30 days late, your work permit renewals and applications will be suspended. In addition, you will receive a complaint to the office of the prosecutor and will receive a severe fine if after the inspection it is proven that there is no employment relationship.

Additionally, if you continue to fail to pay your salary, you may receive several fines and your company will be downgraded. The same will happen if you do not comply with other laws of the wages protection system in UAE.

Understanding Purposes Linked to WPS Non-Compliance

In the Emirates, there are fines for failing to comply with WPS regulations. These are apart from the penalties for non-payment of salary by employer UAE. Therefore, be attentive to the information that we will give you so that you can avoid these sanctions. Below, you will observe the additional penalties applied for violating WPS rules:

  • If you do not enter data correctly into the system for deception, you will pay a fine of AED 5,000 for each employee. Likewise, if there are several, it will have a limit of AED 50,000.
  • If you do not pay the salary on the fixed dates through the UAE WPS System you will pay a fine of AED 1000 per employee.
  • In the case you force your workers to sign false payrolls that justify the payment of their salary, you will pay AED 500.

If any company refuses to register with WPS You will also get negative consequences. For example, blocking work permits for new employees until you pay your employees what you owe them.

Ways to lift a UAE WPS system ban

To avoid WPS bans, you can use electronic payroll software with good flow management practices. This is so that the payment is always effective on the corresponding day. However, if the delay was caused by reasons beyond your control, what you need to do is anticipate the delay.

With this notice, your employees will be calmer while you resolve the situation. However, if the ban has been issued, you can try to lift it in the following way;

Nevertheless, reasons beyond your control may cause a delay in payment resulting in a ban. The best thing the company can do is anticipate these delays and then provide employees with advance notice (and assurances about the stability of the company and its future viability). This will help calm employees during the delay.

  • Pay registered employees what they are owed regardless of whether they are nationals or foreigners.
  • Request salary cycle adjustment through the employer service centers called Tawaseel or through the facilitation of establishment system.
  • If the penalty persists after payment has been made, request technical support, and presenting proof of payment.
  • Make sure you pay within the deadlines before 30 days to avoid it becoming a legal case.

Additionally, MOHRE and the Emirati Central Bank are working so that the UAE WPS Systemcan issue new regulations. Therefore, stay informed of any updates that the system has.

Ensuring Punctual Salary Payments

Paying salaries is not only about avoiding a penalty or fine for being late but it is about complying with the labor rules of the country. Additionally, to ensure both, you can apply an automated payroll system or some payroll service. This way, you will be able to pay salaries without human errors and promptly.

Kinzahr: Partnering for Compliance and Penalty Prevention

uae wps system

We are a dedicated recruitment agency in Dubai and the rest of the Emirates that helps connect employers and employees. Likewise, we will allow you to change your life if you seek employment. In the same way, if you are a business owner you will be able to deal with problems in a way that is satisfactory to everyone in it.

In addition, your clients can choose between what they need and receive all the necessary help from us, as well as connect potential employees with established companies. Therefore, if you need our help in complying with labor law regulations, contact us and we will support you.