Legal actions behind Non-Payment of Salary by an Employer in the UAE

It is the responsibility of every employer to pay salaries to the employees on the due date itself. And to avoid penalties and fines, every private-sector employer should pay the salaries of their staff through the Wages Protection System. According to the UAE Law, employees working in return for annual or monthly wages should receive their salaries once a month on due dates stipulated in the contract, and it should not be later than 10 days after the end of each salary period. If the due dates are not mentioned in the contract, then the employer should pay the employee once every 14 days. The payments to the employees should be in the UAE national currency. 

The UAE Labour Law does not stipulate any minimum salary or percentage of basic salary that has to be paid by the employer. However, it has broadly mentioned the salary must cover the basic needs of the employees. Hence, it is the discretionary power of an employer to decide the basic salary, and the employees can negotiate, accept, or reject accordingly. The Ministerial Decree Number 739 of 2016 on Wages Protection states that all employers registered with the Ministry of Human Resources and Emiratisation (MoHRE) should sign in to Wages Protection System (WPS) and pay the salaries of the employees through the Wages Protection System, on due dates mentioned in the contract.

Under the Wages Protection System, the wages of the employees will get transferred into their bank accounts authorized by the Central Bank of the UAE to render the service. The Mistry of Human Resources Emiratisation (MoHRE) will not operate any transactions or dealings with employers that are not registered with the Wages Protection System until they register within the system.

The Ministerial Resolution Number 15 of 2017 stipulates the fines for fraudulent use of WPS:

• If an entry of incorrect data within the WPS for the needs of evasion or circumvention, a fine of a minimum of AED 5,000 for each employee and up to a maximum of AED 50,000, in case of multiple staff will be imposed.
• If an employer fails to pay on due dates through the Wage Protection System – a penalty of AED 1,000 per employee
• AED 5,000 per employee, if forcing an employee to sign a fake payslip showing that they received their wages.

 

Consequences For Non-Payment of Salary

Late or unpaid wages are punishable under the UAE Labour Law. If an employer defaults on payment of salaries, the ministry will cease granting any further work permits to such companies from the 16th day of delay. 

• Grave penalties will be imposed on those companies that fail to pay wages and have not paid dues within the period of 10 days. The penalties are as follows:
• Work permits will not be issued from the starting date of the delay
• They will be referred to courts for retaliatory measures
• Legal actions will be taken against all corporations closely held by the identical owner
• The owner of the new company will not be permitted to register a new company
• Bank guarantees of the employees will be liquidated
• Workers will be allowed to move to alternative companies

If a company employs more than a hundred employees and fails to pay wages within 60 days from the due date shall be imposed with a minimum fine of AED 5,000 per employee and a maximum fine of up to 50,000 in case of multiple employees.

Accordingly, if a company employs less than a hundred employees, and fails to pay wages within 60 days from the stipulated due date, the penalties include:

• Stop granting additional work permits;
• A fine; and
• Referral to judicial authorities

If a company employs over a hundred employees and commits any violations over once a year, the MoHRE will impose penalties on such companies.