WPS in UAE: A Comprehensive Guide

The Wage Protection System (WPS) in the UAE is a government-mandated electronic system that facilitates timely and proper payment of wages to private sector workers. The WPS covers a broad spectrum of sectors, such as manufacturing, construction, property, retail, hospitality, health services, education, transport and logistics, financial services, and IT, to mention but a few.

An initiative by the Ministry of Human Resources Emiratization (MoHRE) in collaboration with the Central Bank of UAE, the WPS protects the rights of employees and is a key component of the UAE Labor Law. The system helps curb any illegal activities by employers, such as inappropriate salaries, delaying payment cycles, or drawing from illegal sources of funds to pay salaries.

How to register for WPS in UAE?

Employers must follow the guidelines given below to enroll for WPS:

1. Visit the MoHRE online portal to register.
2. Select the right WPS-approved agent to manage salary transfers. Employers must have a corporate account with the same agent.
3. Submit the necessary documents. While the documents that need to be submitted may vary depending upon the nature of the business and industry, the standard documents required are:

• A valid trade license.
• All documents related to company registration.
• List of employees with their bank account details.
• Documents of authorized signatory.
• Duly filled WPS registration form provided by the chosen agent.
• Signed WPS service agreement with the agent.

Benefits of WPS

The WPS has multiple benefits for employers as well as employees. Some of the key benefits of WPS are as follows:

For employers:

• Enhanced credibility and trust: A WPS-compliant company indicates that it is dedicated to ethical labor practices, reinforcing its statute as a trustworthy entity among employees, customers, and the wider business world. This leads to improved employee satisfaction and loyalty and boosts employee retention.
• Legal compliance: The system helps companies to avoid compliance issues with UAE labor laws. In addition, it helps to identify mistakes and allows sufficient time to rectify and avoid penalties or work permit restrictions, which can disrupt business operations.

For employees:

• Tracking salary disbursements: WPS is designed to track all salary transfers and enforces strict deadlines for salary processing to ensure that workers are paid on time and in full. To ensure that the payroll processing is valid and accurate, the WPS system checks the accuracy of payments against the submitted Salary Information File (SIF).
• Safeguarding employee rights: The WPS provides a legal framework that protects employees from exploitation and underpayment. It provides a transparent record of payments that is crucial for dispute resolution.
• Comprehensive database: The system has an all-encompassing database that is a credible point of reference in case of wage-related conflict.

What is SIF?

SIF or Salary Information File is the instrument through which payment processing and transfers are carried out in WPS. SIF consists of employee salary details that must be submitted in a specific format. SIF includes information as given below:

Company details:

• Company name and ID.
• Payroll period (month and year).
• Total number of employees.
• Total salary amount.

Employee details:

• Employee name and labor card number.
• Bank account or wage card number.
• Salary amount.
• Number of days worked.
• Overtime hours and the amount.
• Allowances and deductions.

How to create a SIF?

One of the biggest challenges of creating a SIF is maintaining accuracy so that it is not rejected by the WPS agent. Employers must adhere to the guidelines given below to avoid rejection of SIF:

• Collect accurate employee payroll data.
• Use payroll software to avoid human errors.
• Ensure the data is formatted according to WPS requirements.
• Create templates and direct the payroll team to follow these templates.
• It is advisable to utilize WPS-compatible payroll software to automatically prepare the SIF.
• Check the SIF carefully before submitting.
• Submit the SIF to your WPS agent within the required timeframe.

Penalty for WPS Non-Compliance

Companies with less than 5 employees, domestic workers, government and semi-government employees are not included in the WPS. Apart from these, all other companies must register for WPS. Non-compliance of the WPS willingly or inadvertently can lead to high penalties for companies.

For companies with more than 100 employees

• The first violation can lead to a warning and potential work permit restrictions.
• Second violation can lead to suspension of work permit.
• The third violation can lead to a fine of AED 5,000 per unpaid worker

For companies with less than 100 employees

• The first violation can lead to an official warning from MoHRE.
• The second violation can lead to work permit restrictions on the employer.
• The third violation can lead to a fine and potential administrative closure.

WPS Compliance Made Easy with greytHR

Businesses in the UAE often find it challenging to ensure compliance with WPS due to recurrent regulatory amendments and the chances of manual errors in Salary Information Files (SIFs).

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To know more about greytHR’s HRMS and how it can help businesses in the UAE and the Middle East, click here: greytHR | Full Suite HRMS for MEA Businesses.

FAQs

What is the Wage Protection System (WPS) in the UAE?

The Wage Protection System or WPS is an electronic salary transfer system mandated by the UAE government that enables employers to transfer employee salaries through approved authorities like banks, financial institutions, and exchange houses. The system was initiated in 2009 and ensures that salaries are processed according to employment contracts and labor laws in the UAE, reducing wage-related disputes and fostering financial security for workers.

What are the key features of WPS?

The key features of WPS are as follows:

• It ensures timely and proper payment of salaries to employees.
• It regulates employer-employee salary transactions.
• The system is monitored by the Central Bank of UAE and MoHRE (Ministry of Human Resources and Emiratization).
• The system applies to all companies registered with MoHRE.
• It supports multi-currency salary payments.

How does WPS work?

The WPS process involves the following steps:

• Employer registration: Companies must first register with MoHRE and a WPS-approved agent (bank or exchange house). Depending on the structure, type, size, and location, companies must submit the necessary documentation and agree to the terms of the WPS.
• Prepare and submit Salary Information File (SIF): Employers must create detailed SIFs that include employee information and salary details for each employee and submit them to the WPS-approved agent in a specific format through the bank’s or agent’s website.
• Salary verification: The MoHRE and Central Bank check the submitted SIF of the employer and cross-check the same with the salary information of the employees in order to determine compliance with the labor laws as well as accuracy of data.
• Issuing payment order: Once the information is verified, the employer issues a payment order to their WPS agent for the total salary amount.
• Salary transfer instruction: The WPS agent processes the payment order and prepares individual salary transfers per the SIF.
• Salary disbursement: Upon approval, salaries are transferred to employee accounts through the designated financial institution.

How to choose a WPS agent?

Selecting the correct agent ensures that employers need not stress about
timely payment of salaries. The guidelines given below will help to make the
right choice:

• Reputation and credibility of the bank or financial institution.
• Other employers’ experience with the WPS agent.
• WPS service fees (agents determine it, so always opt for better alternatives).
• Technological platform and simplicity.
• Customer support and responsiveness.
• Other services provided (e.g., wage cards, mobile banking).
• Integration capabilities with current payroll systems.

How to check the WPS status of a company?

Once a company is successfully registered, they can verify its status in the following way:

• Visit the official MoHRE website: https://www.mohre.gov.ae/en/home.aspx
• Click on the "Services" tab and select "New Enquiry Services” from the drop-down.
• On the new page, select the service as required.
• Choose "Company information" from the drop-down.
• Enter the company number. The result will show company information including its WPS status.