In the United Arab Emirates, there are strict labor laws employers must follow to ensure they won’t run afoul of the government. One of these is the government directive for employers to use the UAE wages protection system (UAEWPS) when disbursing employee salaries and wages.
Using the WPS is compulsory for all employers registered with the UAE Ministry of Human Resources and Emiratisation (MoHRE).
Employers should find compliance easy with the help of WPS agents who can provide reliable corporate payroll solutions in the UAE that align with WPS requirements and process.
What Is the UAEWPS?
The UAE wages protection system is an electronic salary transfer system implemented by the Central Bank of the UAE in 2009. All UAE employers whose employer-employee contracts are registered with the MOHRE and are, thus, under the jurisdiction of this government agency must use the UAEWPS to disburse employee wages.
The WPS enables the MOHRE to monitor salary payments. It allows the agency to check employers’ compliance with its requirements, including the following:
l Payment due date: Employers must pay wages one day after the wage period specified in the employment contract. If the employment contract does not specify a wage period, employers must pay their employees at least once a month. Employers default when they fail to pay within the shorter of these two periods: 15 days after the payment due date or the grace period specified in the employment contract.
l Employee registration into the WPS: Employers must enroll new hires into the WPS within 30 days of onboarding them.
l Staff paid: At least 90% of a company’s employees must receive monthly pay. This allows for unpaid leaves, but employers must provide the MOHRE with specific details about any unpaid leaves.
l Wages paid: Employees must receive at least 80% of their salary through the WPS every month. Employers must be able to justify and itemize deductions, if any.
The UAEWPS benefits both employers and employees in the UAE. It simplifies, streamlines and automates the wage disbursal process for employers, providing standard procedures they can follow for convenience and efficiency.
The WPS ensures timely, accurate and regular payments for employees. It also makes salary payments transparent, which can help the MOHRE in the enforcement of labor laws and in investigating employee complaints.
UAEWPS Minimum Requirements
Employers using the WPS to pay their employees must have the following:
l A corporate bank account to fund salary disbursements
l A WPS agent to receive salary information and pay employees
Employees enrolled on the WPS must also have bank accounts with which to receive wage disbursements. To this end, WPS agents often provide corporate clients employees with accounts that can receive salary payments.
It’s best that employee accounts come with linked automatic teller machine (ATM) cards (i.e., payroll cards) for convenient ATM withdrawals. Preferably, they should be accessible through a mobile banking app for easy account monitoring, tracking and online transfers and transactions.
The UAEWPS Process
The UAEWPS involves six key steps:
1 The employer prepares its salary information file (SIF).
The SIF contains all the information that the WPS agent requires to disburse employee salary payments and that the MOHRE needs to verify employer compliance. It has every WPS-registered employee’s MOHRE-provided identification number, bank account, wage period, base pay, and itemized breakdown of variable pay.
2 The employer submits the SIF to their WPS agent.
The WPS agent provides their clients with an online portal for SIF submission.
3 The WPS agent reviews the SIF and submits it to the UAEWPS.
The WPS agent conducts initial SIF checks. If everything is in order, the WPS agent forwards the SIF to the Central Bank’s UAE wages protection system.
4 The MOHRE and Central Bank verify the correctness of the SIF and check for compliance.
The MOHRE and the Central Bank check the SIF entries to see if the calculations are correct, for instance, if the salaries are the sum of the base pay and the variable pay and if the variable compensation in the employee details records match the sum of the itemized variable-pay components in the employee variable pay records.
They also check whether the employer is paying at least 90% of its staff, and employees are receiving at least 80% of their salaries.
5 The MOHRE and Central Bank issue a payment order to the WPS agent.
If the SIF is correct, the MOHRE and Central Bank will issue a payment order. If the SIF entries are incorrect or there are issues, they will return the SIF to the WPS agent.
6 The WPS agent disburses payments to employees’ accounts.
If the WPS agent receives a payment order from the MOHRE and Central Bank, it will transfer the employer’s funds to its employees’ bank accounts.
If the SIF is returned, the WPS agent will send it back to the employer for correction. In this case, the process restarts from step one.
Transparent and Efficient Payments With WPS
The UAEWPS is designed to meet the objectives of the MOHRE, particularly its goal to make wage payment transparent for easy regulation and oversight.
It ensures the timely and accurate release of wages while streamlining the payment process for UAE employers.
