UAE is home to people from over 200 countries who greatly contribute to the country’s economic development through their unmatched talent and professional skills. The payroll processing in UAE is a complex and crucial function for employers as they have to make sure they stay in compliance with the employment laws and everything else which relates to the rights of employees. To make the wages distribution easier for employers all over the UAE, the Central Bank of UAE and the Ministry of Human Resources and Emiratisation (MOHRE) introduced a centralized wage distribution system which is known as Wage Protection System or WPS or WPS Payroll in UAE.
In this blog post, we will discuss everything about WPS payroll the employees and employers both based in UAE need to know. The sections which we are going to cover in this blog post are:
- What is Wage Protection System in UAE?
- What are the goals and objectives of WPS payroll services?
- Which parties are involved in the WPS Payroll?
- What is the process for WPS Payment?
- What is the process for WPS registration for employers?
- What are the methods to withdraw salary through WPS?
- What are penalties and fines regarding WPS payroll processing?
What is Wage Protection System in UAE?
Launched in 2019, the Wage Protection System was created collaboratively by the Central Bank of the United Arab Emirates and the Ministry of Human Resources and Emiratisation (MOHRE) to introduce an advanced and centralized salary distribution system in the country.
The WPS or Wage Protection system is an electronic salary distribution system that enables organizations of the private sector in UAE to pay their workforce’s wages through banks, approved financial institutions, and bureau de change. In this system, the Ministry of Human Resources and Emiratisation (MOHRE) provide organizations in the private sector with a secure database for creating salary files of their employees. These files are then further sent to their respective banks for salary distribution. Based on the designation and role of each employee, the files contain crucial information about their salary which enables MOHRE to make sure that all dues of all employees are timely paid.
What are the goals and objectives of WPS payroll services?
The WPS Payroll services are to facilitate the employees working in the private sector of UAE. Here are some main goals of the WPS Payroll Services:
- To make the salaries of employees secured.
- To secure employers’ interest by providing a system that reduces their time and effort to pay the wages to their employees.
- To enhance job security for employees in the private sector of UAE by working towards the relationship between employer and employees.
- To provide transparency in wage distribution and offer an easy-to-use payment system.
- To provide the Ministry of Labor in UAE with a reliable database that is updated regularly as per the new wages data in the private sector.
- To minimize disputes between employees and employers related to wages.
Which parties are involved in the WPS Payroll?
In the Wage Protection System, there are various stakeholders involved. These are:
Employees are individuals under the payroll of the organizations of the private sector who work in return for an agreed salary. The employees need to provide the labor card issued by MOHRE.
In UAE all organizations and employers in the private sector are supposed to register with WPS and MOHRE.
The bank account the employer holds will be part of the WPS payment for all employees under the payroll.
It includes any bank, other financial institution, or bureau de change that has been authorized by the UAE Central Bank to accept salary payments via WPS. The Central Bank of the UAE updates its list of recognized names and authorized agents on a regular basis.
What is the process for WPS Registration and WPS Payment?
Process for WPS Registration
Employers in the private sector can easily register for the Wage Protection System online through the official website of the Ministry of Human Resources and Emiratisation (MOHRE). All they need to provide for registering and logging themselves for WPS is:
- Bank account details.
- A list of employees with information on the company’s bank/agent.
- The agency or bank with which an employee holds an account.
- The deadline for payment of the compensation.
Please note that according to the guidelines provided by MOHRE:
“Salary month cannot have a difference of more than one month from the dates chosen to pay the salary.” Furthermore, the guidelines also suggest, “whenever an employee joins or leaves a company, you will need to download a new employee list and attach it to the application.”
Process for WPS Payment
Once the account is successfully created by employers, the following steps are done for the payment through WPS:
Step 1 – If the employer does not already have a bank account in the UAE, he must open one with an authorized bank or an agent.
Step 2 – The employer must sign a WPS agreement with the bank or agent.
Step 3 – In the UAE, the bank or agent notifies the WPS, which uses an electronic system to communicate the data of an employee’s pay and salary transfer to the Central Bank of the UAE.
Step 4 – The Central Bank of the UAE sends all details to MOHRE for cross-checking.
Step 5 – WPS sends an authorization to pay the employee’s earnings to the employer’s bank or agency.
Step 6 – The salary is subsequently transferred to the employee’s bank account by the bank.
What are the methods to withdraw salary through WPS?
The two methods to withdraw your salary from WPS are:
- Through WPS Card
- Through ATM
1. Through WPS Card
Employees without a proper bank account in the UAE can apply for a WPS card to withdraw their pay. Furthermore, WPS-registered businesses can work with UAE money exchangers to provide a cost-effective WPS-compliant payroll solution. These exchanges offer financial transfer and salary disbursement services to employees. The WPS card is also issued by the exchanges and can be used throughout the emirates at various venues.
2. Through ATM
The salary can be withdrawn by employees who have a relative’s bank account in the UAE and an ATM card; the process is simple. The bank then sends you a notification of the salary transfer if you have a personal account with them. It can be done via SMS or email.
Do you need more information on WPS Payroll in Dubai?
Payroll Middle East is one of the finest payroll outsourcing companies in UAE and other countries of the Middle East such as Kuwait, Qatar, Saudi Arabia, and Oman. Along with endless payroll services in UAE, we also facilitate our clients by enlightening and assisting them with WPS payroll processing, WPS registration, WPS payroll and other WPS payroll services. If your organization needs assistance regarding the WPS payroll in Dubai, book a free consultation session with us today!