United Arab Emirates: UAE Employment Law Update - October 5, 2016

Last Updated: 10 October 2016
Article by Ibrahim Elsadig

The Minister of Human Resources & Emiratisation recently issued Ministerial Decision No. 739/2016 on the Protection of Wages to ensure employees' wages are fully paid within a period not exceeding 10 days from the due date as registered in the wage protection system (WPS).

The Ministerial Decision, effective from Monday 3 October 2016 (as reported in the local news), does not amend the UAE Labour Law but repeals Ministerial Decision No. 788/2009 on the Protection of Wages and any contrary or inconsistent term provided for under other decisions.

The Ministerial Decision provides that all establishments registered in the Ministry of Human Resources & Emiratisation, formerly known as the Ministry of Labour (the Ministry) must pay employees' wages on the due date and through the WPS. Employees' wages are due starting from the day following the date set out in the employment contracts. If not set out in the employment contracts, wages must be paid at least once every two weeks.

The Ministerial Decision further provides that employers will be deemed to be (i) causing delay if they do not pay the wages within the first 10 days from the due date, and (ii) refusing to pay if they do not pay the wages within one month from the due date, unless the employment contracts provide for a shorter period. Establishments must show proof that the wages have been paid whenever required.

Ministerial Decision No. 739/2016 on the Protection of Wages provides that if:

  1. The Ministry has proof that an establishment employing 100 or more employees has delayed the payment of wages for 10 days from the due date, the following actions will be taken:
    1. Informing the establishment that no permits will be issued as of the 16th day of the delay in payment.
    2. As of the sixteenth 16th day, suspending the work of the violating establishment and notify it that:
      1. If the establishment continues with late payment until the end of the month, then starting from the following month the below actions will be taken:
        1. Judicial and any other relevant bodies will be informed to take precautionary and punitive procedures against the party causing the delay.
        2. Suspension of the establishment will be extended to all establishments of the employer as per Ministerial Decision No. 703/ 2013 on Suspension of Establishments of the Employer, and disregarding the notices' terms and procedures contained therein.
        3. Ban of registration of any new establishments of the employer with the Ministry.
        4. Procedures to:
          • execute the guarantee;
          • decrease the establishment classification to the third class; and
          • permit the employees to transfer to another employer.
      2. If the establishment continues with late payment until the end of 60 days as of the due date, then administrative fines will be imposed on the establishment, in addition to the actions set out in (A) to (D) above.
    3. The ban applied in the event of delay will be stopped immediately following the payment. The ban applied in the event of refusal of payment will be continued for two months following the payment of wages. Every time the refusal of payment is repeated, the term of ban will be multiplied following the payment of wages.
  2. The Ministry has proof that an establishment employing 100 or less employees has delayed or refused the payment of wages, the procedures currently applied at the Ministry must continue to be applied, unless the refusal to pay has been repeated more than once within one year – in which case the actions set out in (1) above will be applied.

The Ministerial Decision further provides that the Ministry will stop dealing with the establishments that have not subscribed to the WPS as of the date of the Ministerial Decision, and will stop dealing with the owners of these establishments until they subscribe to the WPS. In all cases, this must not result in harming the rights of the employees.

It is clear from the new Ministerial Decision that the UAE continues to focus on ensuring that employees receive their wages on time, protecting the employees from manipulation in their financial entitlements, reinforcing the principals of human rights, reducing the amount of labour disputes and assisting the judicial system in labour entitlement disputes by providing evidence in relation to the same.

As a result, employers are urged to subscribe to the WPS immediately and comply with the requirement regarding the payment of wages as set out in the Ministerial Decision in order to avoid the repercussions, suspension and ban as provided for therein.

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