Setting up a business in the UAE is no mean feat and comes with its unique challenges. When you have set up a business in a particular country, it is important to adhere to local compliance laws and meet all legalities of the process. To protect the interest of the workers, the Government has introduced many laws, one of which is the Wage Protection System or WPS.
The Wage Protection System (WPS) is a government policy in the United Arab Emirates through which organizations provide information about employees and salary information to the Ministry of Labor. This disclosure ensures that employees are paid according to statutory requirements. It was established in 2009 to ensure that the companies pay their staff correctly. For organizations having offices and staff in UAE, it is mandatory to register and pay employees through the WPS.
The system allows the Ministry of Human Resources and Emiratisation (MHRE) (formerly the Ministry of Labour – MoL) to keep an eye on the private sector and ensure that the staff is paid correctly and on time. The Ministry can easily identify defaulters and penalize them accordingly. For companies that fail to comply or pay staff within 10 days of the due salary date can be fined or barred from processing Visas for new employees if payment is further delayed.
Companies that have an on-shore presence in the UAE and are registered with the Ministry of Human Resources and Emiratisation (MHRE / MoL) are required by law to register for WPS.
There are certain pre-requisites for WPS registration:
- Hold an account with a UAE bank
- Contract directly with a UAE bank, bureau de change, or financial institution authorized by the Central Bank to deliver the salary and wage payments
- Agree to meet the deadlines for payment as set out in Ministerial Resolution no. 788 of 2009, and as amended by Ministerial Decree 739 of 2016.
- Transfer wages according to the stipulated worker’s contract or not exceeding 10 days of the due date.
- Meet all expenses associated with WPS, which include bank charges and other institutional fees, and not transfer these to the employees.
There are several advantages of registering for WPS:
- Promotes an environment of transparency between employers and employees
- In the event of any labor dispute, it can be used as vital proof to show that employee salaries were paid in full and on time.
- It streamlines the entire payroll process, makes it automated, thereby saving both critical time and resources.
- The risk of handling large amounts of cash in the workplace can be avoided.
How does WPS work?
The company sends salary transfer instructions to the Bank.
Bank notifies WPS
WPS sends worker’s details, salary instructions to the Bank
The Bank, in turn, sends these details to the MHRE for cross-checking
WPS authorized Agent makes the final payment to the employee
The UAE boasts of a large number of expatriate workers who are contributing significantly to the economy of the nation. To protect worker rights and see to it that they are adequately compensated, the UAE Government has brought stringent laws that protect the interest of the employees.
Complying with the laws of a nation can be tricky in the absence of an automated system. Paylite HRMS has been specially built to meet all the payroll requirements of the GCC countries. Available in Arabic and English, it meets the local compliance for:
- United Arab Emirates
- Kingdom of Saudi Arabia
Paylite® Human Resource Management Software is an end-to-end HRMS system that meets the ever-growing needs of modern-day workplaces. It makes your HR process streamlined, smart, and swift, replacing the age-old legacy systems with system-driven workflows. It offers world-class security features that keep your valuable data safe and secured at all times.
To book a Demo of Paylite HRMS, visit https://www.paylitehr.com/request-demo.html or call at +971 529977195.