The wage protection system (WPS) is a crucial aspect of UAE labour law. It ensures employers pay employees’ wages on time and exposes defaulters. Undoubtedly, HR and payroll managers need to familiarize themselves with WPS to improve employee care, avoid defaults, and run the company better. This text discusses the wage protection system (WPS), its origin, benefits, and how to get started in the UAE. 

What is WPS in UAE: Origin and Definition

The Wage Protection Program is an initiative by the Ministry of Human Resources and Emiratisation (MOHRE) and the Central Bank of UAE. It launched in July 2009 with Ministerial Decree No 788. After its launch in 2009, the initiative underwent a couple of modifications. The first was in 2016, according to Ministerial Decree 739, and the second was in 2019. 

WPS was launched to protect employees’ wages in the UAE and Jebel Ali Free Zone (JAFZA). It ensures that they are paid promptly and what they are owed. The system does this by monitoring payments through its database. UAE employers upload employee wage files to the database, and MoHRE and Central Bank validate the information. This way, they keep an eye on compliance rates and violations. 

Furthermore, the system helps safeguard employees’ interests. It prevents employers from paying inappropriate salaries, delaying payday, and using funds illegally. UAE WPS ensures that employers uphold their part of the contract by ensuring employees are paid as they should. 

Benefits of Wage Protection System in UAE 

WPS minimizes labour and industrial disputes, ensuring that companies pay the agreed-upon wages on time. Moreover, the system ensures that employee rights are respected and promotes transparency. All these factors mitigate disputes and enable favourable employee-employer relationships.

WPS also automates the payroll process. Employees aren’t the only party benefiting from the system; employers also benefit from the automated and streamlined payroll process, which saves time and money. 

Moreover, when employees claim they are underpaid, the WPS database serves as a record. Hence, the WPS database can help dissolve conflicts between employees and employers. 

How to Register WPS in UAE 

You need to register in the UAE as an employer since it benefits employees and employers. However, before you register for UAE WPS, there are some requirements you need to take note of: 

• The employer must have a corporate bank account registered in the UAE
• You have to pay employees following the deadline stated in Ministerial Decree No 788
• An employer must pay 70% of all staff (except for some unpaid leave) and at least 75% of wages or salaries.
• You must forge a contract with the WPS agent responsible for paying your employees’ wages.  
• An employer must agree to pay fees, charges or any other expense incurred in WPS.

To own an account, visit the MOHRE site to register and receive your login ID for the WPS portal. 

Understanding How the WPS Works

Once you have met the requirements and registered your account, WPS is a walk in the park. Here, we cover the steps involved so you know what to expect when you log on to the WPS portal:

1. Preparing and Submitting of SIF

SIF, or Salary Information File, is a document that contains information on employees and employers. It typically includes CTC, perks, Basic Pay, and deductions. A SIF needs to be submitted to WPS every time your company pays salaries or wages. 

The document goes through an agent. The agent checks the SIF for errors and makes necessary edits before submitting. Also, SIF is a compulsory tag-along document for salaries, so you don’t need to fill one out for commissions, gratuities, and bonuses. 

2. WPS Salary Check by MoHRE and Central Bank of UAE

After submitting the SIF to WPS, MoHRE and the Central Bank of UAE conduct a salary check. This check ensures the SIF details are correct and adhere to UAE guidelines. For instance, when you submit a SIF, MoHRE checks if you commit to paying your employees at least 75% of their salaries. 

3. Issuance of Payment Order 

MoHRE and the Central Bank of UAE will issue a payment order if you get a positive result after the WPS check. However, if there are errors in the SIF, the employer will receive an email requesting an update. Errors can be damaging, so it pays to have an agent thoroughly run over the SIF to avoid this occurrence. 

4. Transfer the Money to the Employee Account 

Once the payment order is received from the WPS, your agent will transfer the money to your employee accounts. For many companies, the WPS agents are banks. They issue unique WPS payroll cards, which work much like any debit card. For efficiency, it pays when the employees have a bank account and debit card to access their salary. 

How Do You Prepare SIFs for WPS in the UAE? 

An error-free SIF is necessary for a penalty-free WPS in the UAE. Here is how to prepare SIFs in the UAE:  

The WPS SIF Format 

Every SIF file is in the Excel format. The first step to every SIF (salary information file) is a blank Excel document. After opening an Excel file, the next step is to enter the Employee Details Record (EDR). This record includes the essential information you should add for every employee. Besides the EDR, there are other parts of WPS SIF. Here are the information for each column on the SIF for your employees: 

• Employee Details Record 
• Employee 14-digit labor card number
• Bank Routing Code (provided by your payroll processor, which might be your bank sometimes)
• Employee Bank Account Number 
• Start date of salary 
• End date of salary 
• Number of days for which salary is paid 
• Fixed or Basic Salary for Employee
• Variable Salaries 
• Number of leaves every year 

The number of rows on a SIF document depends on the number of employees you have. Also, you might have to include an Employee Variable Pay Details (EVP) for an employee. This part is crucial if the employee has variable pay, i.e., bonuses and overtime. This information can be in the penultimate column (Variable salaries). 

The SIF, or Salary Information File, also includes information on the employer (company). This aspect is commonly known as the Salary Control Record (SCR). Below are the SCR details that have to go into your SIF before submission: 

• Salary Control Record 
• 13-digit Agent ID (provided to you by your payroll processor)
• Bank routing code (provided to you by your payroll processor)
• File creation date
• Time of file creation
• Payroll month and year
• Number of records in the file (EDR only)
• Total amount of salary paid (both fixed and variable)
• Payment currency (in AED)
• Optional field

Above is all the information you have to include in the SIF. Now, how do you decide what to name the SIF? Once you have filled out the SIF with the necessary information, the file’s title is the next step. Luckily, it is one of the easiest too. The name of your SIF is the combination of your MoHRE employment ID, date, and time. Also, you have to save it as an “.SIF” file type.

The first 13 digits of your MoHRE ID number you enter must be consistent with the one on your SCR. After the number, the date follows. The date has to be in the YYMMDD format. For example, if the SIF was created on April 9, 2024, the date will be 240409. 

Finally, the last six digits represent the time, which includes the hour, minute, and second. If the SIF was made at 10:30:23, it is written as 103023. All these numbers combine to make the 25-digit file name that SIF follows. Aside from what we have mentioned, we recommend getting a WPS agent to streamline this process. 

Fines and Penalty for Non-compliance with UAE WPS 

When a company doesn’t conform to UAE WPS requirements, fines and penalties are attached. Here is a run-through of the various non-compliance situations and their different penalties: 

Payment Delays 

The fines for payment delays depend on the company’s size. For companies with 100 or more employees, here is a list of things that will happen if they refuse to pay their employees ten days past the due date: 

• The company’s work permit is withdrawn from the 16th day to the day of the day.
• The employer can’t issue any new UAE company.
• MoHRE can take legal action against all other companies under the defaulting employer’s control.
• The company is reduced to the third category
• Workers will be allowed to live. 

If the delay becomes more than 30 days, MoHRE MOHRE will refer your company to the relevant judicial authorities. If it extends to 60 days, the company will pay a fine of AED 5,000 per affected worker, up to a maximum of AED 50,000 for multiple workers. 

When companies with less than 100 employees delay payment for up to 60 days, here are the penalties that apply:

• Work permits ban, 
• Fines, and
• Referral to court. 

If such a delay (up to 60 days) occurs twice a year, MOHRE will treat the companies as those with more than 100 employees.

What Are the Other Forms of Non-compliance 

Some organizations deliberately provide incorrect information on their college to evade salaries. When this act is caught, the company has to pay a fine of AED5,000. The fine is imposed on each employee. The more employees you plan to cheat, the more the fine. The maximum fine is AED 50,000.

How to Get the Best Value from Using WPS, UAE 

Besides the stated requirements, there are more ways you can get the best value from WPS as a UAE employer. One of them is choosing the right agent. Agents assist in reviewing your SIF for any mistakes and ensure you always meet deadlines. An agent is an affordable and reliable way to get around paying employees. Raising revenue is already hard enough; payroll should be easy. Hiring a trustworthy agent is the best value for using WPS. They ensure the process runs like a well-oiled machine, and you don’t have to bother about getting penalized. 

Bayzat provides an All-in-one software solution that seamlessly handles all your payroll needs. The software allows you to store talent data and structure payment schedules to avoid defaults. Paying on time is always important, as it keeps your workforce happy and motivated. Reach out now and explore the possibilities Bayzat offers.

Frequently Asked Questions (FAQs) 

What is the Minimum Number of Employees for WPS? 

Companies with ten or more employees must adhere to the WPS guidelines in UAE. 

Is WPS Compulsory? 

Yes, WPS is compulsory for all private sector companies in the UAE and the Jebel Ali Free Zone (JAFZA). 

How to Check WPS?

Here is his to check your WPS status: 

• Visit the official website of the MOHRE (available in Arabic and English). 
• Go to the “Services” tab on the homepage and tap “New Enquiry Services” from the drop-down menu.
• A new page will load where you will choose the MOHRE service you want to explore. 
• Select “Company information” 
• Enter the company’s number. 
• The site will return information about the company, including its WPS status.