Legal Forum

Question No. 1:

We’re engaged in the logistics industry and our clients are slow in processing payments. With cash flow problems, the salaries of our employees are sometimes delayed for a week. How much grace period are employers entitled to before it can be constituted as delayed salaries?

Answer:

The Ministerial Decree No. 739 of 2016 (“MD-739”) Concerning the Protection of Wages issued by Federal Ministry of Human Resources and Emiratisation (‘MOHRE’) (formerly known as the Ministry of Labor) adopted on 29/09/2016, ensures that employees wages must be fully paid within a period not exceeding 10 days from the registered due date in the WPS (wage protection system).

The Decree clearly stipulates that an employer shall be deemed as late in paying wages if the wage is not paid to the employee within 10 days of the due date. Therefore, since your company is managing to pay the wages within the time limit of 10 days, it shall not constitute as delay pursuant to the MD-739 and UAE Labor Law.

Question No. 2:

We are a startup company and we wish to have our first office based in Dubai. We hired a number of employees for this project though it hasn’t started. Under the UAE laws, should we pay them their monthly salaries even though the office is not in operation yet? What are the penalties if we don’t pay them as agreed in our contracts with them?

Answer:

The Ministerial Decree No. 739 of 2016 (“MD-739”) Concerning the Protection of Wages issued by Federal Ministry of Human Resources and Emiratisation (‘MOHRE’) (formerly known as the Ministry of Labor) repeals MD 788 in relation to penalties for late payment of wages and details a number of different penalties, depending on the length of the delay in payment and the size of the Employer.

The main penalties duly introduced are;

a. If an employer has 100 or more employees and commits a Payment Delay, the MOHRE will, for delays of at least:

I. Upon 10 days of delay shall give the employer a warning notice that the penalty mentioned below will be imposed if the payment becomes delayed by16 or more days.

ii. Upon 16 days of delay the MOHRE shall suspend the employer from granting any more work permits and give the employer a warning notice that the penalties described below will be imposed if the payment becomes a month late.

The Decree clearly states, if a company delays wages a month from the due date, which means the company has entered into the refrainment phase, then the Ministry shall inform the judicial authorities and other related parties to take all necessary punitive measures against it, causing a complete strike against the other companies owned by the same employer, plus prohibiting the employer the ability of registering any new companies.

Furthermore, if a company continues to refrain wages, the ministry shall take necessary measures to use the bank guarantee, in addition to downgrading the company into the third category and enable the workers to move to another company.

If the company fails to pay wages for 60 days from the due date, then administrative fines of minimum AED5,000 per worker shall be imposed and reaching a maximum of AED50,000 in the event multiple workers complaining about delayed wages for over 60 days.

The decree reiterates that if the company repeats the violation then the ban duration doubles each consecutive time.

Additionally, if the ministry came across any sort of salary delays or refrains by companies that employ less than one hundred workers, the current regulations shall apply, from work permits ban to fines then public trial referral if the company fails to pay the wages within 60 days. However, if the company commits such violations more than once in one year, then, in this case, the ministry shall apply penalties stated for companies that employ over 100 workers.

The decree clearly states the ministry shall not proceed with any transactions with companies that did not register in the WPS, in addition, to stop dealing with the owners of these companies until they register in the system, all to ensure workers’ rights have been met.

Question No. 3:

What is the best thing to do if customs authorities seized a large shipment due to suspicion of carrying fake items?

Answer

We assume that you are a freight forwarding Company. Since the shipment belongs to the Customer/Consignee, your Company as a Shipper is not liable for the clearance of the goods at the Customs due to non-conformity of the goods as per the law.

Moreover, the Federal Law No. 19 on Combating Commercial Fraud, clearly defines that the commercial fraud act includes importing, exporting, re-exporting, manufacturing, selling, exhibiting, possessing for the purpose of sale, storage, rental, marketing or trade of counterfeit or adulterated goods.

In this matter, a proper procedure needs to be followed by the Consignee for release of the goods. However, the UAE Law does empower the concern officers to destroy the goods or return the shipment and consequences of which shall be borne by the Consignee.