Given: A businessman from Ajman, who has a small restaurant that employs 11 people. He can’t pay their salaries because of the current economic situation. Due to pandemic, his restaurant was closed for a long time. Can he be held liable under the UAE wage protection rules? He has all the documents, proving that he is bankrupt and the business has fallen into the downfall.
The restaurant is located in Ajman.
Thus, the provisions of Federal Law No. (8) 1980 governing labor relations in the UAE (Employment Act), Ministerial Decree No. (739) 2016 on Wage Protection (Ministerial Decree) and Cabinet Decree No. (15) 2017 on Service Charges and Administrative Fees in the Ministry of Human Resources and Emirate (Cabinet Resolution).
In response to his inquiry, it may be noted that under the provisions of the Employment Act, an employee must be paid at least once a month. This is consistent with Section 56 of the Employment Act, which states, “Employees employed on an annual or monthly basis shall be paid at least once a month; all other employees shall be paid at least once every two weeks. Consequently, an employer’s failure to pay its employees’ wages is a violation of the Employment Act.
Further, if an employer fails to pay an employee’s wages within one month of the date the employee’s wages became due, it is considered a refusal by the employer to pay the employee’s wages. This is in accordance with article 1(b) of the Ministerial Decree, which states: “An employer is considered to be in arrears with the payment of wages if he does not pay within the first 10 days from the due date for payment and is considered to have refused to pay if he does not pay within one month from the due date, unless a shorter period is set/set in the contract”.
In addition to the above, Article 2 (2) of the ministerial decree also states that if an employer who employs fewer than 100 employees fails to pay his employees within 60 days of the due date, the employer may be subject to penalties.
Since you have failed to remunerate your workers through the “Wage Protection System”, you may be fined AED 1000 per worker in accordance with Article 3 (7) of the Cabinet Resolution, which states: “Failure to pay the wages due to a worker through the Wage Protection System within the deadline set by the Minister: AED 1,000 per employee.”
In view of the above, you may note that if your employees file a complaint against you with MOHRE for non-payment of wages, you may be fined. Said penalties may include a ban on your future work permits and/or fines and/or referral to a competent court by MOHRE.
Our advice is: if you cannot pay your employees, you can move them to a shorter work schedule, make an addendum to their employment contract and pay them according to their hours of work.
And also fire some of the employees who are having difficulty paying their wages, either way you need to not violate employment laws.