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.
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.
