Here’s why more than 50,000 UAE firms faced huge fines last year

June 5, 2017 12:24 pm


In a shocking revelation on Saturday, the UAE federal government said 52,765 private sector companies in the country have been slapped with fines for incomplete work permit registration or late renewals.

The total number of fines stood at 141,500.

But despite these hair-rising figures, what’s surprising – and positive – is that the total number of businesses fined was only 15 per cent of the total number of firms recorded within the Ministry of Human Resources and Emiratisation’s database, meaning the majority abided by the rules stipulated by the country’s labour and immigration laws.

No settlement, no new permits

Those companies who fail to settle their dues will not be allowed to pursue additional work permits, the ministry has said.

“Nonetheless, those who failed to adhere are advised to approach the ministry and pay the reduced sums following the Cabinet’s recent decree to cut all fines to AED2,000 per worker,” Saif Al-Suwaidi, Under-Secretary of Human Resources at the ministry, said while referring to a recent decree that ordered a reduction in all fine amounts on work permits and labour contracts, and put a ceiling of AED2,000 in accumulated fines.

If an employer fails to provide the ministry with a mission work permit labour contract within a period of 30 days from the worker’s date of entry, the fine is AED100 per day up to a maximum of AED2,000. Previously, the fine was AED100 per day but without a maximum limit.

Failure to renew the mission work permit labour contract within a period of seven days from the expiry date will see a fine of AED100 per day up to a maximum of AED2,000. The previous fine did not set a maximum limit.

Summer midday break

A three-month regulation for a mandatory summer midday break for labourers across the country will start from June 15, a decree from the ministry stated on May 24.

The law bans most labourers from working under direct sunlight between 12.30pm and 3pm until September 15. It also requires companies to provide shade and water to their worker during these hours.

Companies failing to comply will be fined AED5,000 per worker with a maximum of AED50,000 if the case involves a large number of workers. In addition, the ministry may degrade such companies or temporarily stop them from operating.

Saqr Gobash Saeed Gobash, Minister of Human Resources and Emiratisation, has said that working hours during the summer will be divided into two shifts, morning and evening, with a total of eight hours daily

Compensation must be provided to workers who exceed the working hours and are required to do overtime.

“If business conditions require additional working hours, then that period is considered overtime, workers shall be paid for a wage equal to the normal working hours, plus, an increase of not less than 25 per cent of that wage. The increase shall be at least 50 per cent of the worker’s wage if called for duty between 9 pm and 4 am,” said Gobash.

In 2016, a total of 19 companies were found violating the midday break rule in Dubai alone.

Pay salaries on time

According to a wage protection law that came into effect in last October, companies that don’t pay the wages to the employees even ten days after the due date will have to face punitive actions.

A decree from the ministry stipulating the law states that companies employing more than 100 workers must pay wages within a period not exceeding 10 days.

According to the decree, the ministry will neither process any transactions nor deal with the owners of the companies that are not registered with the Wage Protection System (WPS) until they register in the system.

The decree states that if a company delays wages a month from the due date, which means the company has entered into the refrainment phase, the ministry will inform the judicial authorities and other related regulators to take all necessary punitive measures against it, causing a complete strike against the other companies owned by the same employer, along with prohibiting him from registering any new company.

If a company continues to delay wages of its employees, the ministry will take needed measures to use the bank guarantee, in addition to downgrading the company to the third category and allow the workers to move to other companies.

“If the company fails to pay wages for 60 days from the due date, then penalties will be imposed, not forgetting the punishments that had been already slapped for failing to pay wages a month from the due date,” Ghobash added.

A fine of AED5,000 per worker’s delayed wage will be imposed which could go up to a maximum of AED50,000 in cases that include multiple workers complaining about delayed wages for over 60 days.

Dubai’s mandatory insurance

The Dubai Health Authority (DHA) had made it compulsory to have an insurance cover for every visa holder in the emirate.

As per the Executive Council resolution no (6), 2017, endorsed by Sheikh Hamdan Bin Mohammad bin Rashid Al Maktoum , Crown prince of Dubai and Chairman of the Dubai Executive Council, all employees and sponsors will have to pay fines if they fail to provide insurance employees by March 31, 2017.

Last year, Dubai Health Authority (DHA) said that companies that fail to provide medical insurance could face fines of up to AED500,000 after the deadline.

Individual sponsors of their spouses, drivers and maids will also have to pay a fine of AED500 in case they fail to provide health insurance cover to their dependents.

Apart from the fine, no new visa will be granted and no existing visas renewed without health insurance.

In April, authorities said that 25 health centres, clinics, insurance brokers and insurance companies were slapped with fines after they were found violating Dubai’s health insurance law.

The fines ranged between AED10,000 and AED80,000.

“Violating facilities received a warning that was followed by a fine,” said Dr Haidar Al Yousef, Director of the DHA health funding department.

“Some healthcare providers and insurers didn’t comply completely with the Health Insurance Law and the circulars issued by the health funding department.

“We observed this through inspection visits, compliance meetings as well as complaints received from different parties involved within the system.”

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Mujeeb Rahman
By Mujeeb Rahman
Journalist
Mujeeb Rahman is a business journalist at AMEinfo. His areas of focus include economy, markets, politics and international relations in MENA and Asia-Pacific regions. An ex-BBC digital journalist, he delves deeper into the subjects that matter most.



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