New wage protection scheme in Qatar

Be Alert Middle East: employment law e-bulletin

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On 18 February 2015 Law No. 1 of 2015 was ratified by HH The Emir of Qatar. This law amends certain provisions in the Qatar Labour Law No. (14) of 2004 and introduces a new wage protection scheme in Qatar.

The wage protection scheme makes it mandatory for employers to transfer an employee’s salary to the employee’s designated bank account with a Qatari based financial institution. The only exclusion to this is for companies operating within the Qatar Financial Centre (“QFC”) free zone. The scheme does not currently apply in the QFC and we understand that they have no current plans to introduce a similar scheme.

Under the wage protection scheme, it will no longer be possible for employers to pay workers in cash or to directly transfer salary payments abroad. The Law No. 1 of 2015 currently provides for a six month grace period in which employers must become compliant. This means that employers must adapt their payroll to ensure each employee has a bank account in which to receive salary payments by the end of August 2015 (unless this period is extended by the Minister of Labour and Social Affairs).

There are serious sanctions for failing to comply – a prison term of up to a month and/or a fine of not less than Qatari Riyals 2,000 and not exceeding Qatari Riyals 6,000. This prison term is likely to be imposed on the authorised signatories of the employer (managers listed on the commercial registration and establishment identity of the employing entity), or the individual sponsor of residence of the employee and any fines will be levied against the employing entity or individual employer. In practice, the Labour Department may also refuse to process new work visas for companies and individual sponsors that are found to be non-compliant.

Executive Regulations are due to be enacted that should provide full details on how the wage protection scheme will be fully implemented and regulated. Once the Executive Regulations have been issued, we can advise further on how to ensure compliance.

In the meantime, we recommend that companies conduct an audit of their payroll arrangements to flag any employees who receive their salary or a proportion of their salary abroad or who do not have bank accounts in Qatar.

Employers should also ensure that their contracts of employment are updated to reflect that salaries must be paid in Qatari Riyals and directly into employee’s bank accounts in Qatar.

For further information on the scheme, please contact us. DLA Piper can assist in reviewing contracts of employment or if you have any questions regarding further information on the schemes or employment issues generally in the GCC.