Unpaid Salary in the UAE

It is the fundamental right of employee to receive the salary on right time. Employer has to transfer salary through WPS every month. Employers have a legal obligation to pay salaries/wages according to the labour employment contract of employee. UAE Labour Laws have to be followed while hiring the employees.

Delayed salaries, partial salary payments, or complete non-payment of salaries, certainly creates serious legal risks for employers and businesses. Workers are allowed to take employers to court for facing the legal consequences. UAE has developed a comprehensive set of rules, to protect employees and ensure timely salary payments. Salary can only be paid through WPS (wage protection system).

Employees facing unpaid salary disputes with employers, have legal right to seek legal help to understand their labour rights. Professional labor lawyers offer legal remedies including litigation support. Professional labor lawyers have always been very useful while dealing with employment disputes with employer, inside the court. These professional advocates are also quite helpful in drafting and reviewing of labour contracts.

Salary is the agreed compensation between employer and employee. Employer has to pay agreed salary in exchange for professional services rendered. The UAE Labour Law requires employers to pay wages according to the terms of the employment contract and within the prescribed payment period. It means employer cannot delay intentionally or even un-intentionally, for paying the salaries. Federal Decree-Law 33 of 2021, which is about Regulation of Labour Relations, is considered as the primary legislation source to govern relationship, obligations and duties between employers and employees. Federal Law stops from late payments, unauthorized deductions etc.

One of the most significant developments in the UAE employment sector is Wage Protection System or also known as WPS. This electronic salary transfer system was introduced and implemented to make sure that salary transfer process is transparent, and under the knowledge of government. Salary transfer without WPS system is legally not allowed. Under WPS, employers have to transfer salaries only through approved banks, and approved financial institutions. The several advantages of this system can be described as follows:

• Reliable payment record.
• Helps detecting salary delays.
• Saved employees from exploitation.
• It reduced disputes.

When an employer is failure while paying the pay through WPS, authorities may initiate enforcement measures quickly.

UAE government always takes serious and quick legal measures. Federal authorities may impose restrictions on the company. They can also limit obtaining new work permits. The Continued non-compliance may result in additional penalties. In severe cases, labour disputes may proceed before the competent courts, where employers can be ordered to pay outstanding wages, compensation, and other employment entitlements.

Salary disputes are created due to many reasons. We need to understand the basic reasons at the beginning. For example:

• Some employers experience financial difficulties and they cannot pay at all.
• While some have, problem but they can pay partially.

Sometimes disputes arise because of disagreements regarding attendance, or performance. However, employers still have to pay earned wages/salaries. Employees should lodge the complaint in MOHRE immediately. However, he cannot stop paying the salaries to employees.

The Ministry of Human Resources and Emiratization (MOHRE) plays a central role in resolving labour disputes between employer and employees in public sector, semi-government sector and private sector. Employees who have not received their salaries may submit a complaint to MOHRE. MOHRE attempts to facilitate an amicable settlement at the beginning between both parties. Labour officers review the dispute, and seek a practical decision. MOHRE’s involvement provides employees with a cost-effective solution.

If the dispute cannot be resolved through MOHRE, the matter is referred to the competent labour court. The competent court examines the entire case by both parties and decides whether wages remain unpaid or not. Court can also punish the employee if it is proved during the case, that employee tried to bluff the court. However, if the employee successfully proves the claim, the court may order the employer to pay outstanding salaries along with all the pending benefits. Court case is the final and ultimate legal remedy.

Failure to pay salary can affect an employee’s ability to continue his service. Employees may consider resigning. However, employees should obtain proper legal advice before making a decision.

When employment ends, employers must settle all lawful dues, including outstanding salaries and end-of-service benefits. End-of-service gratuity remains an important financial entitlement under UAE labour law.

Employees facing salary delays should act promptly as per UAE Labour Law regulations and recommendations. If the employer continues to delay payment, workers should approach MOHRE without unnecessary delay.