Ministerial Decision No. 43/2022 regarding the Wage Protection System

Saher Khan and Swetha Sivaram 

Following the issue of Ministerial Decision No. 43/2022 (the Decision), the UAE Human Resources and Emiratisation Ministry (MOHRE) has announced all establishments registered with it must now pay their employees their wages on the date owed, through either the Wages.

Protection System (WPS) approved by the Ministry, or any other relevant system which the Ministry has approved. Ministerial Decision No. 43/2022 was issued in accordance with Article 16 of Cabinet Decision No. 1/2022 (which is the Implementing Regulations to the new UAE Labour Law (Federal Decree-Law No. 33/2021)).

An employee’s salary becomes due on the first day of the month following the registered payday which is specified in their employment contract. However, if this period has not been mentioned in the employee’s employment contract, an employee must receive their salary at least once a month. Employers are considered to be late in making payment if an employee’s salary is not paid within 15 days from the date on which it is owed unless their employment contract states otherwise. It is important to note that at any point, companies can be asked to provide documentation to prove payment has been made to their employees so they must maintain accurate records of all these payments.

Companies will also be electronically monitored by the MOHRE to make sure their employees are being paid. Reminders and notifications will also be sent to employers on the third and tenth day after the due date if they have not made required payments to their employees. If an employer fails to pay an employee’s salary for over three consecutive months, an electronic notification is sent to the company and the company is unable to issue any further work permits or renew the work permit of an employee whose salary has not been paid. If the employer continues not to pay the employee’s salary for six months, an inspection of the company premises will be carried out in order to ensure there is an active employment relationship in place. If there is no evidence of an active employment relationship, administrative fines will be levied on the employer.

If an employer has not made salary payments 60 days or more after the date they are owed, they will be banned from issuing new work permits. In addition, if the violation is repeated or a company has violated more than one provision of this Decision, an administrative fine will be imposed on them in line with Cabinet Decision No. 21/2020. It is also worth noting that taking into account legal deductions, an employee’s salary is considered to have been paid if they have received 80% or more of the salary specified in their employment contract.

Employers will be considered to be compliant with the WPS requirements if salaries of 90% of their employees have been paid. If a company has transferred 80 to 90% of the total salaries owed to their employees, they will be considered to be partially compliant with the WPS requirements. However, the WPS compliance requirements do not apply to employees who have filed a claim against the employer in respect of unpaid salaries at the Court, an employee who has been reported as absent by way of an ‘unauthorised absence report’, an employee who has not yet completed one month of employment or an employee on unpaid leave. However, if an employee is granted unpaid leave, the employer must notify the MOHRE of the exact period of that unpaid leave through the appropriate approved channels of communication.

Under Article 50 of Federal Decree-Law No. 33/2021 if an expatriate employee absents themselves from work before their term of their employment expires without providing the employer with a valid reason for that absence, that employee will not be granted another work permit to join a new employer in the UAE for one year from the date of the absence. Fortunately, all companies will be given three months to comply with Ministerial Decision No. 43/2022. However, the Decision does not specify the remedies available to the employer for non-compliance.

There are some categories of employers and companies who will be exempt from the WPS requirements. These include fishing boats owned by UAE nationals, public taxis owned by UAE national, banks and places of worship. The changes brought in by Ministerial Decision No. 43/2022, are welcome changes for employees as they will ensure all employees have their salaries paid on time. This Decision will also help MOHRE better regulate companies and minimise the risk of unethical business set ups in the UAE.

This publication is not intended to offer legal advice and is solely for informational purposes.

As published by LexisNexis Middle East in the LexisNexis Middle East HR Alert April 2022