UAE: Up to Dh200,000 fine for employers shutting down firm without clearing employees’ salaries

Question: I work in a UAE-based (mainland) company and we have not been paid our salaries for a while now. How do I address this? What are the things that will happen if I register a complaint against the company? Can the owner refuse to pay my dues, including gratuity, if the company shuts down due to liabilities? Please guide.

Answer: Pursuant to your queries, the provisions of Federal Decree Law No. 33 of 2021 on the Regulation of Employment Relations, Cabinet Resolution No. 1 of 2022 on the Implementation of Federal Decree Law No 33 of 2021 regarding the Regulation of Employment Relations, the provisions of Ministerial Resolution No. 43 of 2022 Regarding Wages Protection System and Ministerial Resolution No. 346 of 2022 Regarding the Amendment to Certain Provisions of Ministerial Resolution No. 43 of 2022 Regarding the Wages Protection System are applicable.

In the UAE, an employer should pay the salary of its employees regularly on due dates. This is in accordance with Article 1(1) of the Wages Protection System Law, which states, “In the implementation of Article 16 of the aforementioned Executive Regulations (Cabinet Resolution No.1 of 2022) of Federal Decree-Law No. 33 of 2021 (Employment Law), all establishments registered with the Ministry must pay the salaries of its employees on the due date through the Wages Protection System (WPS) approved by the Ministry or any other relevant system. The employee’s salary (wage) shall be due starting from the first day of the month following the registered payday specified in the Employment Contract; if such period is not mentioned in the Employment Contract, the employee must receive his/her salary at least once a month.”

In the event of non-payment of salary of employees, the Ministry of Human Resources & Emiratisation (MoHRE) may take appropriate actions against an employer. This is in accordance with Article 16(2) of the Cabinet Resolution No. 1 of 2022, which states, “Subject to the provisions of Article (22) of the Decree-Law:

- The Ministry may take all the legal actions and measures provided for in the Decree-Law, this Resolution, and the relevant legal regulations against the establishment in the event of non-payment of the agreed salary.”

Moreover, once the salary of an employee is due for more than 15 days, then it may be considered as a delay in payment of salary. This is in accordance with Article 1(2) of the Wages Protection System Law, which states, “If salaries are not paid to employees within 15 days from the due date, the employers will be considered late in paying, unless otherwise specified in the employment contract.”

Penalties, fines

If an employer continues to delay in payment of salaries to its employees, then Article 1 of the Amended Wages Protection System Law states the relevant warnings, penalties and legal sanctions which an employer may face due to non-payment of salaries of its employees on a regular basis.

Based on the aforementioned provisions of law, if your employer has not paid your salaries for some time, you may terminate your employment contract without serving a notice period to your employer once you notify MoHRE at least 14 days prior to you leaving the employment. This is in accordance with Article 45(1) of the Employment Law, which states, "An employee may quit his work without notice and reserve all his entitlements at the end of service in any of the following events:

- If the employer commits a breach of his obligations to the employee stated in the employment contract or this decree-law or it's implementing resolutions, provided that the Ministry is notified by the employee (14) fourteen working days before the date of leaving the work, and the employer's failure to remedy the breach through being notified by the Ministry.”

Thereafter, upon resignation you may consider filing a complaint against your employer with the MoHRE related to your claims for outstanding salaries and end-of-service entitlement due from your employer in accordance with Article 54 of the Employment Law read with Article 31 of Cabinet Resolution No. 1 of 2022 which states procedures related to filing employment complaint with the MoHRE. If there is no amicable settlement with your employer before the MoHRE, you may consider filing an employment case against your employer based on the letter issued to you by MoHRE authorising you to file an employment case within 14 days in relevant court which has jurisdiction in the UAE.

Moreover, your employer may have to pay penalties ranging between Dh50,000 to Dh200,000 in the event it shuts down its operations without settlement of employees' entitlements. This is in accordance with Article 60(4) of the Employment Law, which states, “Shall be sentenced to a fine of no less than Dh50,000 and not more than Dh200,000, whoever: Closes, or ceases the activity, of an establishment without taking the procedures for settlement for employee entitlements, in violation of the provisions of this Decree-Law, its Executive Regulations and implementing resolutions.”

Any payments due to the employees by an employer have priority on all other liabilities of an employer (excluding payment due to public treasury and legal alimony of the wife and children of an employer). This is in accordance with Article 65(7) of the Employment Law.

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.

ALSO READ:

• UAE: Can an employee take 60 days of annual leave?

• UAE Golden Visa: Do engineers need a minimum salary of Dh30,000 to be eligible?

• UAE
• Newsletters
• UAE