Updates to the UAE’s Wages Protection System (WPS)
The Ministry of Human Resources and Emiratisation recently issued Ministerial Resolution No.43 of 2022, an update to the UAE’s Wages Protection System (WPS). It includes amendments to certain requirements and clarification on private sector businesses’ obligations to remain compliant with the WPS.
What is the Wages Protection System (WPS)?
The WPS is an integral part of the UAE’s labour regulations. It is a system designed to ensure that companies meet their obligations to pay their employees in a timely manner and that workers’ rights are upheld.
It was established in 2009 by the Ministry of Human Resources and Emiratisation (MOHRE) in conjunction with the Central Bank of UAE.
Essentially, it is an electronic wages transfer system that monitors and oversees the payment of workers’ salaries in the UAE and allows the MOHRE to keep a record of private sector salary payments to ensure that employers failing to pay their staff on time can be identified.
What key points from the resolution do employers need to be aware of?
One of the main changes from the previous requirements is an increase in the minimum amount of an employee’s salary which must be paid via the WPS. It has gone up from 80% to 90%.
The resolution also highlights several other key requirements which must be adhered to by private sector employers:
- All employee salaries must be paid on the due date through the WPS
- If salaries are not transferred by the 15th of the month, the company may be blocked from the system from the 17th of the following month
- 90% of total salaries must be transferred on a monthly basis to avoid the company being blocked and subject to fines
- Employers will have a 30-day grace period to transfer new employees’ salaries via the WPS
What actions should be taken to ensure compliance?
Employers should ensure that the following points are all adhered to, to ensure that their company is fully compliant with the new MOHRE resolution.
- A minimum of 90% of all employees’ salaries should be paid through WPS.
- For any employees that are no longer with the company but have remained under company sponsorship – cancel their visas immediately or alternatively place them on unpaid leave.
- Arrangements of salary reductions with any employees for any reason must be settled after the payroll has been processed.
- The MOHRE will only allow salary reductions for employees that are on unpaid leave and the employer must apply for this ‘early unpaid leave’ through the MOHRE system, with a contract addendum signed by both parties.
- Only a 20% deduction is allowed from the employee’s monthly salary
- Exemptions from the WPS are only permitted for employees that are outside of the country. However, their absence may have to be registered with the MOHRE.
What are the requirements for WPS registration?
Any company registered with the MOHRE must apply for the WPS. In order to register companies must do the following:
- Have a corporate bank account with any UAE registered bank.
- Have a contract with a UAE bank, bureau de change or another financial institution that is authorised by the Central Bank to deliver salary and wage payments.
- Agree to meet payment deadlines as stipulated by Ministerial Decree No.788 and as amended by Ministerial Decree 739 of 2016.
- Transfer wages at least once a month within 10 days of them becoming due, or more frequently and on specified dates if stipulated within the worker’s contract
- Agree to meet all expenses associated with WPS, which could include bank charges and other institutional fees. Companies are not allowed to pass these costs on to their employees.
How to register for the WPS
- Prepare and submit a Salary information File (SIF) – This is a standard form which includes relevant information about each employee’s salary, deductions, overtime, allowances, bonuses…etc. Each time you pay wages, you must submit a SIF which goes through your agent before submission to the WPS.
- After submission of the SIF to the WPS, a salary check will be carried out to make sure that all the details provided are accurate and meet with the WPS’s requirements.
- Issuance of a payment order to your WPS agent – If the WPS salary check is approved, the MOHRE and central bank will issue a payment order to your WPS agent. The details on your SIF must be correct to avoid the possibility of incurring fines or penalties.
- Fund transfer from WPS agent to employees’ accounts – Once the payment order has been received, the WPS agent will transfer the money you have provided to your employees’ bank accounts. Many banks acting as WPS agents, issue a WPS payroll card to employees registered with them. This can be used the same as any other bank debit card.
Read full Resolution here: UAE MINISTERIAL RESOLUTION NO.(346) OF 2022 – WPS MOHRE (MINISTERIAL RESOLUTION NO.(346) OF 2022 REGARDING THE AMENDMENT OF CERTAIN PROVISIONS OF MINISTERIAL RESOLUTION NO.(43) OF 2022 REGARDING THE WAGES PROTECTION SYSTEM)
How can PRO Partner Group help?
PRO Partner Group can advise you on the exact requirements of the new WPS resolution to ensure your company is fully compliant with current regulations, we can then assist you to process WPS and Payroll correctly each month and monitor your MOHRE file to ensure you remain compliant. PRO Partner Group can also assist you with PRO Services and Visas for your staff and dependents to ensure they are set up correctly and conform to the MOHRE WPS system on a monthly basis.
If you need assistance with your company’s responsibilities with respect to the Wage Protection System or any other related onshore or offshore company setup, restructuring, local partner or PRO support matter in Abu Dhabi, Dubai, the wider UAE, Oman, Qatar or KSA, then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at firstname.lastname@example.org or complete the contact form below and we will be delighted to assist you.
Article 3 of Ministerial Resolution No.43 of 2022 is of particular note:
Without prejudice to workers’ entitlement to the agreed-upon wage:
1. The establishment will be considered compliant with wage payment requirements on the condition that the wages of more than 90% of the workers’ have been transferred, including all types of employment contracts.
2. Where there are legal deductions, the worker is considered to be in receipt of their wage if he/she receives 80% or more of the value of the wage registered in the Employment Contract, provided that proof of such deductions is presented upon request.
3. Partial compliance: The establishment is considered partially compliant in the event that it has transferred 80% to 90% of the total wages due to workers, including all types of employment contracts. In this case, the partially compliant establishment shall be granted an additional grace period of one month ( while notification and reminders mentioned in Articles 1& 2 hereof to resume) before the application of item 3 of the schedule in Article 2 above.