UAE wage decree comes into force

Companies employing more than 100 workers must pay wages in full within a period of no more than 10 days from the registered payday or the Ministry will stop issuing work permits, the Ministry said.

If wages are not paid within a month the Ministry will inform the judicial authorities, which will take "all necessary punitive measures against the violating company". Other companies owned by the same employer will be "halted", as will any new projects.

After 60 days the company will be fined Dh5,000 (£1,060) per worker, to a maximum of Dh50,000 if the delay affects multiple workers.

Companies employing fewer than 100 employees will only be punished after 60 days' delay, unless they breach the requirements of the decree twice within a year. In those circumstances, the companies will be treated in the same way as a larger employer.

Dubai-based employment expert Luke Tapp of Pinsent Masons, the law firm behind Out-Law.com said: "The payment of salary within the UAE has been regulated and monitored by the authorities for several years following the introduction of the Wage Protection System (WPS) in 2009. The WPS had a positive impact in respect of the regularity and timing of salary payments within the UAE and a similar salary monitoring system to protect employees was introduced in Qatar in 2015."

"However, where employers based within the UAE fail to comply with the WPS, although there is likely to be business interruption there has historically been no associated fine," said Tapp. "Therefore some companies fail to comply with the WPS for long periods of time without accruing any kind of financial penalty. The introduction of this decree will place greater pressure on employers to ensure they are compliant with the WPS and release payments in a regular and timely manner."

"The Dubai International Financial Centre's Employment Law is similar, in that it requires employers to pay all wages and any other amounts owing to employees within 14 days of the termination date. Failure to comply with this provision results in the employer being required to pay punitive compensation to the employee which amounts to the value of one day's salary for each day that the payment is late," Tapp said.

Maher Al-Obed, assistant undersecretary for the inspections sector said: "The decree fairly contributes towards labour market stability as it safeguards employees while keeping business owners interests. Salaries paid on time is a major contribution towards labour rights protection which is highly recognised by the UAE."

"We value such decisions as it promotes labour relations which in turn secures a balanced labour market productivity, and eventually turns out with positive outcomes for both labourers and employers," Al-Obed said.

The UAE set up a council in August to review the country's maternity law, promising to look at the best ways to "provide women with a supportive work environment in line with best international practices".

Tapp said that the above developments reflect the ongoing trend within the GCC of the national authorities seeking to update their labour regulations to provide more protection to employees around key issues such as salary payment and protection.