How to avoid a ban on your company due to the Wage Protection System
When is a ban applied on a company and how does it affect a business?
Dubai: If you own a company in the UAE, it is essential to ensure that you pay your employee’s salaries on time. Not doing so can lead to heavy fines as well as a ban on the hiring of any new employees, under the UAE’s Wage Protection System (WPS).
The Ministry of Human Resources and Emiratisation (MOHRE) raised awareness about the WPS system and how companies can avoid a ban being placed on them due to non-compliance, in its monthly Labour Market magazine.
When should a worker receive their salary?
Earlier this year, MOHRE issued a ministerial decree specifically on WPS - Ministerial Resolution No. 43 of 2022 regarding Wages Protection System, in which detailed regulations were issued. According to the resolution all establishments registered with the Ministry must pay the wages of their workers on the due date through the Wages Protection System (WPS) approved by the Ministry or any other relevant system. The worker's salary (wage) shall be due starting from the first day of the month following the registered payday specified in the Employment Contract; if such period is not mentioned in the Employment Contract, the employee must receive his/her wage at least once a month.
When is a salary considered late?
According to MOHRE, a salary is an employee’s basic right and if an employer does not pay it out within 15 days of its due date, the employer will be considered late.
How is a ban implemented? 5 guidelines to keep in mind
According to MOHRE, companies need to keep the following guidelines in mind, if they wish to avoid a ban being placed on them under WPS:
1. Pay workers’ salaries and no less than 90 per cent of the total number of registered employees in the company should be paid.
2. The last date for paying wages is the 15th of the month following the due month.
3. When payment is not done, a restriction is placed on the establishment in the system on the 17th of the month following the due month.
4. An employee is considered a recipient of the due wage when he or she receives 80 per cent or more of the wage’s value, as specified in the labour contract.
5. A restriction is placed on an establishment when an employee is not paid their wage for three consecutive months even if a payment rate of more than 90 per cent of the total number of employees is achieved by the establishment.
What does a ban mean?
As per Ministerial Resolution No. 43 of 2022, establishments are monitored electronically to ensure their compliance with WPS. In case of non-compliance, a company is not allowed to issue work permits and the penalties increase based on the extent of non-compliance. The renewal of work permits is also suspended if the worker has not received his or her pay for over three months, with administrative fines also levied on the company.
How do I know I have a ban on my company?
According to MOHRE, employers can view if they have a ban on their establishment and view the number of unpaid workers on the MOHRE mobile application. To access the service, you must be registered as an employer with MOHRE.
How do I lift a ban on my company?
An employer can only lift the ban once they have complied with the WPS requirements. However, if there was an error in the system or the employer has paid their employees and the ban has still not been removed, the company or establishment may need to contact MOHRE’s technical support team. For a step-by-step guide on how to lift the ban, click here.