The payroll process in the 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.
There are several procedures by law in the UAE with which payroll processing companies must comply. As businesses must avoid non-compliance risks, many companies, especially small businesses, tend to go for payroll outsourcing in Dubai. Payroll outsourcing companies ensure that the laws are complied with on behalf of businesses.
Running a business successfully is a great opportunity for both 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.
Also read: Benefits of Hiring a Payroll Outsourcing for Startups
Here are the procedures for the payroll process in the UAE for small businesses.
Most businesses outsource payroll processing to 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.
While processing the payroll, the first and foremost data you need is the details of every staff member. These details must include: complete name, salary, designation, contact number, amount of allowance, type of allowance, etc.
The gross wage is calculated by adding the allowance amount to the basic salary of each employee.
As per UAE labor law, overtime payment is mandatory where applicable, so the payroll must include accurate calculations of staff’s overtime.
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 a car allowance, a bonus, or sales commissions.
If there are any deductions to be reflected on the salary, calculate them thoroughly while preparing the payroll.
Salary statements are summarized reports of the respective month’s salary, which consist of the following components: basic salary, allowances, deductions, absences, and overtime.
The last step is to make the WPS file, which is a salary transfer file in a format recommended by the Ministry of Labor.
For small business payroll processing in the UAE, there are certain dos and don’ts that they must consider when processing payroll in the UAE.
Some of these things are:
While running a business in the 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.
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 backup.
Partnering with a reputable payroll processing company will make things easier for your business big time and help you regulate and monitor your costs through proper report management.
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
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 for other payroll services in Dubai.
Contact us today to manage the payroll processing of your workforce in the UAE.