Electronic wage payment to be mandated by next spring

ABU DHABI // By next spring, the UAE's four million private-sector workers will be paid using a new electronic system designed to reduce salary disputes. A ministerial decree establishing the Wages Protection System goes into effect in September, the Ministry of Labour announced yesterday. Companies with more than 100 employees, regardless of salary level or occupation, must comply by the end of November, but smaller firms have more time.

Humaid bin Deemas, acting director general at the ministry, said the system was designed to boost transparency. "The main objective of implementing WPS is to guarantee that the employees will receive their salaries every month with no delay," Mr bin Deemas said. All institutions registered with the ministry must choose an agent - a bank, money exchange or financial services company - through which their workers will be paid.

When the agent receives the wages, the ministry will be notified. According to lawyers there has been a sharp rise in pay disputes since the global financial crisis hit the UAE. The new system will mean the ministry can keep track of employers who fail to pay their staff, an issue that Saqr Ghobash, the Minister of Labour, has described as a "top priority". Companies with 15 to 99 employees have until the end of February to comply; those with fewer than 15 have until the end of May.

Employers must pay a service fee to the agent, Mr bin Deemas said. The Central Bank will issue a public list of agents. Wages also can be paid directly to money exchanges and collected by workers, or representatives from the exchange can go to labour camps and distribute the cash. Companies that fail to pay workers face court proceedings and may lose their ability to issue new work permits. In the case of "incessant violations", the case will be referred to court and no permits would be issued to the company, its subsidiaries, or any other company with the same owner until the issue is rectified, the ministry said.

Some companies are already using the Wages Protection System, and 28,000 workers were paid using it in June. It was meant to be in place beginning in January 2008, but some firms cited difficulties in finding banks willing to open accounts for low-income workers. When the system was formally launched in May, Samir Khosla, the managing director of Brentford, a Dubai-based contracting company using the system to pay its 700 workers, described it as "excellent and convenient".