Firms' grace period for wage protection system near end

The grace period for the initial phase of the wage protection system, which says that all companies must pay their workers through banks, will end by April 1.

DUBAI // The grace period for companies unable to sign up for the initial phase of the wage protection system (WPS), which says that all companies must pay their workers through banks, will end by April 1, a senior labour ministry official said yesterday. "There are no obstacles for companies to enrol in the system and those which had some internal technical issues were given a grace period, but now they need to adhere to the rule or they will be banned from issuing new work permits," said Mohsen al Nasi, the ministry's acting director of the WPS office.

The ministry granted extensions to 300 companies included in the system's first phase to allow them time to finalise their procedures. The waiver was granted only after the ministry ensured workers at those firms were paid on time. Earlier this month, the ministry said some 800 companies have been stopped from hiring new workers because they failed to enrol in the programme. However, Mr al Nasi said the number of companies from the first phase currently outside the system "is declining as more of the banned companies are enrolling in the system to lift the ban".

Some 3,000 companies included in the initial phase have already complied with the new system. The labour ministry, in co-operation with the Central Bank, launched the programme in May after a January 2009 cabinet decision which stipulated that all companies pay their workers through banks. The system was set up to ensure that workers were being paid on time and that no unlawful deductions were made. The WPS enables the ministry to check, through online notifications, if any company is defaulting on salaries or making illegal deductions from the salaries.

Financial institutions to which the workers' salaries are being transferred will feed their details into the WPS. So far, 54 banks and 24 exchange agencies are licensed to offer WPS services, according to the latest ministry statistics. A ministerial decision issued in July outlined three phases for the implementation of the system. About 35,000 companies included in the second phase must enrol by April 1 and all 269,100 private companies in the country must sign up by May 31.