United Arab Emirates: New Wage-Payment System to Affect Employers of Foreign Workers
United Arab Emirates: New Wage-Payment System to Affect Employers of Foreign Workers
Under the United Arab Emirates’ new Wages Protection System, certain employers will be required to pay their workers through a UAE financial institution rather than directly. Employers will also have to pay wages at least once a month and meet specified payment deadlines. Employers that are not registered with the Ministry of Labour, such as those operating in one of the UAE’s Free Trade Zone, will not have to participate in the new system.
Certain employers in the United Arab Emirates must soon pay their employees’ wages and salaries through a new electronic salary transfer program called the Wages Protection System (WPS). Under the WPS, employers will no longer be able to pay their workers directly. Employers will transfer wages to a UAE financial institution, such as a bank, which will in turn transfer the wages to the appropriate workers. In addition, employers will have to meet certain payment deadlines. The WPS will allow UAE authorities to monitor salaries and wage payments throughout the private sector, and failure to comply may lead to sanctions. Note that the WPS will only apply to employers registered with the Minister of Labour; therefore, employers operating in one of the UAE’s Free Trade Zones will be unaffected.
The WPS took effect on September 1, 2009, but employers have a period of time in which to phase in their compliance based on the number of workers they employ. Employers with 100 or more employees must participate in the WPS by November 30, 2009; those with 15 to 99 employees by February 28, 2010; and those with fewer than 15 employees by May 31, 2010.
To participate in the WPS, an employer must first be registered with the UAE Ministry of Labour. The employer then chooses a UAE financial institution to act as its registered agent under the WPS. The employer will then upload information about its workforce, its salaries, and its registered agent into the WPS electronic system. The agent will make arrangements with the individual workers regarding the receipt of their wages.
Under the WPS, employers must make pay wages at least once a month. Depending on when the employer plans on paying its wages, it must then meet specified payment deadlines. Compliance with these deadlines will be monitored by UAE authorities. There will be a dedicated office within the Ministry of Labour that works on the WPS.
Employers that fail to register with the WPS or that fail to transfer the correct salary amounts on time may be blocked from filing future work permit applications until they comply with the WPS procedures. Repeat offences may lead to a permanent bar from filing work permit applications. In addition, employers that provided false information regarding wages may face civil or criminal fines.
The content of this alert is for information purposes only. If you have any questions, please do not hesitate to contact the global immigration professional with whom you work at Fragomen Global Immigration Services or send an email to middleeast@ae.fragomen.com.
Source: Fragomen