How the UAE Wage Protection System (WPS) protects your business and employees

Managing payroll is essential and too often feels overwhelming due to its complexity and dynamic nature. Ensuring everyone gets paid on time, every time, while maintaining compliance with local regulations is stressful. Imagine preparing to pay your employees just before the cut-off date, only to have your WPS file rejected. Or facing delays during Ramadan with reduced working hours complicating the process or during the busy Eid holidays. With the summer break around the corner, many people leave Dubai to escape the heat, adding another layer of complexity to managing payroll, leaves and coverage at work. These are real pain points that many businesses face. What if there was a way to streamline payroll, eliminate errors, and ensure compliance effortlessly—all through one platform? It definitely gets more interesting, so keep reading.

What is the Wage Protection System (WPS)?

The Wage Protection System (WPS) is an electronic salary transfer system designed to ensure that employees receive their salaries through approved financial institutions. Implemented by the Ministry of Human Resources and Emiratisation (MoHRE), WPS aims to promote transparency and accountability in salary payments, protecting employees' salaries and ensuring timely payments.

How to Know if You Need to Be WPS Compliant?

All employers registered with MoHRE, JAFZA or DMCC have to pay their employees through WPS. To be WPS compliant, more than 80% of your employees have to receive their salaries through the WPS.

Certain Categories of Employees and Employers are Exempt from WPS Compliance

Exempt Employees:

• Employees who have filed a lawsuit related to wages

• Absconding employees

• New employees within the first 30 days from the due date of the wage

• Employees on unpaid leave, with supporting documents submitted to MoHRE

Exempt Employers:

• UAE nationals owning fishing boats

• UAE nationals owning public taxis

• Banks

• Houses of worship

Why is WPS Put in Place?

WPS is implemented to tackle critical issues in the UAE’s labor market by providing:

• Transparency: Ensuring that all salary payments are documented and traceable.

• Employee Protection: Safeguarding employees’ rights by guaranteeing timely salary payments.

• Employer Accountability: Holding employers accountable for correct and timely salary payments.

• Dispute Prevention: Minimizing disputes related to salary payments through a clear and regulated payment system.

When Should Employers Pay Salaries?

In the UAE, employers need to pay their employees' salaries starting from the first day of the month after the pay period ends. If the contract doesn't specify a pay period, employees must be paid at least once a month. Employers are in trouble if they don't pay within 15 days after the due date, unless a shorter period is agreed upon in the contract.

How Should Salaries Be Paid?

Salaries need to be transferred to employees' bank accounts or accounts in financial institutions approved by the Central Bank of the UAE. This system, called WPS, makes sure payments are tracked and clear, reducing disputes and mistakes. Employers can pay in Emirati Dirham (AED) or any other currency agreed upon in the employment contract.

Actions Needed for Compliance

To ensure compliance with WPS regulations, employers must:

• Register to the WPS through MoHRE.

• Ensure timely and accurate salary payments through authorized financial institutions.

• Keep track of employee attendance and leave to avoid discrepancies.

• Submit necessary documentation for employees on unpaid leave.

• Notify MoHRE when an employee takes unpaid leave, mentioning the duration and providing any required documentation.

Penalties for Non-Compliance

Non-compliance with WPS regulations can result in fines starting from AED 1,000 per employee up to AED 20,000 for multiple employees. It can even lead to work permit bans, fines, and referral to court. Nothing to take lightly!

Streamlining Payroll and Compliance with Cercli

Managing payroll and ensuring compliance with WPS is challenging for any business. This is where Cercli, the modern payroll and employee data platform comes into play. Our platform is a game-changer for your business by providing a single, secure source of truth for all team members’ data, facilitating compliant hiring and payments for WPS employees, employers of records and contractors.

Benefits of Cercli:

• Centralized Data Management: All employee data is stored and managed in one place. This eliminates the need for multiple systems, reducing the risk of human errors and ensuring data consistency.

• Compliant Hiring and Payments: The system ensures that all hiring and payment processes comply with local regulations, avoiding potential fines and legal issues.

• Single Monthly Payment: Cercli allows for the consolidation of all salaries, expense claims and contractor service fees into a single monthly payment, simplifying financial management and reporting.

• Error Reduction: Automating payroll processes through Cercli minimizes the risk of manual data entry errors and streamlines the workflow, ensuring accuracy and efficiency.

• Regulatory Compliance: By keeping up-to-date with local laws and regulations, Cercli helps businesses stay 100% compliant with reporting, tax filings, and other statutory requirements.

Conclusion

Follow our page to stay updated on best practices that can enhance your company’s reputation and operational efficiency in the competitive UAE market. Leveraging Cercli significantly streamlines this process, ensuring that your payroll operations are accurate, compliant and efficient. By adopting our all-round solutions, you can focus on growing your business while confidently navigating the complexities of payroll compliance.

Contact us today to learn more about how we can help you take control of your payroll and focus on what you do best—running your business.

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