UAE Announces New Penalty for Companies that Don’t Pay Salaries on Time

The Ministry of Human Resources and Emiratisation (MoHRE) has introduced a new penalty for private sector companies that don’t pay salaries to their employees on time.

In line with this, employers have been reminded that employees must be paid only through the wages protection system. And any employer failing to pay their employees on time will have to shell out more than double the insurance policy of an employee.

UAE Announces New Penalty for Companies that Don’t Pay Salaries on Time

UAE Enforces New Penalty for Companies that don’t Pay Salaries to Its Employees on Time

According to the ministry, the new directive is in line with the timely welfare reforms carried out by the ministry. In 2018, the ministry announced a new insurance policy ‘Taa-meen’, the Khaleej Times reported.

On Monday (April 12), state-run news agency WAM mentioned that the new insurance policy covers the financial entitlements of the employees of relevant companies for 30 months.

According to this, upon recruiting a new employee, the employer has the option to either submit AED 3,000 as bank guarantee on behalf of the employee, as per the rules and regulations of the bank guarantee system or insure them under the new insurance policy, which costs AED 120 for two years.

In case of a company’s bankruptcy or failure to pay the employees’ benefits, the new policy will provide maximum insurance coverage of AED 20,000 per employee against the following benefits in the workplace: unpaid entitlements, end of service benefits, vacation allowance, overtime allowance, unpaid wages, return air ticket and work injury after it is determined by a court ruling.

In line with this, private sector companies expressed their approval of the initiative and said the legislation will ensure that the rights of the employees are protected, and a world-class talent pool is retained and attracted to the UAE.

READ NEXT: UAE Suspends Short-Term Recruitment of Household Service Workers

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