Given that the UAE is a promising destination for expat workers, the government has introduced initiatives to safeguard workers’ rights. One such initiative is The Wage Protection System in the UAE. It is a robust electronic system that makes wage payments quick and error-free.
Every company registered in the UAE must sign up for this system to comply with the laws. But what’s the registration process and the requirements? Read ahead to get answers to all your questions.
- Overview
- Objectives
- Stakeholders
- How to Register for WPS
- Wages Payment through WPS
- Penalties for Payment Delays
- FAQs
Overview of Wage Protection System in the UAE
To facilitate the UAE’s growing expat population, a streamlined salary payment system was necessary to make processes fast and efficient.
In 2009, the Ministry of Human Resources and Emiratisation (MoHRE), in collaboration with the UAE Central Bank, introduced the Wages Protection System (WPS). This launch was in line with the Ministerial Decree No. 788 of 2009.
WPS is an electronic system using which private companies registered in the UAE can pay wages to employees through an intermediary. This system simplifies the payment transfer process and ensures on-time payments. Let’s explore the Wage Protection System in the UAE in detail.
Objectives
Before moving ahead, let’s first understand the objectives of the Wage Protection System in the UAE:
- First, WPS ensures that private companies follow the UAE labour law.
- Second, WPS protects employee rights by keeping a check on timely wage payments. It also ensures that salaries are disbursed in full amounts without unfair deductions.
- Third, it provides a streamlined payment system to employers, thereby saving their time and manual effort.
- Fourth, it improves transparency in processes and makes employers accountable.
- Fifth, it saves both employers and employees from salary disputes.
- Lastly, WPS improves an employer’s reputation among potential job seekers.
Stakeholders
Let’s look at the stakeholders of the Wage Protection System in the UAE:
- Employees: Individuals who have signed a MoHRE labour contract with a private employer in the UAE and are working for an agreed-upon wage.
- Employers: Private sector companies registered with MoHRE.
- Banks: Any bank that the employer uses to disburse salaries.
- Agents: Any financial institution, such as a bank or Bureau De Change, through which an employer transfers wages.
How to Register for WPS
Now comes the actual part, ‘How can companies register for WPS?’ The process is straightforward, but before that, companies must fulfil some eligibility requirements. Here is everything about registering for Wage Protection System in the UAE:
Eligibility
Here is the eligibility criteria for WPS registration:
- Employers must have a corporate bank account in the UAE.
- Employers must pay a minimum of 75% wages through WPS.
- A contract between an employer and a WPS agent.
- Every employee should receive salaries within the timelines stipulated in the employment contract.
Exemptions
Here are the individuals and authorities exempted from WPS:
- This system is only designed for expats working in the UAE, therefore, UAE citizens are ineligible to benefit from it.
- WPS is only for private companies registered in the UAE. Any government or semi-government authority is not a part of it.
Process
Follow these steps for a seamless application:
- Go to MoHRE’s official website and sign in to the portal.
- Register for WPS using the company details.
- Submit the required documents such as:
- A valid trade licence in Dubai or other Emirates
- Proof of company registration
- A complete list of employees, along with their bank account details
- The date of wage payment
Wages Payment Process through WPS
After registration with WPS, the next important step is to understand the salary payment process. Let’s first look at the different documents that you must submit to complete the registration followed by the wage payment process:
1. Submit a Salary Information File (SIF)
Every employer must submit a Salary Information File (SIF) detailing everything about employees. This is a mandatory process for wage payment as it includes employee details, base salaries, cost-to-company (CTC), and more.
It is crucial to note that commissions, gratuities, and bonuses are not part of SIF. Here is the format to prepare SIF in Excel:
| Column A | Employee details |
| Column B | The 14-digit labour card number of an employee |
| Column C | Bank Routing Code |
| Column D | Employee bank account number |
| Column E | Salary start date |
| Column F | Salary end date |
| Column G | Number of paid days |
| Column H | Basic salary of an employee |
| Column I | Variable salary of an employee |
| Column J | Number of leaves per year |
2. Wait for Review by MoHRE and Central Bank
Once SIF is submitted to WPS, the next step is to wait for its review by MoHRE and the Central Bank. Both these authorities verify the information to avoid any errors.
3. Approval or Rejection of Payment Order
If everything is in place, the WPS agent will receive a payment order from MoHRE and the Central Bank. In case of rejection, the employer will be sent an email detailing the issues and changes required.
4. Wages Transfer to Employee Account
The final step is the salary transfer to employees’ bank accounts by the authorised WPS agents.
Penalties for Payment Delays
According to the UAE labour laws, an employer must transfer wages on time as stipulated in the contract. In light of Article (2) of Ministerial Decree No. 588 of 2022, any payment delays can result in penalties on the employer. Here is a list of penalties imposed depending on the payment delays:
| Deadline | Targeted Establishments | Penalty |
| By the due date | All establishments | Suspension of new work permit issuance by MoHRE. |
| In the third and tenth days after the due date | All establishments | Reminders are sent to establishments that fail to transfer employees’ salaries. |
| By the seventeenth day following the due date | All establishments | Suspension of new work permits issuance by MoHRE. |
| Establishments employing more than 50 employees | Inspections will be conducted alongside necessary warnings. | |
| 45 days following the due date | Establishments employing more than 50 employees | Details of such establishments are sent to the public prosecutor. In addition, details are provided to local and federal authorities for legal action. |
| Cases where an establishment repeats the same violation within six months of the previous one | Establishments with wage-related labour complaints are referred to the judiciary. | The authorities will impose fines on defaulting establishments in line with Cabinet Resolution No. (21) of 2020. They will also reclassify an establishment to Category (3) as per the Ministerial Resolution No. 209 of 2022. |
FAQs
Wages Protection System is an electronic payment system through which private companies transfer salaries to employees.
Yes, WPS registration is a legal requirement for all private employers. This ensures accountability, transparency, and improved payment processes.
Employees can withdraw salaries from WPS using the WPS Card or through an ATM.
To sum up, the Wage Protection System in the UAE is an electronic wage transfer system. It has made payment processes fast, efficient, and error-free. Register for WPS today and enjoy stress-free salary transactions.
Are you thinking of coming to the UAE for employment? Here is the complete process to apply for a work visa in the UAE.
