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

UAE Government launches wage protection system for workers

Companies defaulting on salaries will soon be a thing of the past as the UAE government launched its Wages Protection System (WPS) on Tuesday.

In yet another significant stride to further protect the rights of those employed in the country, the new system will benefit over four million employees when fully implemented.

WPS is an initiative to safeguard payment of workers' wages via transfers through selected fin-ancial institutions, that will be authorised as well as regulated by the government.

"UAE businesses will now adhere to timely wage payments at the exact amounts agreed with employees," said Saqr Gobash, minister of labour.

"This initiative greatly enhances our ability to implement preventive measures to reduce labour disputes pertaining to wages and will offer solutions that will guard workers and employers against keeping large amount of cash at work places," he noted.

The minister officially launched the system alongside Nasser Al Suwaidi, the Central Bank Governor, who said that the system is based on the latest technology and that it allows for future upgrades.

With WPS the Ministry of Labour (MOL) would know at real time whether or not salaries have been paid out in full and on time. Defaulting companies could then be easily identified and penalised.

If the wages paid are not the same as those agreed by the employer on the job contract, then those employers could be easily brought to book, officials told Gulf News.

Compliance with the WPS is mandatory for all businesses operating in the UAE; however, no particular deadline has been fixed yet. The time frame of WPS implementation and penalties will be issued as a ministerial decree shortly.

Companies failing to integrate WPS will not be eligible for new work permits, Gobash warned.

Reaffirming the government's commitment to safeguard the interests of both workers and the employers, Gobash said that the system offers wage protection to unskilled workers who are in desperate need of such protection.

Currently, official estimates put the number of workers who receive their wages electronically at 500,000.

"The system reflects the government's willingness to safeguard the basic rights of all concerned parties," he said, adding that it will enhance the stability of the labour market.

"The employer can choose any registered agents to participate in WPS. Once the customers bank or company receives information about the workers wages, this information will be sent electronically to WPS. WPS will then send the salary file to the agent for payment. Agents then pay the employees", Babu Santhanam, Senior IT manager at the Central Bank explained.

A dedicated WPS office in the ministry aims to set up and implement a comprehensive system to ensure wages are paid on time, to guarantee legitimate working hours are adhered to and implement the wages transfer project through banks and other financial institutions.

A Cabinet decision two years ago proposed the implementation of an electronic wage payment system. This federal order was to be implemented from January 2008.

However, businesses cited practical difficulties such as unwillingness of some banks to open accounts for low-income workers. The system was thus on hold until the Central Bank supported MOL to reach a solution in the form of WPS.

Jargon: WPS explained

- What is WPS and where will it be hosted?

It is an electronic system initiated by the Labour Ministry in association with UAE Central Bank. It is hosted at the Central Bank.

- How does it work?

The employer can choose any registered agents to participate in WPS. Once the customers bank or company receives information about the workers wages, this information will be sent electronically to WPS. WPS would then send the salary file to the agent for payment. Agents then pay the employees.


- Can the employer choose any financial service provider as its agent?

No, the employer can only choose financial service providers like banks, money exchanges or service providers that are registered and approved by the Central Bank.

- Is paying wages through WPS mandatory?

Yes, WPS is mandatory according to a Cabinet decision which requires that all workers' salaries be paid using regulated channels. A ministerial decree will be issued shortly announcing the deadline.

- Will there be penalties for not using WPS?

Defaulting companies will not be eligible for new work permits. While officials have warned of further disciplinary action, details on the penalties will only be announced in a decree later.

- Will workers have to pay to get their salary electronically or otherwise?

No, the workers will not have to go through any charges or deductions to get their salary. In order to use the services of agents in disbursing the salary, employers will get tied up with banks, money exchanges etc.

Unified system to safeguard workers against manipulation

A unified payment system for workers and the Ministry of Labour's emphasis on cracking down on non-complying companies will push the implementation of the Wage Protection System (WPS), financial institutions which will provide the service said.

The Ministry of Labour in coordination with the central bank yesterday launched WPS, an initiative to safeguard workers' salaries via transfer through selected financial institutions.

Nabil Bader, CEO of Waseela Equity, one of the payroll service providers in the country, and the process of getting linked to WPS, said "the implementation of the decision with the introduction of the new system will be more effective because the whole country will have a unified system for payment of workers' salaries, which is monitored by the central bank and Ministry of Labour, as well as the ministry's insistence to follow up on the implementation by companies."

The company currently has 100,000 workers in 18 companies paid through them.

"Since the Minister of Labour made the announcement of the launch of the new system about a month ago, there has been a massive increase in the number of requests for our services," Bader said.