A complete guide to the Wage Protection System in the UAE
The UAE is home to expatriates from more than 200 countries, contributing to economic development as well as the overall progress of the country. To make payments and wage distribution easier, the government of the UAE has launched the Wage Protection System (WPS). Let’s find out what WPS UAE is, how it works and other related information.
WHAT IS THE WAGE PROTECTION SYSTEM OR WPS IN THE UAE
Launched in 2019, the WPS UAE was developed by the Central Bank of the UAE and the Ministry of Human Resources and Emiratisation or MoHRE. Wages Protection System UAE is a state-of-the-art electronic salary transfer system that enables organisations in the private sector to pay employees’ wages through banks, approved financial institutions and Bureau de Change.
The Ministry of Human Resources and Emiratisation (MoHRE) offers private sector companies a reliable database to create salary files for their workforce. Companies send these files to their respective banks for wage distribution to employees. Each file holds crucial information about the employee’s salary based on their contract, allowing MoHRE to ensure that all employees’ dues are paid.
GOALS AND OBJECTIVES
This massive database ensures timely payment of agreed-upon wages. The Wage Protection System UAE covers all institutions registered with MoHRE across various businesses in multiple industries. The system offers services to a wide category of employees in the private sector.
Some of its main goals are:
- Solid commitment to safeguarding employees’ salaries.
- Safeguard employers’ interests and provide a seamless system to reduce the time and effort required to pay due wages and salaries.
- Improve job security in UAE’s private sector and work towards strengthening work relationships and protecting the rights of employees and employers.
- Provide a transparent and easy-to-use payment system.
- Offer a reliable database for the UAE Ministry of Labour that is regularly updated on new wage data in the private sector.
- Provide protection to employees and reduce labour disputes associated with wages.
WPS STAKEHOLDERS
The Wage Protection System in the UAE targets various stakeholders.
EMPLOYEES OR WORKFORCE
Any individual under the payroll of an organisation operating in the private sector who works in return for an agreed-upon wage. The employee must possess a valid labour card issued by MoHRE.
EMPLOYERS
The owners of an organisation in the private sector in the UAE registered with MoHRE and WPS.
BANKS
This includes any bank where the employer has a bank account, and the company relies on the bank account for wages transfer to all employees under its payroll.
AGENTS
It includes any banks, Bureau De Change or any other financial institution approved and authorised by the Central Bank of the UAE to offer salary payments through the WPS system UAE. The Central Bank regularly updates its list with names of approved and authorised agents.
Benefits of the WPS UAE
While the Dubai WPS system guarantees fair treatment for employees through on-time and accurate salary payments, its benefits extend beyond worker protection. This electronic system also streamlines payroll processes for employers, minimising disputes and legal issues. Additionally, WPS salary UAE serves as verifiable proof of employers’ salary payment.
Now, let’s find out how the system works and how to register with the WPS system in UAE.
WPS REGISTRATION PROCEDURE FOR EMPLOYERS IN THE UAE
Employers in the private sector can easily register for the Wages Protection System in the UAE. The entire system is available on MoHRE’s official website, where employers can register their accounts using the company details provided by the Ministry.
Employers can then log in to their accounts and update the lists with:
- Bank account details.
- List of employees with details of the bank or agent the company works with.
- The bank or agent an employee has an account with.
- The specific date on which the salary needs to be paid.
Please note that according to the MoHRE guidelines, “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.”
HOW DOES WPS WORK IN THE UAE
Once you have registered your account, it is time to know how WPS Dubai salary or WPS in the UAE works. The process comprises four main steps:
PREPARE AND SUBMIT SIF
The Salary Information File (SIF) is a digital document containing essential details about employers and their employees, including base salary, Cost-To-Company (CTC), benefits and any deductions.
WPS mandates submission of the SIF whenever regular wages or salaries are paid. The file first undergoes a review process by a WPS agent to ensure accuracy before final submission. However, commissions, bonuses and gratuities are exempt from SIF requirements.
SALARY CHECK BY MOHRE AND CENTRAL BANK
Upon submitting the Salary Information File (SIF) to the WPS, it undergoes a joint review by the MoHRE and the Central Bank. This review verifies the accuracy of the information within the SIF and ensures compliance with UAE’s WPS guidelines.
For instance, MoHRE will confirm adherence to the regulation requiring employers to transfer at least 75% of employee salaries through the WPS system.
WPS AGENT RECEIVES PAYMENT ORDER
If the MoHRE and the Central Bank find everything in order, they will authorise a payment order to the WPS agent for salary disbursement.
In case of any discrepancies in the SIF, the employer will be notified via email. This notification will detail the errors and request any necessary corrections. Promptly addressing these errors is crucial to avoid potential penalties and late fines.
MONEY TRANSFER FROM WPS AGENT TO EMPLOYEE ACCOUNT
Upon receiving the payment order, the WPS agent facilitates the transfer of salaries directly into employees’ bank accounts. Notably, many banks serving as WPS agents offer dedicated WPS payroll cards. These cards function similarly to regular debit cards, allowing convenient access to salaries.
For optimal efficiency, employers are encouraged to ensure their staff possess active bank accounts and debit cards for streamlined salary withdrawals.
HOW TO WITHDRAW YOUR SALARY FROM WPS UAE
Here are the different ways to withdraw your salary from the WPS salary system in UAE.
WITHDRAWAL THROUGH WPS CARD
Employees without a relevant bank account can opt for a WPS card in the UAE to withdraw their salaries. Companies registered with WPS can access money exchanges in the UAE, offering cost-effective WPS-compliant payroll services.
These exchanges provide fund transfer facilities and salary disbursement to employees. They also issue the WPS card, which can be used at different locations across all emirates.
THROUGH AN ATM MACHINE
Employees with a registered bank account in the UAE can use their ATM card to withdraw their salary.
WPS PENALTIES ON COMPANIES FAILING TO PAY EMPLOYEE WAGES
WPS system Dubai has strict penalties to prevent companies from withholding employee wages.
Here’s a list of penalties a company might face for non-payment of dues.
PENALTIES FOR ENTERPRISES EMPLOYING OVER 100 EMPLOYEES
If a small to medium-sized private sector firm in the UAE, with over 100 employees, fails to pay employee dues within a period not exceeding 10 days, they are liable to these penalties:
- The company will not get any work permits starting from the 16th day from the date of delay in wages.
- Companies that have delayed wages more than a month from the due date will be referred to the judicial authorities for further punitive measures.
- If the company owner has other registered companies with WPS in the UAE, similar penalties will apply to all of them.
- The owner(s) cannot register any new company.
- Employees’ bank guarantees will be liquidated.
- The company will face downgrading to the third category.
- Workers will be permitted to find other job opportunities.
If the wages are delayed for over 60 days, a fine of AED 5,000 per employee (whose wage has been delayed) will be charged up to a maximum fine of AED 50,000 for multiple employees.
WPS PENALTIES FOR COMPANIES WITH A WORKFORCE OF FEWER THAN 100 EMPLOYEES
If a small to medium enterprise with less than 100 employees fails to pay employee salaries within 60 days from the due date, then they are liable to penalties that include:
- Barred from issuing work permits.
- The company will be liable to fines by MoHRE.
- Referral to court for further proceedings.
If the company fails to pay wages twice in one year, MoHRE will apply the same penalties mentioned for bigger firms with more than 100 employees.
FREQUENTLY ASKED QUESTIONS?
WHAT IS WPS IN THE UAE?
WPS (Wage Protection System) is an electronic wage transfer system that protects the rights of employees in the UAE.
HOW CAN I GET THE BEST RETURN FROM WPS IN UAE?
Beyond ensuring adherence to WPS regulations, selecting the ideal agent can significantly enhance your experience. A competent agent safeguards you from penalties and missed deadlines, guaranteeing a smooth and cost-effective payroll process for your staff, regardless of their salary level. The right agent prioritises timely salary disbursements for all your employees.
WHAT IS SIF?
The Salary Information File (SIF) is a critical component of the Wage Protection System in the UAE. It’s a digital document mandated for all employers and must be submitted through authorised agents, banks or other financial institutions.
This file ensures adherence to WPS regulations and maintains a transparent record of employee salary payments.
The SIF typically includes details such as:
- Employee Detail Record (EDR)
- 14-digit EID issued by MOHRE
- 9-digit routing code assigned to the bank or exchange house responsible for processing the payroll
- IBAN (the employee’s bank account number)
- Start date of salary
- End date of salary
- Total number of working days
- Basic or fixed salary
- Variable salary
- Days on leave
IS IT EASY TO GET A JOB IN DUBAI?
Getting a job in Dubai is not particularly different from applying for work in any other country. Follow the relevant regulations and apply for jobs that best suit your academic qualifications, work experience and skill set.
WHAT ARE THE TOP JOB SITES IN DUBAI?
Some of the best job-searching sites in the UAE are dubizzle, LinkedIn, Indeed, etc. These online job portals have a range of job opportunities open to everyone.
This concludes our detailed guide to WPS UAE, along with the registration process, penalties and salary withdrawal for employees. If you would like to file a complaint regarding workplace disputes, check our post on how to check labour complaint status.
The guide includes all the crucial information about filing a complaint, tracking and resolution. For more services and permits, visit the Taw-seel mobile service centre. Other services of the Ministry include Tasheel and Tadbeer. Those looking to hire domestic workers in Dubai should contact Tadbeer service centres.
Learning about Tawjeeh training can also be useful for those working in the country.
