The Wages Protection Scheme (WPS) system is an important compliance tool implemented by the Ministry of Human Resources & Emiratisation (MOHRE) by Ministerial Decree no. 788 of 2009 which protects employees’ wages from illegal deductions and prevent delays in salary payments. The WPS is an electronic salary transfer system which enables companies to pay salaries via banks and exchange houses authorised to process salaries through the Central Bank of the UAE.
It is mandatory for all onshore companies, and is also encouraged for Free Zone companies, to comply with WPS as a proactive means to reduce labour disputes and increase job security, WPS also provides a streamlined process for salary payments.
WPS registration can be applied for through any UAE bank account. For new businesses established in the UAE it is important to register for WPS during the opening of the Company’s Labour and Immigration accounts (L&I). Once the Company is registered with them for the WPS account a Company can begin to employ and sponsor staff and pay all salaries via WPS. If your employees are new to the UAE and have yet to open a bank account, UAE exchange houses can facilitate these salary transfers through designated salary distribution points.
It should be noted that salary payments should be made on time and that any salary transfers made by cheque or in cash do not comply with the WPS guidelines and non-compliance will result in a penalty or fine issued by the MOHRE.
Monthly salaries must be paid before the 10th day of the following month. In the case of excessive delays or non-payment of an employee’s salary, the Company’s MOHRE account status will be changed to “Stopped”. This means that all Company MOHRE transactions, including new visa applications, will be stopped in the MOHRE system until the WPS non-compliance issues are resolved.
Companies will automatically incur the following fines and penalty amounts issued by the MOHRE system, which cannot be appealed or removed; late payment of employee salaries AED 1,000 and failure to register for WPS in accordance with WPS regulations begin at AED 10,000.
In the event of salary deductions, (e.g. a fine on a company vehicle or a salary advance) deductions should not exceed more than 10% of the monthly salary. For amounts greater than 10%, deductions are to be deducted over consecutive months until the debt is cleared.
The salary transfer file provided by the MOHRE has the ability to account for any annual leave taken without pay if granted by the company.
CBD actively monitor all our clients MOHRE accounts to identify and manage any issues which may arise to ensure all your day to day operations and visa applications are smooth and efficient, which includes providing the employee information required to process your salaries effectively, and provide assistance in case of any query, or on the rare occasion a MOHRE Stop occurs.
If you have any questions on the above, please contact us for more information.