International companies falling foul of the Wage Protection Scheme

In 2015, Qatar introduced a wage protection scheme (WPS) and since late 2015 all salaries have been required to be paid from a Qatari bank account into the employee’s Qatari bank account though the WPS. This applies to all employees subject to the Labour Law (Law No. (14) of 2004), which will be the majority of employees working for international companies in Doha. The WPS does not apply to companies licensed by the Qatar Financial Centre.

Employers are required to submit various details of employees and salaries to their bank electronically. The information is then sent to the Ministry of Administrative Development, Labour and Social Affairs (the Ministry of Labour) which conducts audits from time to time to confirm that salaries paid match the amounts specified in the registered employment contracts. Salaries must be paid within seven days of the due date.

The WPS was primarily introduced to ensure that employees in Qatar are paid on time. Under the Labour Law, a salary not paid through the WPS is considered a salary not paid at all and there is the potential for a claim by an employee in the future that he/she has not received salary if companies do not comply with the requirements of the WPS.

The more immediate issue some companies are facing is blacklisting for non-compliance. The Minster has the right to either (a) block the employer from obtaining work permits; or (b) block the employer from conducting all transactions with the Ministry of Labour. Our experience is that there are still a significant number of companies in Doha who are not aware of the new requirements and some have found that they have had their ability to obtain work permits for employees blocked unexpectedly. Whilst the ban can be lifted by providing evidence that salaries have transferred, this can place a significant administrative burden on the employer.

The WPS is primarily administered through the company’s local bank and generally the banks have contacted companies to notify of the introduction of the scheme. We are aware, however, that this has not always been the case and also, where the company has no local bank account (for example because all employees are paid outside of Qatar), there would have been no notification. In addition, allowing terminated employees to remain on company sponsorship for a period of time after employment ends might also result in a warning or penalties being applied as no salary will be paid whilst the work permit remains in place.

Where you have employees holding Qatari residence permits and are not currently complying with the WPS system we recommend you speak to your payroll provider on an urgent basis to rectify the situation. Eversheds can also provide advice on removing Ministry of Labour blocks and structuring employment contracts for international secondees to comply with WPS requirements.