GLOBAL PAYROLL MAGAZINE
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the fines that may be simultaneously imposed upon non-compliant companies under Cabinet Resolution No.21/2020 Concerning Services Fees and Administrative Fines in The Ministry of Human Resources and Emiratization ( “Resolution No.21/2020” ). Resolution No.21/2020 states that companies who fail to pay their employees within the specified period will face fines of AED 1,000 per employee, with a maximum of AED 20,000. Furthermore, it stipulates that if a company forces employees to sign false documents stating they received their wages or attempt to insert false data into WPS, a fine of AED 5,000 per employee will be imposed with a maximum of AED 50,000. Future Trends The U.A.E. was the first country in the Middle East to implement WPS. The system quickly gained popularity in the MENA region, with multiple countries following suit; Bahrain in 2019 being the latest. However, WPS has not been utilized in the majority of U.A.E. free zones despite its regional popularity. The absence of WPS or a similar system in the majority of free zones may leave employees vulnerable. However, this may soon change, as some free zones have begun to opt into WPS or have opted to utilize similar schemes. For example, The Dubai Multi Commodities Centre ( “DMCC” ) chose to implement WPS in February 2023, while the Dubai Airport Freezone ( “DAFZ” ) recently announced its adoption of an employee payroll system. The payroll industry may continue to see more free zones follow suit, meaning that it is important for payroll professionals
In contrast to the above, Decision No.58/2022 adopts a less restrictive approach, such as: Removing the penalty of prohibiting the issuing of new work permits to other exclusively owned companies by the owner of an offending company once 4 months from the due date passed. Stipulating that the public prosecution will be notified 45 days after the due date has passed for offending companies with more than 50 employees, rather than 30 days. Rather than imposing the penalty of downgrading to category 3 on all companies who repeated violations within 6 months, only applying it to companies who have wage-related complaints referred against them. This is especially significant, given that companies within category 3 pay substantially higher fees for renewing work permits. Previously, the penalty of being downgraded to category 3 applied to all companies who repeated violations within 6 months. Now, this penalty only applies to companies with repeated violations that also have wage-related complaints made against them. While some may caution softening penalties puts employees at risk, it may create balance and ensure penalties upon companies are not overly harsh. Furthermore, the penalties under Decision No.598/2022 are supported by
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