The Wage Protection System (WPS) in the UAE is an electronic method of transferring salaries and other amounts to employees. The WPS is introduced to promote a positive work environment and create good relationships between employees and employers in the UAE.
The WPS was first introduced in 2009 and was further modified in 2019 with the support of the Ministry of Human Resources and Emiratisation (Mohre) and the Central Bank of the UAE. In this article, we cover the key aspects of WPS along with its purposes, benefits, and registration method.
If you want to mitigate the risk of penalties, Employers should choose the right WPS agent such as Now Consultant in the UAE.
What Is The WPS In The UAE?
According to Ministerial Decree No. 788, established in 2009, the Ministry of Human Resources and Emiratization (MoHRE) along with the Central Bank of the UAE have taken the initiative of WPS in the UAE. Additional provisions were added in 2016 and 2019. The main purpose of the WPS system is to make sure that the employees in the UAE get their salaries on time without any delays.
This WPS system gives authority to MOHRE and the central bank to verify and validate these payments by accessing employees’ salary information. The system addresses the issues of salary delays, underpayment, and the use of illegal and unfair funds. All in all this WPS helps in creating a healthier and more transparent employee-employer relationship in the UAE.
Purpose of WPS in UAE
The following are the purposes of the WPS in the UAE:
1) The system needs to be implemented in countries with large workforce to promote the positive image of the country.
2) The system ensures transparency and efficiency in monitoring wage punishment.
3) This WPS helps reduce labor disputes.
4) The WPS enhances efficiency in monitoring wage punishment and addresses delayed salary payments.
5)WPS automates the payroll process by saving time and providing legal proof in case of disputes.
Benefits of WPS In The UAE
Here are the key benefits of the WPS in the UAE.
1) The WPS guarantees employees’ rights and protects them before they are violated.
2) The WPS resolves the disputes between employees and employer relationships to promote a healthy work environment in the UAE.
3) WPS streamlines payroll processing, mitigating legal risks and avoiding legal consequences.
4) The WPS works as a legal proof that provides assurance to employers.
How Do You Register For WPS In UAE?
The following is the step-by-step guide to registering for the WPS in the UAE:
Step 1: Open a Corporate Bank Account
Employers working in the UAE must open a corporate bank account to facilitate wage payments.
Step 2: Setup a Contract
Employers need to set up a contract with a WPS agent responsible for disbursing employee wages. Any bank or financial institution can become your WPS agent.
Step 3: Follow Payment Deadlines
According to the ministerial Decree NO.788.The wages must be paid to employees before the deadline is over.
Step 4: Adhere to the Payment Percentage
Employers must pay at least 70% of all staff and make sure that a total of 75% of wages are paid through WPS.
Step 5: Pay Fees
Employers need to pay a fee for WPS.
By following the steps listed above employers can easily register for WPS in the UAE in compliance with labor law regulations.
Fines and Penalties Under WPS System In UAE:
The following are the fines and penalties incurred by employers if they do not meet WPS requirements in the UAE:
Non-Compliance:
When employers delay the salaries violating compliance with WPS, the following penalties may apply to them:
- The company lost eligibility for a work permit after 15 days of the delay.
- The employer is restricted from establishing new companies.
- MoHRE can take action against employers who delay the salaries of employees.
- The company involved in delayed practice is downgraded.
- Workers are allowed to change their employer.
- It also liquidates its employees’ bank guarantee.
These penalties force for timely payment of wages of employees by the employers in the UAE.
Penalty for MIS information:
A fine of AED 5000 will be imposed on employers as per affected workers in one’s organization due to misinformation about the salaries of employees.
The maximum fine in this category is AED 5000 for multiple affected employees.
These penalties ensure transparency in wage payments and accountability in employment practices.
WPS Salary Processing Time In Dubai:
The salaries are to be paid by the 15 of the month following the due date:
Due Date:
The date is fixed in the contract for paying salaries to the employees, and both parties must agree upon it. If the salaries of the employees are not paid by 15, the company will be restricted on WPS until the 17th of the month. Employers will have a 30-day grace period for new employees’ registration.
How Can We Help You:
In order to comply with WPS in the UAE, employers require the right agent. The choice of WPS agent matters as it highly impacts companies ability to avoid penalties and meet deadlines.
Now Consultant, a financial firm, helps you manage WPS in such a way that your company can get from WPS and mitigate the risk of fines and penalties in the UAE.
