Wage Protection System in UAE – Guest Blog

The Central Bank of the UAE and the Ministry of Human Resources and Emiratisation collaborated to create the UAE’s Wage Protection System (WPS), which went into effect in 2019. This sophisticated computerized salary transfer system enables private-sector firms to pay employees through banks, recognized financial institutions, and the Bureau de Change.

MoHRE has a sophisticated database that allows private-sector enterprises to create wage files for their employees. These files, which contain critical information about each employee’s income as specified in their contract, are subsequently forwarded to the appropriate banks for wage distribution. This procedure enables MoHRE to monitor and verify that all workers get their dues properly and on time, establishing a transparent and dependable payment environment.

What is the Registration procedure for Employers for the WPS

The MoHRE’s official website makes it simple for private sector employers to sign up for the UAE’s Wage Protection System (WPS). Using the firm information that the Ministry has supplied is part of the registration procedure.

After registering, employers may access their accounts and make changes to the following data:

• Details of thier bank account
• A list of workers that includes information on the bank or agency the business uses
• Each employee’s account with the bank or agent
• The precise day when salary must be paid

“The salary month cannot have a difference of more than one month from the dates chosen to pay the salary,” states MoHRE standards. Furthermore, according to the standards, “a new employee list must be downloaded and attached to the application whenever an employee joins or leaves a company.”

How the WPS works in the UAE

After creating an account, you should learn about the UAE Wage Protection System (WPS). Four steps comprise the process:

SIF preparation and submission

The Salary Information File (SIF) contains important company and employee information, including basic pay, Cost-To-Company (CTC), benefits, and deductions. When wages or salaries are paid, the WPS mandates the SIF. A WPS agent verifies the file before submission. SIF exemptions include commissions, incentives, and gratuities.

MoHRE/Central Bank salary check

After submitting the SIF to the WPS, MoHRE and the UAE Central Bank assess it. SIF information is verified and UAE WPS requirements are followed throughout this evaluation. For instance, MoHRE will verify that companies transmit at least 75% of employee pay via WPS.

WPS agent recieved paymernt order

If everything checks up, the MoHRE and Central Bank will authorize a salary payment order to the WPS agent. If the SIF has inconsistencies, the employer will be alerted via email. This notice will list mistakes and urge corrections. To prevent penalties and late fees, fix these mistakes immediately.

Money transfer from WPS agent to employee

Once the payment order is received, the WPS agent transfers wages straight into workers’ bank accounts. Many banks that are WPS agents provide WPS payroll cards that work like debit cards to access wages. For efficient pay withdrawals, businesses should urge employees to have bank accounts and debit cards.

UAE Wage Protection System Salary Withdrawal.

The UAE WPS offers numerous options to withdraw salary:

WPS Card withdrawal

A WPS card is helpful for non-banking staff. UAE money exchanges provide affordable WPS-compliant payroll services to WPS-registered companies. These exchanges offer WPS cards and transmit funds and salaries. Employees use these cards throughout all emirates.

ATM withdrawal

UAE bank account holders may withdraw their salary using their ATM card. You may easily withdraw cash from any ATM using this approach.

WPS penalties for employer wage nonpayment

Companies who withhold salaries in the UAE face severe fines under the WPS. The following penalties apply to companies that fail to pay dues.

Penalties for enterprises under 100 employees

Failure to pay salary within 60 days can result in the following fines for small to medium firms with less than 100 employees:

• Work permits ban, 
• Fines, and
• Referral to court. 

If such a delay (up to 60 days) occurs twice a year, MOHRE will treat the companies as those with more than 100 employees.

Companies with over 100 workers face penalties.

If a company with 100 or more workers fails to pay them ten days late, the following will happen:

• The corporation loses its work authorization from the 16th to the day.
• The employer can’t issue new UAE firms.
• MoHRE may file a lawsuit against all of the defaulting employer’s firms.
• Company drops to third category
• Workers may seek alternative jobs.
• If the delay exceeds 30 days, MoHRE will report your firm to the courts. It will cost the employer AED 5,000 per worker, up to AED 50,000 for several workers, if it lasts 60 days. 

Final Thoughts

In conclusion, the UAE’s Wage Protection System (WPS) provides a strong structure that ensures timely and correct wage payments, creating a fair and transparent workplace. WPS compliance protects the rights of workers and employers against harsh fines. For this, engage a respected audit company like Farahat and Co.