Today, there are no ways around it – failure to comply with WPS regulations regarding the payment of a WPS salary can lead to legal action against employers in almost every industry in the United Arab Emirates. Given the seriousness of the issue, employers need to be better informed about the latest updates regarding WPS and how they can stay within the good graces of regulators.
In a bid to ensure that employees are paid their agreed-upon wages in a timely fashion, the Ministry of Human Resources and Emiratisation (MOHRE), in association with the Central Bank of the UAE, created the Wages Protection System (WPS), an electronic salary transfer system, in 2009 with the publication of Ministerial Decree No. 788.
With this system, employers in the UAE are required to upload their salary information files (SIFs) to the WPS portal and pay their workers electronically through a WPS agent.
In this way, the MOHRE will be able to conduct a WPS salary check – monitor every employer to ensure that salary payments are in line with what was agreed in their employment contracts and that they are making those payments at the right time.
After its inception in 2009, the MOHRE issued fresh regulations in 2016 under the Ministerial Decree No. 739 and some additional updates in 2019. Then in 2022, they issued Ministerial Resolution N0. 43, which has now superseded Ministerial Decree No. 739 of 2016.
In this article, we will highlight the main WPS regulations that employers in the UAE must comply with, the process that compliance requires, and the consequences of non-compliance. We’ll cover:
- Key WPS salary regulations
- Consequences of non-compliance with WPS salary regulations
- How to join the WPS
- Paying WPS salary efficiently
[Do you need a payroll processing system to help you easily comply with WPS? Sign up for NOW Money’s digital payroll software to comply with WPS and enjoy smart, cost-effective, and flexible payroll management.]
1. Key WPS salary regulations
According to Ministerial Resolution No. 43 of 2022, the following are the key regulations that employers in the UAE under WPS must comply with:
- New employees must be integrated into the WPS within 30 days from their date of employment.
- WPS salary becomes due a day after the payday employers agreed with their employees, as found in their employment contracts.
- Payments become late after 15 days from this due date
- 90% of the firm’s workers must be paid in any particular month (which allows for some unpaid leave).
- However, the employer must notify the MOHRE about the existence and duration of such unpaid leave.
- 80% of an employee’s WPS salary must be paid in any particular month (which allows for some deductions).
- However, the employer must be ready to present evidence of such deductions upon request.
- For workers with whom the employer did not agree on a particular payday, WPS salary or wages must still be paid at least once a month.
(NOTE: These regulations don’t apply to non-WPS payments like commissions, bonuses, end-of-service benefits, etc.)
It is also crucial to state that there are certain employees that employers are not obligated to include in the WPS system. These are:
- Employees who filed a lawsuit related to wages
- Employees for whom the employer has filed a ‘work abandonment’ report
- New employees within the 30-day grace period.
- Employees who are on unpaid leave
All the regulations above apply to all employers in almost every industry in the UAE. In the words of the resolution, “all establishments registered with the Ministry,” which is equivalent to all private sector employers in the UAE (aside those in the free zones), must implement WPS and abide by its guidelines.
Even the Jebel Ali Free Zone has adopted WPS and employers in that zone will have to comply with these regulations.
The only recognised exceptions are:
- Fishing boats owned by nationals
- Public taxis owned by nationals
- Houses of worship
2. Consequences of non-compliance with WPS salary regulations
Ministerial Resolution No. 43 has also transformed the definition of and consequences associated with non-compliance with WPS salary regulations.
Before considering the various levels of non-compliance and the consequences, it is worth mentioning that in order to avoid non-compliance the MOHRE will send notifications and reminders to employers in the WPS on their employees’ due date (payday), on the third day after the due date, and on the 10th day after the due date.
Also, once the due date arrives, the MOHRE will start monitoring the employer to ensure that they pay workers the right amounts at the right time.
As said above, non-compliance begins after WPS salary remains unpaid 15 days after the due date. Below are the various levels of non-compliance and the associated penalties:
- 17th day after the due date: MOHRE will suspend the issue of new work permits for all employers who have not made payment to workers 17 days after the due date. For employers with 50 workers and above, the ministry will also schedule inspection visits to issue warnings about their non-compliance.
- 30 days after the due date: Companies with 500 workers and above (and those considered as “high-risk establishments”) will be handed over to the Public Prosecution office and federal and local authorities to initiate relevant legal action.
- 45 days after the due date: Companies with 50-499 workers will now be treated the same way companies with 500 workers and above were treated after defaulting for 30 days – legal action.
- 60 days after the due date: Issuance of new permits will be suspended for other companies owned by the owners of the defaulting company. This applies to all employers irrespective of the number of workers.
- Repeated violation: The MOHRE will schedule inspection visits to issue warnings. Also, they will impose administrative fines in line with Cabinet Resolution No. 21 of 2020. Finally, the company will be downgraded to Category C or the third tier.
- Failure to pay a worker’s wage for more than 3 consecutive months: Suspension of issuance of new permits continues. Also, an electronic notification will be sent to the company and inspection visits scheduled once it is six months from the date of non-payment.
This visit is to confirm if there is actually an employment relationship between the employer and the supposed employee. If no such relationship subsists, the company will be handed over to relevant authorities for legal action.
3. How to join the WPS
WPS registration can be completed on the MOHRE website. Before registering, you must ensure you have a corporate bank account and have established a contract with a WPS agent (which can be a traditional bank or another financial institution, including some services or other institutions acting as an agent for a bank or other licensed financial institution) who will be responsible for electronically transferring money to your employers.
After registering, you will need to follow certain procedures to make WPS salary every month, in compliance with the WPS salary regulations we have already identified above.
Since we have examined these procedures in some depth in another article, we will outline them here only briefly (since the new resolution has not modified them):
- Preparation and submission of a salary information file (SIF): This is a document that includes relevant payroll data and employee details (including basic salary, allowances, deductions, account number, labour card number). You must prepare and upload these salary files to the WPS.
- WPS salary check by the MOHRE: The MOHRE will monitor your account and ensure that the details in your SIF are in line with the employment contracts you signed with your workers. It’s important you also learn how to check WPS salary so you can identify any mistakes in your SIF before uploading to the portal.
- Issuance of payment order to your WPS agent: After uploading the SIF, you can issue a payment order to your WPS agent for onward wages or salary disbursement.
- Transfer of money from your WPS agent to your employees: Your WPS agent will transfer wages or salaries to your employees.
4. Paying WPS salary efficiently
Complying with WPS is a matter of legal duty for every UAE employer registered with the MOHRE. However, mere compliance is not enough; employers must seek to comply in the most efficient way that will be advantageous to them and their employees.
NOW Money, a fintech company that is also a WPS agent, provides such effectiveness with its cost-effective, flexible, and smart digital payroll software.
Unlike other WPS agents that charge for every SIF you upload, with NOW Money, SIF uploads are free of charge. NOW Money only charges for each record uploaded and its charge of AED 0.50 per record is one of the cheapest in the country.
In addition, all non-WPS payments (commissions, bonuses, etc.) made on NOW Money are free.
Sample NOW Money Dashboard
Regarding flexibility, on NOW Money, you can experiment with different ways to pay your employers – daily, weekly, monthly, and quarterly. One of our clients who changed from a quarterly payment of sales commissions to a daily payment recorded 50% increase in sales. We won’t charge you any extra fees for paying more frequently.
Setting up a payment on NOW Money
Our payroll solution allows you to easily and comfortably upload SIFs, deposit money into your account, pay employees, monitor transaction status, gain complete visibility into your employees, and monitor your account balance (so you can know if you have enough cash to make the next payment).
What’s more, we create free mobile bank accounts for your employees so they can receive their WPS salary (and other non-WPS payments), transfer money to their families and friends abroad (through our international remittances service), withdraw funds at the ATM through a free debit card, recharge their phones (and that of their loved ones abroad), check account balance, and download account statements.
This free mobile bank account benefits you as well. It means you don’t have to pay bank charges since all your payments are now NOW Money to NOW Money transfers.
[Do you want to adhere to WPS regulations in the most cost-effective, flexible, and smart way possible? Sign up for NOW Money and begin to pay WPS salary efficiently or learn more about how this software can transform your payroll.]
- The MOHRE, in association with the Central Bank, conceived and implemented the WPS as a way to ensure that employers pay employee salaries in accordance with the employment contracts they signed with them.
- WPS has advanced and new regulations have clarified what the system requires of employers.
- Non-compliance with WPS regulations comes with various types of penalties.
- Employers in the UAE (Dubai, Abu Dhabi, and the other emirates) registered with MOHRE must comply with WPS and do so efficiently.