When employers should pay salaries?
In the UAE, workers employed in return for an annual or a monthly wage must receive their salaries once a month on due dates and no later than 10 days after the end of each salary period. If such periods are not mentioned in the contract, the employer must pay the employee once every 14 days.
Payment must be in the national currency of the UAE and must be done on working days.
There is no minimum salary stipulated in the UAE Labour Law, however it broadly mentions that salaries must cover basic needs of the employees.
Article 63 of the Labour law mentions that the minimum wage and cost of living index is determined either in general or for a particular area or a particular profession by virtue of a decree and consent of the Cabinet.
Basic salary and total salary
The UAE Labour Law does not provide any guidelines on the percentage of the basic salary to be paid by the employer. So it is at the discretion of the company to decide this percentage and the employee may negotiate, accept or not.
How salaries should be paid?
According to Ministerial Decree No. 739 of 2016 Concerning the Protection of Wages, all employers registered with Ministry of Human Resources and Emiratisation (MoHRE) must subscribe to Wages Protection System (WPS) and pay the wages of their employees through the WPS, as per the due dates.
Under this system, salaries of employees will be transferred to their accounts in banks or financial institutions, which are authorised by Central Bank of the UAE to provide the service.
MoHRE will not process any transactions or deal with the owners of the companies that are not registered with the WPS until they register in the system.
Use these resources to register in WPS and understand how it functions:
Fines for evading WPS
According to Ministerial Resolution No. 15 of 2017, these fines apply for actions involving fraudulent use of the WPS:
- Entry of incorrect data in the WPS for the purposes of evasion or circumvention - AED 5,000 for each worker and a maximum limit of AED 50,000 in case of multiple workers
- Failure to pay on due dates through the WPS - AED1,000 per employee
- Forcing employees to sign fake pay slips showing that they received their salaries – AED 5,000 per employee.
Late or unpaid salaries
- The employer is considered as late in paying wages if the wage is not paid to the employee within 10 days from the due date, which is the next day of the end of the salary period.
- The employer is considered as refusing to pay wages if the wage is not paid to the employee within one month of the due date.
Penalties on companies failing to pay salaries
On companies employing over 100 worker
Here are the consequences of companies employing over 100 workers failing to pay wages within a period not exceeding 10 days:
- They will not be issued work permits starting from the 16th day from the date of delay.
- Such companies delaying wages a month from the due date will be referred to judicial authorities for punitive measures.
- Action would be taken against all companies owned by the same owner.
- The owner/s will not be able to register any new company.
- Employees’ bank guarantees will be liquidated.
- The company will be downgraded to the third category.
- Workers will be allowed to move to other companies.
In case a company employing over 100 workers delays wages over 60 days, a fine of AED 5,000 per worker whose wage is delayed will be levied with a maximum fine of AED 50,000 in cases of multiple workers’ delayed wages.
On companies employing less than 100 workers
If a company employing less than 100 workers fails to pay the salary within 60 days from due date, penalties will include:
- work permits ban
- referral to court.
If the company commits such violations more than once in one year, MoHRE will apply penalties stated for companies that employ over 100 workers.
Updated on 02 Sep 2019