Wages Protection System in United Arab Emirates

David Kambo

image

    Get Free Consultation




    The UAE Wages Protection System (UAEWPS) is an electronic salary transfer system that allows institutions and organizations in the private sector to pay their employees through banks, exchange bureaus, and financial institutions approved by the UAE Central Bank to provide the service.

    UAEWPS was introduced in 2009 by the UAE Central Bank to meet the desired objectives of the Ministry of Labour. The purpose of WPS is to ensure wages are paid on time and in full. The initial objective was to protect the rights and interests of blue-collar workers but has transformed to require all salaries paid in the private sector under the jurisdiction of Ministry of Human Resources and Emiratization (MOHRE) and Economic Free zones be remitted via WPS. Currently Jebel Ali Free Zone (JAFZA) is the only free zone that has fully adopted the use of WPS. All government entities and public sector institutions are exempted from WPS compliance.

    Employers prepare and send employee salary and account details to WPS via a SIF file format.

    The parties involved in the WPS cycle are outlined as follows:

    • Employers – Any company registered in UAE Mainland and JAFZA.
    • Employees – Any individual working in the private sector and has labour card issued by the Ministry of Labour
    • Banks – The financial institution where the employer holds an account with, and which is used to transfer wages to the appointed agent.
    • Agents – Any bank, bureau de change or financial institution approved by UAE Central Bank to offer wages transfer to employees via WPS.

    The model adopted by the UAE Central bank is where information flows from the employer via WPS to one or more of the contracted agents for payment of the wages to the employees. The funds from the employer are secured by CBUAE prior to dispatching of information to the agents.

    The WPS cycle is explained below in the following infographic;

    Employer – Employer Bank – CBUAE – Agent Bank – Agent – Employee Bank/Employee

    HLB HAMT has all the mechanisms and resources to provide WPS payroll services to our clients. We have put in place the technology and human expertise that guarantees a smooth and error-free WPS cycle for our clients and payroll partners.

    FAQs

    1. How can one register with WPS?
      Registration can be done by contacting the bank which the employer holds a corporate account or through an authorized exchange house.
    2. Is WPS registration mandatory?
      Yes, salary transfer via WPS is mandatory for every private company under MOHRE Jurisdiction and companies registered within JAFZA and should cover at least 70% of the employee head count.
    3. What are the advantages of WPS?
      • Ensures that the agreed-upon wages are paid on time
      • Provides advanced solutions that help employers safeguard their own interests and reduce the hassles associated with paying the employees.
      • Improves job security, at the same time ensuring transparency
      • Ensures that the UAE Ministry of Labour is updated on wages data in the private sector
      • Helps in taking measures to reduce labor disputes regarding wages.
    4. Can one process salary payments via WPS in a foreign currency?
      The only authorized currency of remittance is the UAE Dirham. WPS payments must be made to a bank account registered in the UAE.
    5. Which payments to employees are processed via WPS?
      All salary must be processed via WPS. However, if employees receive any other form of payments from the employer other than salary payments, then these too can be processed via WPS.
    6. Can a group of companies make all the salary payments for all staff via one SIF file?
      No, every company under the group should make their salary payments separately. WPS does not permit the mixing of payments from different companies in one SIF file.
    7. How many SIF files can be sent by a company in one month?
      There is no limit to the number of files that a company can send out in one month.
    8. What is the minimum salary that can be processed via WPS?
      The salary and other allowances payable to the employee as agreed in the contract should be processed via WPS.
    9. What is the maximum number of employees whose salary can be processed with one file?
      There is no limit to the number of employees whose salary is processed in one SIF file.
    10. Should End of Service Benefits be processed via WPS?
      It is not mandatory to process EOSB and gratuity payments via WPS.
    11. What are fines for evading WPS?
      These fines apply for actions involving fraudulent use of the WPS:

      • Entry of incorrect data in the WPS for the purposes of evasion or circumvention – AED 5,000 for each worker and a maximum limit of AED 50,000 in case of multiple workers
      • Failure to pay on due dates through the WPS – AED1,000 per employee
      • Forcing employees to sign fake pay slips showing that they received their salaries – AED 5,000 per employee.

    SIF Files composition.

    1. Employee details are found on the EDR rows

    Column A – Employee Details Record
    Column B – Employee 14-digit labour card number.
    Column C – Bank routing code.
    Column D – Employee bank account number.
    Column E – Start date of salary
    Column F – End date of salary
    Column G – Number of days salary paid
    Column H – Fixed or Basic Salary of Employee.
    Column I – Variable Salary
    Column J – No of Leave

    2. The last row has the employer details as follows

    Column A – SCR column (Salary control record)
    Column B – 13-digit Agent ID.
    Column C – 9-digit bank Routing Code.
    Column D – File creation date
    Column E – Time of file creation
    Column F – Payroll Month and year
    Column G – No of records in the file.
    Column H – Total amount of salary paid.
    Column I – Payment currency which is in AED.
    Column J – Optional field.

    A sample SIF file looks as below

    Payroll Process

    The process of payroll in UAE is a little complicated and time-consuming; hence it is always recommended to outsource your company’s payroll function. Outsourcing payroll in UAE will ensure the assistance of a team of trained payroll professionals and it frees up the time of the organization, helping them focus on other projects that add value to their business.

    One should be extra vigilant while selecting their payroll provider, as payroll data is highly sensitive, and one should opt for a provider that can ensure high levels of data security.

    As a leading payroll outsourcing company, HLB HAMT can help solve your payroll complexities through customized strategies. We take care of our clients’ entire payroll cycle that includes preparation of payroll reports, processing salary payment with WPS compliance, accrual management including Gratuity, pension funds, an online portal for accessing payslips, and many more. Our leadership team spends the necessary hours in every project, ensuring our clients get refined consulting services to take your business forward. HLB HAMT provides payroll in UAE, Bahrain, Qatar, Saudi Arabia, Kuwait, and Oman.

    To know more about our payroll process, click here

    Disclaimer:
    Whilst every effort has been made to ensure the accuracy of this information, HLB HAMT will not accept any liability arising out of errors or omissions. Please note that this blog is not all-inclusive. Our guidance is designed only to give general information on the issues/topics covered. It is subjected to change and not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.

    Did you find the blog informative?         

     

    Varun R Chandra
    Varun R Chandra
    07:38 25 Apr 21
    HLB Hamt is highly recommended! They have the quality of services that would satisfy your needs. I'm glad I found them.
    Giuseppe Assi
    Giuseppe Assi
    06:20 31 Jan 21
    I HAD A GOOD EXPERIENCE WITH HLB HAMT DUBAI. THEY HAVE A VERY PROFESSIONAL TEAM, GOOD QUALITY OF SERVICES, GOOD VALUE... FOR PRICE.I RECOMMEND THIS COMPANY.read more
    Mohamed Sheriff
    Mohamed Sheriff
    16:16 28 Jun 20
    Experience with HLB Hamt in audit experience is great pleasure. They deploy well qualified accounts team for audits.... And the amount of checking they perform give the management of the company confidence that internal controls are well in place. We are glad to see they have high standard of audit practices.read more
    218141 JOSEPH THOMAS
    218141 JOSEPH THOMAS
    16:20 23 Jun 20
    Professionally managed firm with commitment to the engagements taken. My company and its group are assigning our... requirements for last 12 years to HLB and we don’t have any negative remarks on any assignments.read more
    PMI
    PMI
    07:14 23 Jun 20
    In my opinion, HLB Hamt is one of the best professional firms in UAE after big4. Excellent client service, professional... and competent staff and timely delivery are their strength. Over the years they have developed the infrastructure and skill set to handle multiple verticals ie, audit, tax services, consulting, IT support etc.Wishing HLB Hamt team all the very best.read more
    RAVI CHOKSI
    RAVI CHOKSI
    08:28 21 Jun 20
    Thank you Team HLB hamt...Your internal auditing team put the good amount of time and inputs in helping the... organisation making considerable improvements throughout the organisational working structure and helps in building the better business.Thanks.read more
    Maharajan Subramaniam
    Maharajan Subramaniam
    18:17 06 Jun 20
    High-Performing IT Teams, I'm impressed with the knowledge level of their deputed staff, audit procedures, and... checklist adopted. Mr. Vimal especially understand the requirement and provide solution not only technical feasibility and also considered budgeting. We’re confident in their abilities.read more
    Mohammed L
    Mohammed L
    08:07 05 Jun 20
    We have been working closely with them on payroll services for quite sometime.They provide very professional... services,experts in domain and excellent support. Would recommend them.Cheers.read more
    ROY ROSHAN VIVIAN
    ROY ROSHAN VIVIAN
    06:32 04 Jun 20
    Very professional team. Vimal has always given us good solution advice for various Software and IT Infra projects. We... are very Extremely satisfied working with him and his team. Wishing them success.read more
    Basil Daniells
    Basil Daniells
    05:55 03 Jun 20
    I have worked with HLB as a partner of Sage for about 2 years, they were dedicated to the success of the partnership... and kept aligned with the business plan that was agreed between our two companies. They are always ready to go the extra mile for a customer and don’t shy away from challenging circumstances. Keep up the good work and wish you all the success in the future.read more
    Amar Kashyap
    Amar Kashyap
    19:28 02 Jun 20
    Team of well qualified and organised professionals. Their reports are not based on numbers first they will understand... their client and their business. They are highly recommended and trust worthy.read more
    Radz de Jesus
    Radz de Jesus
    16:03 02 Jun 20
    We're glad to have found HLB Hamt to conduct the IT audit and risk assessment for our organization. We have learned a... lot from their team during that first project. And since then, we've continued to be in touch with them. Mr. Vimal especially is very good at presenting technical concepts in simple yet interesting ways that non-IT and business people alike would easily catch. We are very happy with the professionalism and quality of service they provide. They leave their clients nothing short of satisfied. Highly recommended.read more
    Next Reviews

    Get in touch

    Whatever your question our team will point you in the right direction

    Start the conversation
    Get in touch
    x
    x

    Share to:

    Copy link:

    Copied to clipboard Copy