The payroll process in UAE is a core function for UAE businesses. Companies must be very cautious and thorough about payroll processing to avoid errors. Successful payroll processing does not just help businesses prevent errors but also ensures that the workforce is satisfied and also to stays compliant with various labor laws in the UAE.
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There are several procedures by law in UAE with which payroll processing companies must comply with. As it is crucial thing for businesses to avoid non-compliance risks, many companies, especially small businesses tend to go for payroll outsourcing in Dubai. Payroll outsourcing companies ensure the laws comply on behalf of businesses.
Payroll Process in UAE for Small Businesses
Running a business successfully is a great opportunity for small and large companies both. UAE has a multi-cultural population which gives investors from all over the world a big chance to make larger profits.
However, like any other business, establishing a successful business in the UAE involves staff and human resources who are dedicated to your business and a very crucial factor for managing the human resources well is the payroll process.
The laws and regulations regarding labor and employment in the UAE keep changing time and again and to keep your business in compliance, you must keep yourself up-to-date with these changes.
To avoid discrepancies related to law violations, many companies choose to partner with an Employer of Record who acts as a legal employer for the company’s staff and manages the payroll services on its behalf. This minimizes the risk of non-compliance by a great margin.
Here are the procedures for the payroll process in UAE for small businesses.
- Calculation of all types of payments by the company
- Monitoring the working hours of the employees
- Keeping paid leaves in consideration
- Calculations of applicable deductions
- Preparation and issuance of payslips
- Calculations for taxes
Also read: Benefits of Hiring a Payroll Outsourcing for Startups
What Are the Steps in the Payroll Process?
Most businesses outsource payroll processing companies which helps them save cost, time, and effort since payroll processing is a lengthy and intricate function. When you are handling the payroll for your company yourself you must learn about all the requisitions and steps.
Here are the steps of the payroll process.
- Detailed Employee Information
- Gross Wage Calculation
- Overtime Calculation
- Applicable Allowances
- Applicable Deductions
- Salary Statement and Payslips
- WPS File
Detailed Employee Information
While processing the payroll, the first and foremost data you must need is the details of every staff. These details must include; complete name, salary, designation, contact number, amount of allowance, type of allowance, etc.
Gross Wage Calculation
The gross wage is calculated by adding the allowance amount to the basic salary of each employee.
Overtime Calculation
As per UAE labor law, overtime payment is mandatory where applicable so the payroll must include accurate calculations of staff’s overtime.
Applicable Allowances
Other than the allowances mentioned in a salary package, there are extra allowances offered as well according to the role and performance. These extra allowances could be car allowance, bonus, or sales commissions.
Applicable Deductions
If there are any deductions applied to be reflected on salary, calculate them thoroughly while preparing the payroll.
Salary Statement and Payslips
Salary statements are summarized reports of the respective month’s salary which consist of the following components; basic salary, allowances, deductions, absences, and overtime.
WPS File
The last step is to make the WPS file which is a salary transfer file in a format recommended by the Ministry of Labor.
Things to Be Considered for Small Businesses During the Payroll Process
For small business payroll processing in UAE, there are certain do’s and don’ts that they must consider when processing payroll in UAE. Some of these things are:
Always Consider Seeking Assistance From Payroll Processing Companies
While running a business in UAE, it is very wise to seek advice from payroll processing companies as they can be the best source of guidance for your business in terms of laws, regulations, and other crucial matters such as taxes, etc.
Don’t Dissolve the Entire Payroll Department
As a small business owner, you might think about outsourcing payroll services in Dubai and partnering with an Employer of Record or payroll processing company but this should not make you eliminate your internal payroll department as you might always need a support backup.
Think About Partnering With a Payroll Specialist in the UAE
Partnering with a reputed payroll processing company will make things easier for your business big time and help you regulate and monitor your costs through proper report management.
Don’t Terminate Your Staff and Change Them Frequently
Last but not least; constant change in staff will affect the loyalty you need for your business. As a small business, you must keep the right people in your company while educating and training them effectively for the long run. This will eventually affect your payroll processing as well.
Read More : Shadow Payroll: How Businesses Are Managing International Employee Costs
Seeking More Guidance on Payroll Services in Dubai
Preparing payroll is a sensitive and crucial task and while processing it, you must be sure there are no errors. Many companies use payroll processing software to automate payroll processing. Payroll Middle East is one of the finest payroll processing companies in Dubai.
We have a highly qualified team of professionals and consultants who invest their due diligence in making payroll outsourcing smooth for small businesses. We have many clients from the Middle East who have partnered with us as their Employer of Record and other payroll services in Dubai. Contact us today to manage the payroll processing of your workforce in UAE.
