The wage protection system (WPS) is an essential part of the business market in the United Arab Emirates. Since 2009, the WPS payroll in the UAE has been a crucial tool for employers and employees. However, most of them still do not know how to make the most out of it.
In this article, you will learn about the WPS system and how important it is for companies in general. Understanding this system is critical for employees and employers alike. This will allow staff members to know their rights and managers to comply with the local laws and regulations.
- What is the Wage Protection System?
- What are the objectives of the WPS payroll in the UAE?
- Requirements for registration for WPS payroll in the UAE
- What is the process of the WPS system?
- Ways to withdraw your salary from the WPS system
- Penalties and fines for non-compliance with the wage protection system
- Obtain the most out of your WPS system
- How can Connect HR help you with your WPS payroll?
1. What is the Wage Protection System?
The Wage Protection System was implemented for the first time in July 2009. It was a development of the Ministry of Human Resources and Emiratisation (MOHRE) in conjunction with the Central Bank of the UAE. In recent years, the MOHRE has been issuing further guidelines and regulations to update the WPS regime.
The WPS system in the UAE is an electronic database where regional companies can upload their salary information files. Subsequently, the MOHRE and the Central Bank of the UAE can confirm and validate every single detail before authorizing the transfer of the employees’ salaries. In this way, businesses can process payroll compliantly.
The involved parties in this process are:
- Staff members: these are the individuals who are under the payroll of a company. They need to provide their valid labor card to enter the WPS payroll in the UAE.
- Employers: they must go through the registering process to streamline their payroll processes.
- Banks: any bank entity in the United Arab Emirates can support companies to provide payroll for their employees.
- Agents: this includes banks and other financial institutions that the Central Bank of the UAE authorizes to provide payments through the WPS payroll system.
2. What are the objectives of the WPS payroll in the UAE?
The main goal of the WPS payroll in the UAE is to make sure payments get to workers in time. Additionally, with the support of the MOHRE and the Central Bank of the UAE, companies will not face any compliance issues when using this system.
In Dubai, the wage protection system covers all registered entities with the MOHRE across different business fields in various industries. The WPS’s importance is very clear for all staff members in an organization. Thus, its main objectives are:
- Assurance and security of employees’ salaries.
- Protect employers’ interests and deliver a system that will decrease the effort and time required to pay their staff members’ awaited salaries.
- Improve job security in the UAE’s private sector. Moreover, it works in pro developing relationships and protecting the rights of employers and employees.
- Effortless and transparent payment system.
- It offers the Ministry of Labor a reliable database that is constantly updated.
- Minimize labor disputes related to salary wages.
WPS payroll services are necessary due to the dishonest actions of some employers in delaying payments, refusing to pay the right wages, using funds from illegal sources, or using offshore accounts to avoid required payments.
Registering to this payroll management service is very beneficial. By using this wage protection system, organizations can pay their salaries on time. And also, it ensures transparency in the employer-employee business relationship. In this way, employers can save time and money while streamlining processes.
3. Requirements for registration for WPS payroll in the UAE
The requirements to register on the Wage Protection System are:
- A UAE bank account.
- Contract directly with an agency authorized by the Central Bank of the UAE to provide the salaries and wage payments for your staff members.
- Responsibility to meet the deadlines for payments as established in the Ministerial Resolution N° 788 of 2009 and the Ministerial Decree 739 of 2016.
- Transfer payments at least once a month within 10 days of their due date, or more frequently according to each worker’s contract.
- Finally, employers have to agree to meet all expenses associated with WPS payroll services. Including intuitional fees and other charges.
In the United Arab Emirates, many companies that take care of providing WPS payroll solutions. For example, Connect HR is a company that provides payroll and other essential services for companies that need to streamline their operations in Dubai. Businesses must choose a provider that fits their necessities and can offer services for all their challenges.
4. What is the process of the WPS system?
To enter the WPS payroll in the UAE, companies in the private sector can hire the services of a WPS agency. They will guide them through the process of registering with the MOHRE and get managers started with the system.
These agencies will take care of submitting the necessary information to the authorities to start your WPS process. Thus, you must provide them with the following information:
- UAE bank account information.
- A detailed list of the company’s employees and the banks that they manage.
- The date on which the payments have to go through to your staff members.
After the account is registered, you must process payments following these steps:
- Firstly, with the help of an approved agency, employers have to open a UAE bank account if they do not have one yet.
- Then, your selected agency will help you sign a WPS payroll in the UAE agreement. In this way, you will be officially responsible for your compliance with the local laws and regulations.
- Successively, the agency will support you set your wage protection system. This operation will send details of your staff members’ salaries through an electronic system to the Central Bank of the UAE. Subsequently, they will send them to the MOHRE.
- Lastly, the WPS system issues the approval to pay the workers’ salaries, and, as a result, the bank transfers them to each employee’s bank account.
With this system you will be aware of how beneficial is to automate your payroll. Ultimately, companies will be more eager to acquire more benefits and mechanize other operations. Thus, managers can focus on the process of developing their businesses in other areas.
5. Ways to withdraw your salary from the WPS system
There are two ways to withdraw your salary from the WPS payroll in the UAE:
- Withdraw through WPS card
Employees in the United Arab Emirates who do not have a relevant bank account can opt to withdraw their salaries through a WPS card. Furthermore, organizations registered with the WPS payroll system can associate with money exchange in the region. Helping to provide cost-effective payroll solutions that can keep them compliant with the laws.
According to the employees, these exchanges offer them fund transfer conveniences and salary disbursements. The exchanges also issue the WPS card which can be used through the United Arab Emirates with no problem.
- Through an ATM
Staff members with a bank account in the UAE that provides an ATM card can withdraw their salaries by themselves effortlessly. When they do so, their particular banks send a notification of the payment transfer through SMS or email. In this way, the process is more secure and easier for employees.
6. Penalties and fines for non-compliance with the wage protection system
If the employer refuses to conform to the requirements of the WPS payroll in the UAE, it can cause certain fees and penalties. For instance:
6.1 Payment delays
When the employer has delays with their staff members’ payments, the fines and penalties vary according to the size of the organization. As a result, for businesses with over 100 employees, the following applies if they do not pay workers’ salaries within ten days of the due date of the wages (based on the employment agreement):
- Starting from the 16th day from the date of the delay in salaries, which is the 26th day from the wages’ due date, the organization will not obtain any work licenses.
- In the same way, the company’s owners will not be able to register new businesses.
- Consequently, the MOHRE will take severe actions against other organizations owned by the owners of the evading business.
- Finally, the workers’ bank guarantees can be liquidated, the organization will be lowered to the 3rd category, and staff members will be allowed to move.
If the delay prolongs to 30 days, the MOHRE will refer the companies to the acting judicial authorities. However, if it extends to 60 days, the organization will have to pay a fine of AED 5.000 per affected employee, up to a maximum of AED 50.000 for various workers.
Ultimately, when a business with less than 100 employees delays its payments for up to 60 days, the company will incur penalties such as fines, a work permits ban, and referral to court. Similarly, if this delay occurs in companies with over 100 employees more than once in the same year, MOHRE will also treat apply the same penalties.
6.2 Other ways of non-compliance
For organizations that knowingly provide incorrect information to evade salary payments, they will suffer a fine of AED 5.000 per affected worker, up to a maximum of AED 50.000 for various employees.
Likewise, businesses that force their staff members to sign a counterfeit payment slip as a way of evading wages payment, will have to incur a fine of AED 5.000 per affected worker.
7. Obtain the most out of your WPS system
With the support of a great agency, you can easily maximize the value of your WPS payroll in the UAE. When you have the support of a company like this, you will not have to worry about compliance issues as they will check your SIF for any possible mistakes and also will make sure that you do not miss payment deadlines.
Additionally, they will offer you packages that can help you make your payments fast, easy, and within your budget. You will be enjoying benefits such as HR management and insurance for your employees, depending on the agency you choose.
8. How can Connect HR help you with your WPS payroll in the UAE?
Connect HR is the main provider of HR and payroll software in the United Arab Emirates. We focus on providing our clients with top-notch services related to human resources. Therefore, taking responsibilities from their shoulders and allowing managers to concentrate on company expansion.
We will help you automatize your payroll. In this way, you will not see it as a difficulty anymore. With our WPS payroll in the UAE, you can pay all your wages accurately at the same time. Enhancing your staff members’ satisfaction and ensuring your business’ security. Our agents will make sure that you understand every step of the process, so you can manage your payroll with just a few clicks.
Our main objective is to improve your workforce’s efficiency. Thus, to turn this into a reality, we offer you services such as attendance management, employee benefits, and more. Leave your HR management processes to us and do not stress about your compliance with the United Arab Emirates laws.
Would you like to manage your wage protection system with Connect HR? Do not think twice and contact our company. Feel free to give us a call at +971 43 316 688 or get in touch with us via email at the following address [email protected]. Our agents will be waiting to answer any of your queries!
On the other hand, if you are looking for the perfect job opportunity, you can check out thetalentpoint.com. There, you can submit your resume and find the right role according to your experience and qualifications. Additionally, you can also apply through [email protected]. We will make sure to find a position that will take your career to the next level.