Labour Minister issues decree to enforce Wages Protection System

All institutions registered under the Labour Ministry will, from September this year, start paying workers' wages and salaries through the newly introduced Wages Protection System (WPS).

Labour Minister Saqr Gobash Saeed Gobash has issued an order enforcing the new system, which involves transfer of salaries through selected financial institutions, authorised and regulated by the government.

The move, which is in implementation of cabinet decree number 133/1, is aimed at boosting transparency and stability on the labour market. It also seeks to protect the rights of workers in the country.

Gobash and the UAE Central Bank Governor, Sultan Bin Nasser Al Suwaidi, recently launched the WPS, under which the employer can choose any registered agent to participate in the WPS.

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On receiving details about workers' wages, the bank or institution sends the information electronically to the WPS. The WPS sends the salary file to the agent for payment, and the agent pays the employees.

The system will also supply the Labour Ministry with the necessary data pertaining to all salary and wage payments in the private sector.

Gobash said: "The WPS reflects the UAE's pioneering position in the region, and will increasingly project the country as a model worth emulating in the area of boosting the rights of workers.

"It is our ethical and legal responsibilities to always strive to come up with innovative means of implementing our leadership's policies which aim at providing secured and stable environment and at protecting the rights of all segments of the society."

A dedicated WPS Office in the Labour Ministry will ensure that the process is functioning smoothly. The workers will not face any deductions or charges in salaries because of the WPS.

The decree also sets deadlines for various categories of business institutions in the country to comply with the WPS. Institutions with 100 or more employees have till the end of November to comply with the new system.

Institutions with 15 to 99 employees have to comply by the end of February 2010, while institutions with 15 or less employees have their deadline set for May 31, 2010.

Acting Director General at the Labour Ministry, Humaid Bin Deemas cited a number of positive aspects of the system, including saving of money, time and energy, boosting production and employee loyalty.

He described the new system as "most appropriate", saying it will save both the employees and their employers the trouble of having to keep huge amounts of money at their workplaces.

Bin Deemas said the Labour Ministry was committed to working very closely with all concerned with the aim of reaching the best mechanism that would equally protect the interest of all parties.

He said even before the issuance of the new decree, the response to the WPS was very positive as the system transfered the wages of about 28,000 workers in June.

Stringent penalties

Cabinet decree number 133/1 states that institutions which provided false information regarding employees' wages or salaries will suffer consequences, including court action.

In addition, it will be denied the right to have a new work permit, which shall remain in force until after the court proceedings.

Any institution which fails to transfer payment of its employee to the WPS on time will also have its work permit transactions blocked until it transfers the full payment of the wages.

A repetition of these two violations will lead to more punitive action. The institution shall forfeit the right to have a new work permit until after one month of rectifying the violation.

A third violation will result in the processing of new work permit being suspended for two months, while a fourth violation will attract a three-month suspension.

The decree mandates the Labour Ministry to stop issuing new working permits to institutions which violate the decree frequently.

These institutions are to be referred to court and no work permit is to be issued to the company, or any of its subsidiaries, or other companies owned by the owner of the violating company, until after the court proceedings or after the errant company has rectified the violation, whichever comes first.

The decree abrogates ministerial decree number 156 of 2003, which mandates institutions to produce an auditor's certificate.

UAE companies to pay workers’ salaries through WPS

In an effort to curb delayed salary payments, the Labor Minister, Saqr Ghobash, issued a decree enforcing the recently introduced Wages Protection System (WPS), reports WAM. All companies registered with the Labor Ministry will be required to begin salary payments to its employees through the WPS in September 2009.

“The WPS reflects the UAE’s pioneering position in the region, and will increasingly project the country as a model worth emulating in the area of boosting the rights of workers,” explained Ghobash. “It is our ethical and legal responsibilities to always strive to come up with innovative means of implementing our leadership’s policies which aim at providing secured and stable environment and at protecting the rights of all segments of the society,” he added.

A dedicated WPS Office in the Ministry will ensure that the process is functioning smoothly. The workers will not be subjected to any deductions or charges to get their salaries.

The decree gives deadlines for the various categories of business institutions in the country to fully comply with the new system. According to the decree, institutions with 100 and above employees have three months to comply fully with the new system with the deadline slated for the end of November. Institutions with 15 to 99 employees have six months to complete the process with the deadline for this category set at the end of February 2010, while institutions with 15 or less employees have their deadline set for May 31, 2010.

Shedding more light on the new system, Acting Director General at the Labour Ministry, Humaid bin Deemas, said the WPS is aimed at entrenching transparency and competitiveness on the labour market and cited a number of positive aspects of the system, including saving of money, time and energy, boosting production and employee loyalty. He described the new system as "most appropriate", saying it will save both the employees and their employers the trouble of having to keep huge amount of money at their work places, which put those monies at high risk.

Bin Deemas said his outfit was highly committed to ensuring the full implementation of the new system and to working very closely with all concerned stakeholders in the system with the aim of reaching the best mechanism that would equally protect the interest of all parties.

He said even before the issuance of the new ministerial decree response to the WPS was very positive as the system transfered the wages of about 28,000 workers in June. He attributed the success to the good and hard work of the task force in charge of supervising the system. The task force is made up of two representatives from both the Labour Ministry and the Central Bank.

Regarding penalties, the decree states that institutions which provided false information regarding the wage or salary of its employee will suffer consequences, including court action, in addition to denying that institution the right to have new working permit, which shall remain in force until after the court proceedings.

Any institutions which fails to transfer payment of its employee to the WPS on time will also have its working permit transactions blocked until several days later from the time it made the transfer of full payment of the wages.

A repetition of the two above violations will lead to a more punitive action against the violating institution, which shall forfeit the right to have new working permit until after one month of rectifying the violation. Repeating any violation for the third time will attract two months suspension of processing of new working permit for the violating institution, while a fourth violation will attract three months suspension until the violation is rectified.

The decree mandated the labour ministry to stop issuing new working permit to any institution which violated a complete unit of rules of the new decree and refer those responsible to court to face the consequences of incessant violation of the system. In this case, no working permit would be issued to the company, or any of its subsidiaries, or other companies owned by the owner of the violating company, until after the court proceedings or after the errant company had rectified the violation, whichever comes first.

The decree abrogates Ministerial Decree no. 156 of 2003, which, among others, demands from institutions to produce auditor's certificate.

Source: WAM/SA