Wage Protection System for Domestic Workers

Wage protection system for uae domestic workers

Wage Protection System for UAE Domestic Workers

I.            Relevant Legislation

        Federal Decree-Law No. 9 of 2022 Concerning Domestic Workers;

        Cabinet Resolution No. 106 of 2022 Concerning the Executive Regulations to Federal Decree-Law No. 9 of 2022 Concerning Domestic Workers;

        Cabinet Resolution No. 675 of 2022 on Payment of Some Domestic Workers’ Salaries though the Wage Protection System.

 

II.              Scope of Application

The Wage Protection System, as is relevant to U.A.E. Domestic Workers, does not apply to all categories of domestic workers.  Notably, it excludes categories such as housekeepers, nannies, and gardeners.  Specifically, it is only applicable to those who fall within the following five (5) categories:

1)    Private agricultural engineers;

2)    Private tutors;

3)    Personal Trainers;

4)    Home nurses;

5)    Personal Assistants.

However, as a measure of protection, and as per Article 5 of the new U.A.E. domestic workers law, Federal Decree-Law No. 9 of 2022 Concerning Domestic Workers, licensed recruitment agencies are obligated to provide all employers of domestic workers in any category, with a booklet of wage receipts or any document to prove payment of wages.

 

III.            Exemptions  

Employers of the above-mentioned 5 categories of domestic workers in the U.A.E. are exempt from paying domestic worker salaries through the WPS in the following cases:

1)    If the U.A.E. domestic worker has a pending employment complaint, and does not work for the employer;

2)    If there is a report of absence from work against the U.A.E. domestic worker;

3)    If the U.A.E. domestic worker is newly employed; during the first 30 days of their employment.

 

IV.            WPS Requirements

        January 1, 2023:  Employers of domestic workers in the U.A.E. have the option to register on the WPS;

        April 1, 2023:  Employers required to register and pay U.A.E. domestic worker salaries. 

        Salaries for a specific month are due on the first day of the following month.  And, are considered late if they have not been paid through WPS within one month of the due date. 

        An employer is considered to have fulfilled the WPS requirement if they have paid 80% of more of the domestic worker’s salary through the WPS system.   However, if the employer has paid 75-79% of the U.A.E. domestic worker’s salary, they must submit a supporting document justifying the salary deduction (Article 3)

 

V.              Supervisory Authority

        Starting in February, and at the start of every month, MOHRE is tasked with notifying and warning employers about the importance of registering in the WPS.

        On the 2nd and 8th day from the salary due date, MOHRE is also tasked with notifying and warning employers about the importance of paying the relevant domestic worker salaries through WPS.

 

VI.            Penalties

        If any U.A.E domestic worker’s salary has not been paid within 2 months of the due date, the employer’s file is suspended until the salary is paid.  For those U.A.E. domestic workers subject to WPS, the payment must be made through WPS.  This prevents the employer from recruiting, or hiring any additional domestic workers.

 

        Employers of U.A.E. domestic workers who fall within the 5 categories who fail to register on the WPS will be fined AED 100.00 per domestic worker. 

WPS for Domestic Workers UAE - FAQs

The U.A.E. Wages Protection System was developed by the U.A.E. Central Bank.  The aim of this system is to ensure that employees are paid their salaries timely as per their employment contract.

Yes. The Wage Protection System, as is relevant to U.A.E. Domestic Workers, however, does not apply to all categories of domestic workers.  Notably, it excludes categories such as housekeepers, nannies, and gardeners. 

Yes, as per Ministerial Resolution No. 788 of 2009, at least 80% of the total monthly salaries should be transferred through UAE WPS each month.

Yes. On January 18, 2023, the DMCC Dubai announced that it would be implementing the U.A.E. Wages Protection System (WPS), for employees. Click here to learn more. 

The UAE WPS is only applicable 5 categories of domestic workers. These include the following: 

  • Private agricultural engineers;
  • Private tutors;
  • Personal Trainers;
  • Home nurses;
  • Personal Assistants.

DMCC Dubai Introduces WPS

DMCC Dubai Introduced WPS UAE

DMCC Dubai Introduces WPS

On January 18, 2023, the DMCC Dubai announced that it would be implementing the U.A.E. Wages Protection System (WPS), for employee salary payments.

DMCC Dubai – Wage Protection System U.A.E. | Guidelines  

1. Deadline to Register
The deadline for employers to register their employees with the s U.A.E. Wages Protection System is February 15, 2023.

2. What is the U.A.E. WPS?
The U.A.E. Wages Protection System was developed by the U.A.E. Central Bank.  The purpose of the system is to ensure that employees are paid their salaries timely, and in line with their employment contracts.

3. How to Register?
DMCC companies must register their employees through the system.  This is for employees both with and without a bank account in the U.A.E.  Below are the relevant registration steps.

                           i.          Create an employer ID:  The employer ID is a 13-digit number, consisting of the following structure – DMCC + 0000 + company’s portal account number.

                         ii.          List of employee details (employees with bank accounts):  The company should prepare a list of all its employees’ details.  The list should include:  1) employee name, 2) employee ID, 3) routing code, 4) account number, and 5) IBAN number.

§  Employee IDs:  The employee ID for employees with a bank account consists of the following structure – DMCC + 000 + employment card/personal identity card number.

                       iii.          List of employee details (employees without bank accounts):  For employees who do not have a bank account, the list of their details will only include their name and employee ID number.

                       iv.          Salary File Creation:  Once the above requirements are prepared, companies should then approach a bank or exchange house (Agent).  The company will enter into an agreement with the Agent.  And, submit a request to create a salary file for its employees.

DMCC Dubai – Wage Protection System U.A.E. | Additional Information

Sanctions & Fines
Throughout 2023, the DMCC Dubai will not impose any portal sanctions or fines against companies who do not comply with the WPS.  The fines will commence as of January 2024.

New Employees
Employers within the DMCC Dubai must register new employees with U.A.E. WPS as soon as their employment/personal identity card is issued.

Shareholders
Shareholders are not required to register with the U.A.E WPS.

Currency
Salaries can only be paid in AED.

Processing Charges:
The Agent may impose a processing charge for requests through U.A.E. WPS.  These cannot be deducted from the salaries of employees.

Percentage of Transfers
As per Ministerial Resolution No. 788 of 2009, on Wage Protection, at least eighty percent (80%) of the total monthly salaries should be transferred through U.A.E. WPS each month.

DMCC Introduces UAE Wage Protection System

Wage Protection System U.A.E. | How are Salaries Transferred?

The general structure for U.A.E. WPS salary transfers are as follows:

Salary Information File
The company should send the Agent a salary information file (“SIF”).  This is generally in the form of an excel sheet, with a particular structure and format. 

§  Employee Details:  The excel sheet should include the following details for each employee:  1) 13-digit employee ID, 2) 9-digit routing code ID of the employee, 3) employee’s IBAN number, 4) pay start date, 4) pay end date, 5) number of days for which salary is being paid, 6) fixed income amount, 7) variable income amount (overtime, bonus, etc.), and 8) day on leave for the period (without pay).

§  Employer Details:  In addition, the excel sheet should include a final row, with the following details of the employer:  1) employer ID number, 2) 9-digit bank code, 3) file creation date, 4) file creation time, 5) salary month, 6) total number of employees, 7) total salary amount, and 8) payment currency (always AED).

SIF to Agent 
The employer should then send the salary information file to the Agent.

Agent to Central Bank 
The Agent, through the U.A.E. WPS, will send the details and salary transfer instructions to the Central Bank electronically.

Central Bank to MOHRE/DMCC Dubai
Generally, at this stage, the Central Bank would forward this database to MOHRE, to confirm that the details are accurate and in line with the employees’ contracts.  However, in this case, the details may instead be transferred to the DMCC Dubai.

WPS to Agent
Through the U.A.E. WPS, the Agent will receive authorization to release the payments to the employees accordingly. 

DMCC Dubai & WPS U.A.E - FAQs

The U.A.E. Wages Protection System was implemented by the U.A.E. Central Bank.  The purpose is to ensure that employees get their salaried paid timely – in line with their employment contracts. 

February 15th 2023, is the deadline given for DMCC companies to register their employees with the WPS. 

The Dubai DMCC will not impose any portal sanctions or fines throughout 2023. However, the fines will commence as of January 2024. 

Yes, as per Ministerial Resolution No. 788 of 2009, on Wage Protection, at least 80% of the total monthly salaries should be transferred through U.A.E. WPS each month.

The Wage Protection System, as is relevant to U.A.E. Domestic Workers, does not apply to all categories of domestic workers.  It excludes categories such as housekeepers, nannies, and gardeners.  Specifically, it is only applicable to the following five (5) categories:

  • Private agricultural engineers;
  • Private tutors;
  • Personal Trainers;
  • Home nurses;
  • Personal Assistants.

Learn more about WPS for Domestic Workers in UAE. 

Unemployment Insurance UAE Overview

UNEMPLOYMENT INSURANCE UAE OVERVIEW

Overview Unemployment Insurance in the U.A.E.

Unemployment Insurance in the U.A.E. | Legal Authorities 

1.   U.A.E. Federal Decree Law No. 13 of 2022 re: Insurance for Unemployment (“Main Law”)

2.   U.A.E. Ministerial Decision No. 604 of 2022, re the System for Unemployment Insurance (“Ministerial Decision”) further clarifying certain aspects of the law. 

Unemployment Insurance in the U.A.E. | Effective Dates

o   Main Law came into effect on September 29, 2022.

o   Ministerial Decision, dated November 30, 2022, became effective on December 15, 2022.

o   Insurance implementation commencement date is January 1, 2023.

o   Deadline for compliance (subscription) – June 30, 2023, after which penalties will apply.

o   Employees employed after January 1, 2023, must register within 4 months from: 1) entering the U.A.E.; OR 2) from change of status; OR 3) final approval of work permit.  (Article 11, Ministerial Resolution).

Unemployment Insurance in the U.A.E. | Objectives

1)    Ensure income during unemployment;

2)    provide social security; and

3)    continue to attract and retain world’s best talent to the country.

Unemployment Insurance in the U.A.E. | General Guidelines

o   Obligation of employees, not employers.

o   Although companies can offer this as benefit for their employees. 

o   Mandatory, not optional. 

o   Suspension of work permit in the event of non-compliance (Ministerial Decision, Article 10). 

Unemployment Insurance in the U.A.E. | Compensation Scheme

o   Temporary compensation during unemployment. 

o   Maximum insurance compensation is for 3 months of unemployment.

o   Up to 60% of monthly salary. 

o   Eligibility after 1 year of paying into the scheme. 

Unemployment Insurance in the U.A.E. | Insurance Subscription Fees
(Article 3, Ministerial Decision)

o   Those who earn less than AED 16,000.00 – AED 5/month.

o   Those whose basic salary is above AED 16,000 – at AED 10.00/month. 

o   Commission basis employees – can choose category of insurance they wish to opt-in for. 

o   Average of monthly salary over last 6 months to be used as a base.

Subscription fee can be paid: 1) monthly; 2) quarterly; 3) bi-annually; or 4) annually. (Article 5, Ministerial Resolution)

UAE Unemployment Insurance UAE

Unemployment Insurance in the U.A.E. | Applicability and Exceptions

o   Unemployment insurance is available for employees of:

§  public sector

§  private sector  

o   Exclusions:

1)    part time employees

2)    owners of businesses

3)    investors

4)    domestic workers

5)    minors below 18

6)    retirees

o   Other Exclusions

§  Free zone employees (for the time being)

§  Employees terminated for gross misconduct

§  Employees who resign

Unemployment Insurance in the U.A.E. | Insurance Provider

(Article 2, Ministerial Decision)

o   For now, in Dubai, Dubai Insurance Company is main provider of the Unemployment Insurance, https://www.dubins.ae/en/.

o   Ministry (MOHRE) can license other insurance companies.

Unemployment Insurance in the U.A.E. | Payment of the Subscription Fee (Article 4, Ministerial Decision)

1)    insurance provider’s website;

2)    insurer’s mobile application;

3)    insurer’s call center;

4)    business centers approved by the Ministry;

5)    ATMs and Kiosks, set by the insurer, and in coordination with MOHRE;

6)    exchange houses; and

7)    SMS.

UAE Unemployment Insurance UAE

Unemployment Insurance in the U.A.E. | Obligation to Pay
(Article 6, Ministerial Decision)  

o   Failure to pay for more than 3 months – terminates insurance policy.

o   Financial penalty imposed for non-compliance. 

o   In the event of a Court case, subscription must continue until work permit is cancelled, or employment ends.

Unemployment Insurance in the U.A.E. | Submission of a Claim
(Article 7, Ministerial Decision)

o   Claim for coverage to be submitted within 30 days from termination of employment. 

o   Reason mentioned in work permit cancellation (termination or resignation) will be used by insurer. 

o   Insurance provider must pay compensation within 2 weeks of application.

o   In the event of court case, final court judgment must be submitted in request for compensation, within 30 days of judgment.

o   Upon receipt of maximum compensation, employee must re-subscribe for another 12 months before becoming eligible again.

Unemployment Insurance in the U.A.E. | Penalties for Non-Compliance

(Article 9, Ministerial Decision)

o   Failure to subscribe by June 30, 2023 – subject to AED 400.00 fine.

o   Failure to pay within 3 months – subject to AED 200.00 penalty. 

o   Failure to pay penalty within 3 months:

§  Deduction of fine by MOHRE from salary through WPS, or from end of service.

§  Suspension by MOHRE of issuance of new work permits (Article 10, Ministerial Resolution). 

Unemployment Insurance in the U.A.E. | Grace Period to Subscribe

(Article 11)

However, for employees who have been employed after January 1, 2023, must register within four months from: 1) when they entered the U.A.E. with the employment entry permit; OR 2) from the change of status; OR 3) the final approval of the work permit issuance for employees who do not need a change of status.



Unemployment Insurance UAE | FAQs

At the moment the Dubai Insurance Company is appointed as the provider of the UAE Unemployment Insurance. It is compulsory for both working residents and nationals. 

No. The Unemployment Insurance UAE is mandatory for the employees and not the employers. 

The following are the list of categories who are exempted from applying for the Unemployment Insurance in the UAE.

Part-time employees, owners of businesses, investors, domestic workers, minors below 18 and retirees. 

Other exclusions include: 

  • Free zone employees (for the time being)
  • Employees terminated for gross misconduct
  • Employees who resign
  •  

Presently in Dubai, the Dubai Insurance Company is the main provider of the Unemployment Insurance. 

Yes.

  • If you fail to subscribe by June 30, 2023 – you will be subjected to AED 400 fine.
  • If you fail to pay within 3 months, you will be subjected to AED 200 fine. 
  • If you fail to pay penalty within 3 months:
    -MOHRE will deduct the fine through your salary via WPS or from end of service. 
    -MOHRE will suspend the issuance of new work permits.

Yes. You will not be able to claim for the Unemployment Insurance Scheme if you resign or get terminated from the company due to misconduct. 

June 30th, 2023 is the deadline set for the UAE employees to register for the Unemployment Insurance Scheme.

Public Registry for Companies’ Information

Public Registry for Companies’ Information

Public Registry for Companies’ Information

A new law regarding a public registry for companies’ information has been issued.  The new law is Cabinet Decision No. 107 of 2022 Issuing the Executive Regulations to Federal Decree Law No. 37 of 2021 Concerning the Commercial Registry. 

In brief, Article 2 of this law outlines all the details which the registry must include for all companies.  These details are for: 1) the company; 2) the owners, and 3) the management. 

  1. The company: The details include but are not limited to: a) address(es), b) license details; c) legal form; and d) manager’s name.

  2. The owners: This includes owners’ names and details such as: a) contact details (mobile and email), and b) Emirates ID or Passport numbers.

  3. The management: Lastly, the registry must also include the management’s details, which include: a) directors’ names and their details (including Emirates ID numbers and/or passport numbers); and b) Ultimate Beneficial’s Owner’s (UBO) details.

UAE Public Registry - FAQs

The public registry must be included for all companies within the UAE.  These details are for the company; the owners, and the management. 

The details include but are not limited to:

  1. Address(es),
  2. License details;
  3. Legal form; and
  4. Manager’s name. 

This includes owners’ names and details such as: a) contact details (mobile and email), and b) Emirates ID or Passport numbers.  

The registry must include the management’s details, which include: a) directors’ names and their details (including Emirates ID numbers and/or passport numbers); and b) Ultimate Beneficial’s Owner’s (UBO) details.

All About the UAE Unemployment Insurance Scheme

UAE Unemployment Insurance Scheme

All About the UAE Unemployment Insurance Scheme

The UAE Unemployment Insurance Scheme is a new decision issued by the UAE Ministry of Human Resources and has come into effect in January 2023. Presently the Dubai Insurance Company is appointed as the provider of the Unemployment Insurance Scheme. It is mandatory for employees, both residents and nationals.

UAE Unemployment Insurance – Subscription 

The UAE Unemployment Insurance Scheme has two categories. The employee can subscribe and pay the fee based on the monthly salary.

Unemployment Insurance Category 1 – Subscription payment of AED 5.00 if the basic salary is less than AED 16,000.00. 

Unemployment Insurance Category 2 – Subscription payment of AED 10.00 if the basic salary is more than AED 16,000.00. 

UAE Unemployment Insurance Scheme – How to Apply

Employees may subscribe for the Unemployment Insurance Scheme though the ILOE Insurance Pool website, through its app or any other channel that the MoHRE will announce in the upcoming months.

Note – The Unemployment Insurance UAE is a mandatory requirement for the employee and the employers.

UAE Unemployment Insurance Scheme – Fee Payment

Once the employee has registered, the subscription fee can be paid through the following methods:

  1. The insurer’s mobile application;
  2. The insurer’s call center;
  3. Ministry approved business centers;
  4. ATMs and Kiosks as set by the insurer, and in coordination with MOHRE;
  5. Exchange houses;
  6. SMS.

UAE Unemployment Insurance Scheme – Payment

The insured employee can choose to pay either monthly; quarterly; bi-annually; or annually. If the employee does not pay based on the selected plan for more than three months from the due date, the insurance policy will be considered as terminated. Moreover, a financial penalty shall be imposed.

UAE Unemployment Insurance Scheme – How to Claim Benefits

  • To receive the Unemployment Insurance benefits, an employee must submit his claim for coverage within 30 days from the termination of the employment relationship. 
  • The compensation due to the employee shall be 60% of the basic salary. It is calculated based on the average for the previous 6 months. And, the compensation amount shall not exceed 3 months’ salary.
  • The insurance provider must pay the compensation amount within no more than 2 weeks of the applicant submitting all the necessary documents.

UAE Unemployment Insurance Scheme – Fines & Suspensions

  1. Non-Subscription. An employee who does not subscribe to the UAE Unemployment Insurance is liable to pay AED 400.00 after the registration period ends (June 30, 2023).
  2. Non-Payment of Subscription. If an employee subscribes to the UAE Unemployment Insurance, and does not pay within 3 months of the due date, a penalty of AED 200.00 will be imposed.
  3. Non-Payment of Penalty. If the fine is not paid within 3 months of when it is due, the charged amount will be deducted from the employee’s salary through the Wage Protection System, or from their end of service, or any other process that the MOHRE decides.
  4. Work Permit SuspensionMOHRE will suspend issuance of any new work permits for an employee who has not paid the penalties imposed for non-subscription or non-payment of the UAE Unemployment Insurance Scheme.

UAE Unemployment Insurance – Exempted Employees

The following are the list of employee categories who are currently exempted from applying for the Unemployment Insurance Scheme in the UAE.

  1. Free Zone employees.
  2. Investors (such as owners of firms in which they work),
  3. Domestic workers
  4. Part-time workers,
  5. Workers below 18 years old,
  6. Retirees who receive a pension and have joined a new job.

UAE Unemployment Insurance – Grace Period for Employees

The deadline employees have to register for the Unemployment Insurance is until June 30, 2023 following which, penalties will be imposed. For employees who have been employed after January 1, 2023, must register within 4 months from:

  1. When they entered the UAE with the employment entry permit; OR
  2. From the change of status; OR
  3. The final approval of the work permit issuance for employees who do not need a change of status.

UAE Unemployment Insurance - FAQs

Presently the Dubai Insurance Company is appointed as the provider of the Unemployment Insurance. It is mandatory for employees, both residents and nationals.

No. It is only the employees’ mandatory responsibility to register for the Unemployment Insurance.

To attain the Unemployment Insurance benefits, an employee must submit his claim for coverage within 30 days from the employment termination. The compensation shall be 60% of the basic salary.

No. Given below are the list of employee categories who are currently exempted from applying for the Unemployment Insurance Scheme in the UAE.

  1. Free Zone employees.
  2. Investors (such as owners of firms in which they work),
  3. Domestic workers
  4. Part-time workers,
  5. Workers below 18 years old,
  6. Retirees who receive a pension and have joined a new job.

Yes. An employee who does not subscribe to the UAE Unemployment Insurance is liable to pay AED 400.00 after the deadline. And, if an employee subscribes to the UAE Unemployment Insurance, and does not pay within 3 months of the due date, they will face a penalty of AED 200.00.

The Unemployment Insurance cost has two payment categories. The employee can subscribe and pay the fee based on the monthly salary.

  • Category 1 – Subscription payment of AED 5.00if the basic salary is less than AED 16,000.00. 
  • Category 2 – Subscription payment of AED 10.00if the basic salary is more than AED 16,000.00. 

Once the employee has registered online, the Unemployment Insurance fee can be paid through the following methods:

  1. The insurer’s mobile application;
  2. The insurer’s call center;
  3. Ministry approved business centers;
  4. ATMs and Kiosks as set by the insurer, and in coordination with MOHRE;
  5. Exchange houses;
  6. SMS.

Yes. You will not be able to claim for the Unemployment Insurance Scheme if you resign or get terminated from the company due to misconduct. 

June 30th, 2023 is the deadline set for the UAE employees to register for the Unemployment Insurance Scheme.