Guide On Deduction or Withhold From The Worker’s Wage In New Labour Law

WPS payroll: Federal Law no. 33 as known as the new Labour Law is a complete guide for employees as well as employers in order to make both parties understand their rights as well as obligations while operating or working in the United Arab Emirates. For employees who are working in the UAE companies, it is vitally important to know how their wages are managed and treated, how would employers pay them through WPS payroll and how will they get benefitted from working in the UAE.

The new labour law applies to all private sector employers of both original and outsourced categories. Read ahead if you are interested to know how employers can or cannot deduct or withhold anything from the employee’s wage according to the new labour law.

What Does the New Labour Law Say About Deducting Or Withholding From Employee’s Wage?

According to the new UAE labour law, an employer may only deduct or withhold from the employee’s wage paid through WPS payroll processing under the following conditions;

• An employer can deduct from the wage of an employee if the purpose is to redeem loans given to the employee. This amount should only be deducted by obtaining the written consent of the employee in the first place and it should not exceed the limit of deduction of amount from the employee’s wage.
• Any amount paid to the employee in addition to the entitlements of the employee can be redeemed by the employer from the wage of the employee given that the amount deducted should be a maximum of 20 percent of the salary.
• Sometimes employers deduct from the wages of employees to contribute to insurance, retirements, pensions, and bonuses which is permissible but should be done in accordance with the enforced legislation in the UAE.
• Employers can also deduct from the wages of employees paid through WPS payroll in order to contribute to savings funds or any other types of funds approved by the government of UAE.
• The deduction is also permissible for the purpose of social projects going on under the supervision of the employer. However, such projects should only be executed upon the approval of the ministry and after achieving the written consent of the employees that they agree to such deductions from their wages.
• An employer can deduct an amount from the wage of an employee as fines or penalties in case the employee violates any rules and regulations of the organization. This should be in accordance with the legislation enforced in the UAE for penalties and fines and upon approval from the ministry. Also, this type of deduction can be a maximum of five percent of the wage.
• With the exclusion of alimony debt awarded to the employee, due debts in accordance with a judgment can be deducted from the wage of the employee given that the amount should not be more than a quarter of the wage. If an employee has taken more than one type of debt, the deduction can be made while processing the WPS payroll of the employee for different categories of debts keeping in consideration the regulations for all categories.
• If an employee violates the instructions of the employer which results in loss, demolition, or destruction of materials, products, machines, or tools of the company, the employer can deduct from the wage of the employee to repair the damage caused by him. The condition is that this amount should not be more than the wage of five days or what the competent jurisdiction orders.
• An employer cannot deduct any amount from the wage of the employee based on his own judgment or rules without keeping into consideration the new labour law or other regulations.

What Will the Employer Do If There Are More Than One Reasons For Deduction?

If there are multiple reasons for which the employer can legally deduct from the wage of an employee, the total amount deducted from the wage while processing WPS payroll should not be more than 50 percent of the wage of the employee as per the new UAE labour law. Wages in the UAE are mainly processed with the help of WPS payroll and all the deductions are done on the system for the confidentiality of the payment of wages. 

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If you discovered this material useful, do check our website to learn much more about UAE’s new labour legislation and other employment rules. Visit us to know more about the interests and obligations of employees and employers. If you are concerned about the WPS payroll service in the UAE, do consult payroll middle east specialists. payroll middle east offer premier outsourcing services in all parts of the UAE. experts possess field professionals that will conduct your outsourced activities accurately and efficiently. By hiring experts, you may enjoy the greatest outsourcing journey in the UAE.