Companies that don't pay their workers' salaries on time will be exposed and dealt with immediately once the Wage Protection System (WPS) is in full swing, senior officials said on Tuesday.

WPS, an electronic system that will be applied to 300,000 companies employing 4.5 million workers across the UAE, was launched jointly by Saqr Ghobash, Minister of Labour, and Nasir Al Suwaidi, Central Bank Governor, at the National Theatre in Abu Dhabi on Tuesday.

"This electronic system will provide information on companies that don't pay wages on time," said Al Suwaidi. The central bank governor said the WPS employs the latest wages payment system.

"This system can be linked to mobile phones and is able to allow employees to transfer their salary directly to his country or through ATM machines," said Al Suweidi.

Al Suweidi said WPS will notify businesses which fail to comply and delay paying wages.

During the launch, Ghobash said the system is a "turning point" that would prevent non-payment of salaries. Many construction workers have protested in the past over unpaid salaries.

"We will not accept any excuse (by employers) to avoid adhering to the system," said Ghobash. "The issue of wages is a top government priority. WPS will help stabilise the job market and, consequently, enhance productivity, safeguard workers' wage payments via transfers
though selected state financial institutions."

Ghobash said WPS will enhance stability of labour relations through timely payments, adherence to legitimate working hours and the transfer of wages through banks and other financial institutions.

The Cabinet has earlier ordered the Ministry of Labour to ensure that workers are paid through banks across the UAE. The federal order was to be implemented from January 2008 but some companies have cited
difficulties in finding banks willing to open accounts for low-income workers as the reason for the delay.

To fully implement the WPS, the Minister of Labour created a dedicated WPS office, linked directly to the executive director of inspection affairs, in October 2008.

Now, registration to the WPS is compulsory and any non-abiding businesses will be subject to disciplinary action, said the Labour Minister.

Ghobash, however, said the system is "flexible" and would allow for enough time for all companies to comply. He did not set a timetable for compliance.

“The system reflects the government's willingness to safeguard the basic rights of all concerned parties. Our co-operation with the Central Bank has resulted in the development of an effective mechanism to provide the Ministry of Labour with data and information on the
private sector's wage payment processes, which we aim to constantly improve. UAE businesses will now adhere to timely wage payment at the exact amounts agreed with employees,'' said Ghobash.

He said the initiative will prevent labour disputes pertaining to wages and will offer solutions that will guard workers and employers against keeping large amount of cash at work places.

Under WPS, an employer now has the right to choose one or more of the participating agents licensed by the Central Bank system.

Once a bank receives workers' wages, information and data will be sent to the WPS, so it can notify the agent for payment. The same information will be simultaneously received by the Ministry of Labour.

Half a million workers are currently covered by WSP and Ghobash said he hopes hat the new system will exceed this number and include the entire work force in UAE, especially unskilled workers who are in desperate need of such protection.

The Central Bank will disseminate a detailed, periodical list of all WPS-accredited banks, exchange companies and service providers.

Babu Santahnam, IT projects senior manager at UAE Central Bank, explained that the system will not allow workers to be charged when they receive their salary through any channel.

WPS still allows for cash payments for workers in remote areas, but this can only be carried out by payment agents, exchange houses or banks -- and not directly by employers.

"The system calls for regulated wage payment environment. Under WPS, the employers provide information to banks, which then takes the money before pushing the wage file to the WPS and the Central Bank. In turn the WPS automatically informs the Ministry of Labour. The system is transparent. Employers paying directly to employees will no longer be possible under this system."

How it works

  • Employer can choose any of these agents – banks, money exchange companies or payroll service provider which participate in the wage protection system.
  • Employer may choose more than one agent for this
  • Once the customer's bank account or company receives workers' wages, information and date would be sent to the WPS which would then send them to the agent for payment. The same information would be
    concurrently received by the Ministry of Labour (MOL)
  • WPS sends a notification of which businesses delay wage payments in real time.
  • MOL will issue a ministerial order specifying names of businesses which should participate in the system together with a timetable for implementation.
  • Enough time will be given for businesses to prepare themselves to participate in the service. Establishments failing to do so shall be barred from transacting with MOL, and disciplinary action will be taken against them.