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 ensure they comply with the employment laws and everything else related to the rights of employees.
The UAE Wages Protection System (WPS) exists as an electronic salary transfer system that operates through joint development between MOHRE and the Central Bank of the UAE. Through the WPS process in UAE, companies can transfer worker compensation to banks along with authorized financial institutions efficiently. This article provides comprehensive information about WPS in the UAE along with its advantages, as well as procedural details and the registration criteria and recommendations for selecting trusted payroll service providers in UAE.
What is the Wage Protection System (WPS) in UAE?
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 the UAE to pay their workforce’s wages through banks, approved financial institutions, and the Bureau de Change. In this system, the Ministry of Human Resources and Emiratisation (MOHRE) provides organizations in the private sector with a secure database for creating salary files for 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, enabling MOHRE to ensure that all employees’ dues are timely paid.
Benefits of WPS in UAE
WPS implementation has the following benefits:
- Transparency and Accountability: WPS creates a system which provides transparent wage payment records because all transactions remain both tracked and easily identified.
- Legal Compliance: Organizations that fail to follow WPS rules will face administrative penalties as well as work permit suspensions and may get blacklisted from future operations. Implementing WPS rules ensures businesses to adhere to the UAE labor regulations.
- Reduced Administrative Work: The use of automated salary transfer functionality enables HR and finance departments to perform strategic work while conserving time and eliminating errors.
What Are the Goals and Objectives of WPS Payroll?
The WPS Payroll is to facilitate the employees working in the private sector of UAE.
Here are some main goals of the WPS Payroll:
- 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 wage 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
- Employers
- Banks
- Agents
Employees
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.
Employers
In UAE all organizations and employers in the private sector are supposed to register with WPS and MOHRE.
Banks
The bank account the employer holds will be part of the WPS payment for all employees under the payroll.
Agents
It includes any bank, other financial institution, or bureau de change that the UAE Central Bank has authorized to accept salary payments via WPS. The Central Bank of the UAE updates its list of recognized names and authorized agents regularly.
What is the Process for WPS registration and WPS Payment?
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, that “whenever an employee joins or leaves a company, you will need to download a new employee list and attach it to the application.”
WPS Payroll Process in the UAE: Step-by-Step
- Step 1: Establishing a Corporate Bank Account represents the initial requirement for wage payment systems in the UAE- To initiate WPS processes employers should open corporate banking accounts at financial institutions which operate in the UAE.
- Step 2: At WPS Agent’s office candidates place their names on the WPS database. All employers need to select a WPS agent that holds approval from the UAE Central Bank to begin the process. Approved WPS agents consist of banks together with exchange houses and financial institutions operating in the UAE.
- Step 3: Wage information that will be processed requires preparation into the Salary Information File known as SIF. A WPS Salary Information File presents employees’ wage data through their full names together with their employee IDs and payment amount and banking information. The Salary Information File needs to adhere to the format defined by MOHRE.
- Step 4: The fourth step involves uploading the Salary Information File onto the WPS Platform. Your WPS agent provides a system or online platform to process the SIF file.
- Step 5: Salary Disbursement- The salaries are sent via bank transfer to employee accounts once MOHRE verifies the information and provides a confirmation. Real-time payment tracking success is possible through this measure.
- Step 6: MOHRE Monitoring-Business operations of the employer face penalties or restrictions when MOHRE discovers non-compliance or delays or discrepancies with their procedures.
Read More: Wage Protection System in Qatar
WPS Registration UAE: What You Need
To register your business with WPS, you will need:
- A valid trade license
- A corporate bank account
- Enrollment with an approved WPS agent
- Employee Emirates ID and labor contract
- Authorization from MOHRE
Once registered, companies are required to pay salaries within 10 calendar days from the due date. Failure to do so could result in fines starting from AED 1,000 per employee, suspension of new work permits, or even legal actions.
What Are the Methods to Withdraw Salary Through WPS?
The two methods to withdraw your salary from WPS are:
- Through WPS Card
- Through ATM
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.
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.
WPS Payroll Providers: Choosing the Right Partner
Choosing the right payroll provider is essential for maintaining compliance and operational efficiency. Here’s what to look for:
- MOHRE-Approved Platform: Ensure the provider is authorized by the Central Bank and integrated with the WPS system.
- Comprehensive Services: Opt for providers that offer additional services like automated SIF generation, tax calculations, and employee record management.
- Data Security: Employee wage data is sensitive. Choose providers with strong cybersecurity measures and data encryption.
- Scalability: Your provider should be able to support business growth, whether you have 5 or 500 employees.
- Customer Support: Timely support can prevent delays and errors. Look for providers with responsive customer service teams.
Seek the Expert Services from Payroll Middle East
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.
FAQs: Wages Protection System (WPS) in UAE
Q1. What is the Wages Protection System (WPS)?
The Wages Protection System (WPS) is an electronic salary transfer system developed by the Central Bank of the UAE in collaboration with the Ministry of Human Resources and Emiratisation (MoHRE). It was introduced to ensure that employees in the private sector receive their salaries in a timely and transparent manner, in compliance with UAE labor laws.
Q2. Is WPS mandatory for all businesses?
Yes. All private-sector employers registered with MOHRE must comply with WPS.
Q3. Can I pay salaries in cash or cheque?
No. Cash or cheque payments are not permitted under WPS. All payments must go through the official WPS channels.
Q4. What happens if I miss a payment?
Late or missed payments can lead to fines, suspension of new work permits, and even a ban on your trade license.
Q5. How often should I pay my employees under WPS?
Wages must be paid monthly or as per the employment contract, and within 10 days of the due date.
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