UAE government warns companies to pay employees on time and in full

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The Ministry of Human Resources and Emiratisation on Monday reminded private companies to transfer the salaries of their employees to bank accounts to avoid fines.

Salaries should be transferred through the Wage Protection System on fixed dates, the ministry said.

"The ministry seeks to ensure the worker’s right to receive his wage in return for his commitment to perform his job duties," said Maher Al Obed, assistant undersecretary at the ministry.

"It also contributes to increasing the worker productivity as a result of paying the wages on time and the specified amount."

The system, introduced in 2009, ensures timely payment of wages.

According to Ministerial Decree No 739 of 2016 concerning the protection of wages, all companies registered with the ministry must subscribe to the WPS and pay salaries through the system.

How does WPS work?

Private sector companies registered with the ministry must open an account with a bank in the UAE. WPS authorises the employer's bank or agent to pay salaries to the employees and the bank then transfers the salary to the employee's bank account.

Salary transfer can be done through banks, bureaux de change and financial institutions approved and authorised to provide the service.

Fines for flouting WPS rules

The authorities will penalise companies that are late in paying salaries and for failure to follow the rules.

Wages not transferred within 10 days of the due date are considered a late payment. These are the fines for flouting rules:

If a company submits incorrect data to evade the transfer of salaries, then a fine of Dh5,000 ($1,360) for each worker and a maximum of Dh50,000 if there are several employees involved is applicable
There is a fine of Dh1,000 per worker if the salaries are not paid by the due date through the system
Getting fake salary slips signed by the employees can lead to a fine of Dh5,000 per worker

All companies and businesses registered with the ministry must sign up with the WPS and those that fail to will be blocked from all new work permits until salaries are fully paid.

Mr Al Obed said any change in salaries should be done through the approved system.

He said employers can also use the 'statement of account' service for salary transfers, which is emailed every month.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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UAE government warns companies to pay employees on time and in full

The Wage Protection System ensures salaries are paid within 10 days from the registered payday

How does WPS work?

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