As a business owner, employer, or HR manager in the UAE, there are countless responsibilities to juggle, but few are as critical as ensuring your employees are paid on time.
Timely and accurate salary payments are more than just a legal requirement – they are the backbone of a productive and motivated workforce. In this article, we’ll explore why paying your employees on time is essential for your business’ success.
Legal Compliance
One of the most fundamental reasons to ensure timely employee payments is to stay in compliance with the UAE’s labour laws. The UAE Labour Law clearly states—in accordance with Ministerial Resolution No. 598 of 2022 regarding Wages Protection System —that:
1) Paying wages on the due date is the responsibility of every employer.
2) The employee’s wages are usually due from the first day of the month, following the expiry of the time period for which the wages are specified in the employment contract.
3) If the time period is not specified in the employment contract, the employee must be paid at least once a month.
4) The employer is in default of paying the wage, if he does not pay it within the first 15 days after the due date, unless a shorter period has been agreed in the contract.
Failure to do so can result in fines and legal disputes. Adhering to these laws not only avoids unnecessary penalties but also fosters trust and a positive relationship between employers and employees.
Employee Morale
Timely payments are directly linked to employee morale. When employees receive their salaries promptly, it not only meets their basic financial needs but also shows that their employer values their contributions. This can lead to higher job satisfaction, increased motivation, and a more engaged and loyal workforce.
On the other hand, delayed or inconsistent payments can lead to frustration and demotivation, potentially causing employees to seek other job opportunities. In a competitive job market like the UAE, retaining talent is crucial, and punctual salary payments can be a key factor in employee retention.
Financial Stability
Many employees rely on their salaries to cover essential expenses such as housing, education, and healthcare. When payments are delayed, it can disrupt their financial stability, and lead to stress and anxiety. This, in turn, can affect their performance at the workplace, leading to decreased productivity and increased absenteeism.
By paying employees on time, you help them maintain their financial stability, which, in the long run, benefits your business by maintaining a consistent and productive workforce.
Brand value
Your company’s reputation matters, across business communities. Word of mouth travels fast, and if your company becomes known for late salary payments, it can damage your reputation both as an employer and as a business partner, thereby affecting your brand value in the market.
Conversely, consistently paying employees on time enhances your company’s reputation. It sends a positive signal to potential employees and clients, demonstrating your commitment to professionalism and reliability.
Legal Disputes :: Employee Turnover
Failure to pay employees on time can lead to legal disputes and potentially costly litigation. Disgruntled employees may seek legal remedies to recover unpaid salaries, and these disputes can be time-consuming and expensive.
Additionally, if late payments become a recurring issue, it can result in increased employee turnover. This turnover not only incurs the costs of hiring and training new employees but also disrupts your business operations.
Other factors
In the UAE, the government requires that salaries be paid through a bank or similar financial institution. This helps ensure transparency and record-keeping. Timely payments enable you to comply with this requirement efficiently and maintain accurate financial records.
Furthermore, many employees in the UAE are expatriates, and they have various financial commitments, including remittances to their home countries. Timely salary payments help these employees meet their financial obligations, promoting their satisfaction and peace of mind.
To conclude, paying your employees on time is more than a legal obligation; it’s a crucial element in maintaining a motivated, productive, and loyal workforce. Timely payments boost employee morale, support financial stability, enhance your company’s reputation, and prevent legal disputes. We would recommend to all employers and HR teams to make timely employee payments a priority, to ensure the long-term success of your business.
For more information related to WPS payroll, management of payroll cards, or your employees’ financial rights, feel free to reach out to us on info.ae@edenred.com
