Points to consider while processing payroll in the UAE
Posted On April 9, 2019
Payroll is one of the most important HR functions. Understanding the basics before you move ahead is a must. Read on to explore the basic considerations while setting up or running a payroll system.
Processing payroll is essential to any business’s success and employee satisfaction. Payroll regulations in the UAE are amended often and setting up your payroll system can be quite labor-intensive. Once your business is set up and ready to operate, it is essential to make sure that your payroll processes are in place. Depending on the type of business entity and the nature of the business, legal regulations can vary. However, the basics of payroll that every HR professional must know remain the same.
The first consideration to make is regarding the employees in your company. Ensure that all employees have signed the employment contract as required by the UAE Labor Law. Based on the type of your organization and the nature of the business, you can have your employees on a limited, unlimited or part-time contract. “Whether you choose a standalone payroll system or one that integrates into your existing processes, it is always beneficial to have an automated payroll structure right from the beginning. ”
All onshore employees in the UAE must be paid through the electronic salary transfer system, called WPS or Wage Protection System. This system allows companies to pay their employees via banks and other financial institutions. The system was developed by the Central Bank of UAE and allows the Ministry of Labor to create a database that records wage payments in the private sector to guarantee the timely and full payment of the wages.
As per the UAE Labor Law, employees are entitled to vacation, sick, Hajj, emergency and maternity leave. Calculating the leave balances for employees is an essential part of payroll processing. Assuming a company is calculating ‘calendar’ leave, the employees are entitled to two annual leave days for each month of their service that is more than six months and less than a year.
Employees whose service exceeds one year, are entitled to 30 days of paid annual leave for each year of service.
While setting up your payroll processes, it is essential to consider the medium you would want to use. Many small businesses start off by processing payroll manually through Excel sheets. However, this can get quite laborious and error-ridden as the company grows. Which is why it is recommended for companies to switch to an automated payroll system such as Bayzat Benefits to make their life easier. There are a plethora of payroll processing systems to choose from in the market today. Whether you choose a standalone payroll system or one that integrates into your existing processes, it is always beneficial to have an automated payroll structure right from the beginning.
Payroll is closely tied to employee satisfaction in the company. Irrespective of the size of your company, your employees deserve to be paid on time. Often overlooked, processing salaries on time is a quick way to improve employee retention.
Finally, make sure you protect your data. One of the fastest growing concerns in the world today is security and protection of data. Using an automated system ensures the security of something as sensitive as your employees’ salary information. Whether you decide to do payroll in-house or not, understanding the basic considerations is crucial towards establishing a smooth and flawless payroll processing system.