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Top Story

September 14, 2017



Panama case petitioners misled SC about Wage Protection System in UAE

ISLAMABAD: The Wage Protection System (WPS) introduced in 2009 in the UAE is not fully implemented even today and around 30 percent foreign employees were not registered with it till the end of 2016.

The petitioners in the Panama case didn’t inform the apex court of the correct position on this point because of which honourable Justice Ejaz Afzal Khan remarked on Wednesday that salary of the chairman of FZE Capital must have been transferred into the account of Respondent No1 (Muhammad Nawaz Sharif), otherwise, his ‘Iqama’ would have been cancelled because of the Wage Protection System under which salaries were transferred electronically. It was wrongly implied by the petitioners on the basis of the JIT report that mere mentioning of the rules in WPS regarding electronic transfer of monthly salary belies the claim of former prime minister Nawaz Sharif that he never received the salary from his son’s company FZE Capital.

It was submitted before the Supreme Court that Nawaz Sharif remained the chairman of the UAE company FZE Capital from 7 August, 2006 until 20 April, 2014 and according to the agreement, his salary was 10,000 dirhams per month. It was argued that this salary was not declared by Nawaz Sharif and thus he should be disqualified. The counsel of Nawaz Sharif, however, has responded that Nawaz never withdrew any salary from this company that his employment status in the company was for obtaining the ‘Iqama’ for the UAE visa and travel facilitation. The apex court in its July 28 verdict declared that as it is admitted by the counsel of Nawaz Sharif that he was entitled to withdraw salary from FZE Capital so his un-withdrawn salary was his ‘receivable’, hence his asset and failing to declare the same in the 2013 general elections nomination papers attract his disqualification under Article 62(1)(f) of the Constitution.

While explaining the arguments of counsels from both sides, the Supreme Court in its July 28 verdict did mention the argument forwarded by the lawyer of the petitioner as follows; “that the respondent denied withdrawal of salary, but payment of salaries to all employees electronically, through the Wage Protection System, under Ministerial Resolution No. (788) for 2009 on Wage Protection used by United Arab Emirates Ministry of Labour and Rules 11(6) and 11(7) of the Jebel Ali Free Zone Rules, would belie his stance”. However, the same point was neither discussed nor made basis while passing the final order by the SC and Nawaz Sharif was disqualified on the basis of definition of ‘asset’ by declaring his un-withdrawn salary as his ‘receivable’.

As a matter of fact, the UAE, which is the first country in the region to introduce the wonderful WPS for ensuring rights and timely payment of salaries to labourers, is still struggling to fully implement this system. The issue repeatedly discussed in UAE media and even the latest news stories in leading UAE newspapers reflect that much is yet to be done to fully implement the WPS. Stories as late as in May 2017, December 2016 and October 2016 highlight the same. The National, Khaleej Times and Gulf News stories can be easily searched on this subject. Official statement of the UAE government officials available on official websites also reflect the same that all-out efforts were being made to fully implement the WPS but hundreds of thousands are yet to be registered.

The UAE Ministry of Labour (renamed as the Ministry of Human Resource and Emiratisation in February 2016) started implementing the wages system from the big companies having large number of employees and licensed and LLC companies. Companies even registered with the WPS were not penalised with severe punishments initially as there were practical problems in implementation of the system. Even when strict implementation was started, the maximum action taken against some big companies was refusal to issue new work permits or imposition of fines. Companies set up in free zones with very little strength of employees, like in the case of FZE Capital, did not come under radar in initial years so possible cancellation of Iqama because of non-payment of salary can be mere speculation. In the early years, any action against company was initiated in case of a complaint of non-payment of salary by an employee. Even today, in majority of the cases, despite availability of record of payment of salaries of the companies registered with the WPS to the concerned ministry, action is initiated after complaint from employees.

Salaries were never automatically transferred electronically as being dubbed by some in the Pakistani media. Companies used to deposit security regarding salaries of the employees before introduction of WPS and in case of small companies with little number of employees, especially in free zones, there were no problems until a few years back.

The most important fact is that because of all these problems of non-implementation of WPS, in addition to 2009 Ministerial Decree, another Ministerial Decree was issued in 2016 to further strengthen control over companies to ensure implementation of WPS. Why this 2016 decree was issued? The case under discussion is regarding nomination papers submitted in 2013 and decision is made on the basis of un-withdrawn salary is ‘receivable’ and ‘receivable’ is ‘asset’.