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If you handle payroll or manage employees in the UAE, you’re likely familiar with the Wage Protection System (WPS), a crucial component of UAE labor law designed by Ministry of Human Resources and Emiratisation (MoHRE) and the Central Bank of the UAE (CBUAE) to ensure employees receive timely and accurate wage payments.
For HR professionals, finance managers, and business owners operating in mainland UAE, DMCC, and Jafza zones, navigating WPS can be a daily challenge, especially when it comes to ensuring payroll processing is in line with evolving regulations.
In this article, we present a detailed look at WPS requirements and show you how RemotePass, a WPS-compliant payroll provider, simplifies payroll processing and ensures timely payments across UAE regulatory zones.
Understanding the WPS Requirements by UAE Zone
Initially, the WPS was only applied to mainland companies in Dubai, exempting free zones from the system. However, this has changed over the years. Free zones such as Dubai Multi Commodities Centre (MDCC) and Jebel Ali Free Zone Authority (JAFZA) have adopted WPS to protect employees from exploitation.
Below, we examine how each zone implements WPS.
Mainland Companies
The Labor Resolution Number 43 of 2022 mandates all employers in the mainland zone to comply with these regulations regarding WPS:
- New hires must be integrated into the WPS system within 30 days from the date of employment.
- WPS salary is due a day after the payment date stipulated in the employment contract.
- Payments become late 15 days after the due date.
- 90% of employees must be paid within the month, and any unpaid leave must be reported to MoHRE.
- Employers must pay 80% of salaries within the month and document deductions.
- WPS salary must be paid once a month, whether or not the employer and employee agree on a specific payday.
- Some categories of employees are excluded from the WPS, including:
- Employees who filed a wage-related lawsuit.
- Those who have been reported to abandon their jobs.
- New employees within 30 days of their due wage period.
- Employees on unpaid leave.
- Foreign employees working for foreign companies or subsidiaries and receiving their wages from abroad.
Non-compliance begins when WPS salary remains unpaid 15 days after the due date. Penalties include work permit bans, legal action, and fines of up to AED 5,000 per affected employee, with a maximum of AED 50,000 for multiple employees.
Dubai Multi Commodities Centre (DMCC) Free Zone
DMCC adopted WPS on February 15, 2023, and in January 2024, this zone began implementing portal sanctions and imposing fines for non-compliance. Besides the Mainland regulations above, here are specifications unique to this zone:
- All companies registered in DMCC must register their employees with an active or expired employment visa or Permanent Identity Card (PIC) under the WPS.
- Employers must register new employees for salary transfer immediately after issuing the Company Employment Card (CEC) and approving the Personal Identity Card (PIC) application.
- Salary disbursements must be made in the local currency UAE Dirham (AED).
- Shareholders of DMCC companies are excluded from WPS. Their salaries don’t have to be paid through the system. However, shareholders holding a CEC or PIC under the company can request that DMCC manually include them in the WPS.
- Employers must not deduct charges from banks or exchange houses from employees’ wages.
- All salary transfers must be made through DMCC’s list of authorized banks and exchange houses.
Jebel Ali Free Zone (Jafza)
Jafza introduced the WPS in 2012, following the same regulations as the rest of the UAE. However, regardless of the due date stipulated in the employment contract, the salary must be paid by the 19th of the following month. Otherwise, the employer will be fined and no longer apply for new work permits with Jafza.
Jafza may not penalize a defaulting company that submits concrete reasons to justify its violation. For example, an employer hasn’t paid an employee or only pays in part due to unpaid leave. The employer can create a Service Request Number (SR Number) via the Dubai Trade Portal and submit justifying documents to prove the inaccurate payment was not due to negligence. After reviewing and examining the appeal, Jafza may not impose a fine depending on the evidence presented.
Initial Steps to Prepare for WPS-Compliant Payroll System Implementation
Before setting up your payroll for WPS, do these:
Evaluate Current Payroll Processes
Assess your payroll workflows to identify inefficiencies that need to be optimized to align with WPS requirements. This evaluation determines if new tools or updates are necessary to ensure accurate, timely payment, and reduce the risk of human errors leading to non-compliance.
Choose a WPS-Compliant Payroll Provider
An automated payroll system simplifies your payroll processes and reduces the risk of penalties when administering WPS. Before investing in one, verify that the payroll provider aligns with UAE regulations and prioritizes data security in mind.
RemotePass is a payroll provider proficient at handling WPS for UAE companies operating in Mainland, DMCC, and JAFZA zones. With compliance checks and secure bank integrations, our platform protects your company from potential compliance risks.
How to Set Up the Payroll System for WPS
Once you’ve prepared your payroll system, follow these steps to make it compliant with WPS:
Open a WPS-Compliant Bank Account
Before registering for WPS, you must open an account with a MoHRE-approved bank operating in the UAE. These banks can handle and report salary disbursements in compliant formats.
RemotePass seamlessly integrates with these approved banks, making it easier to process payroll for your UAE employees in a single AED payment. On top of this, our system generates WPS payroll files for each period, covering employee salary details and payment schedules.
Register with the Ministry of Human Resources and Emiratisation (MoHRE)
After opening an approved bank account, register for WPS on the MoHRE website and receive your login details. Besides having a bank account, here are other requirements for registration:
- A contract with a WPS agent—a bank, exchange house, fintech, or any financial institution registered with MoHRE—who’ll pay wages to your employee.
- Pay at least 70% of all staff (except those on certain types of unpaid leave) and at least 75% of their wages or salaries.
- Pay wages via the WPS by the deadlines stipulated in Ministerial Decree No. 788 as amended in Ministerial Decree No. 739 of 2016.
- Handle any bank fees, provider charges, expenses, and other related payment costs incurred in the WPS.
Configure Payroll Software for WPS Requirements
To align with WPS requirements, input relevant business data, such as employee name and salary information, ID, bank account details, salary deductions, and payment schedules, into your payroll software. Ensure the payroll tool integrates with your chosen WPS agent to automate payroll submissions and ensure compliant payments.
This is where RemotePass thrives. Our platform has pre-built WPS integration that makes configuration with your WPS agent’s platform faster. It also automatically applies salary deductions and schedules to ensure accurate records, precise payments every time.
Prepare Salary Information File (SIF)
A Salary Information File (SIF) is a standard form containing details about your employees, including basic pay, allowances, bonuses, and deductions, which are recorded in an Excel sheet. You must submit the SIF on the WPS portal whenever you pay salaries.
SIF documentation has two components: Employee Details Record (EDR), which is the basic information for employees, and Salary Control Record (SCR), which is your salary details.
Below is the EDR information to include in your SIF column by column:
- Employee Details Record
- Employee 14-digit labor card number.
- Bank routing code as provided by your payroll processor or bank.
- Employee bank account number.
- Salary start date
- Salary end date
- Number of days paid.
- Employee’s basic salary.
- Employee variable salary
- Number of leave annually
Below is the SCR information to include in your SIF:
- SCR
- 13-digit Agent ID.
- Bank routing code
- File creation date.
- Time of file creation.
- Payroll month and year.
- Number of EDRs in the file.
- Total amount of fixed and variable salary paid.
- Payment currency (AED).
Once you’ve entered the correct information, name your SIF a combination of your MOHRE employer ID and the date and time. Then, save it as a “.SIF” file type.
SIF Submission to the Bank or Exchange House
After preparing your SIF, submit it to the chosen bank or exchange house. They’ll check for errors and make necessary changes before submitting it to the WPS portal. MoHRE and CBUAE will review salaries to ensure all the details are correct and compliant.
If the salary check is successful, the authorities will send a payment order to your WPS agent. But if there are errors, you’ll receive an email requesting a correction and update.t
Process Payments through the WPS System
Once the WPS agent receives the payment order, they’ll transfer the money directly to your employees’ bank account through a secure electronic database. The employees can then access the funds through a WPS card, ATM card, or over-the-counter withdrawal.
Monitoring Compliance and Record-Keeping
WPS compliance isn’t a one-time activity but a continuous process. Here’s how to ensure your WPS payroll remains compliant always:
Track and Document Payment Records
Maintaining accurate payroll records is crucial for compliance. These records serve as proof that your company adheres to WPS regulations, helping to avoid potential penalties or legal complications during audits.
Audit and Reconciliation of Payroll Data
When reconciling WPS records, review employee details and financial data, including salaries paid, bank statements, and tax withholdings. This helps you detect and fix late or miscalculated payments before they become an issue.
Using tools like RemotePass is an excellent way to audit payroll and reconcile WPS records. Our platform consolidates all payroll data, including WPS payments and other benefits, into one system, making it easier to access and audit. You can also leverage our platform to generate real-time reports detailing payment dates, amounts, and specific law requirements.
Resolve Discrepancies and Penalties
If MoHRE reports discrepancies, correct them immediately, and document any changes made for future reference.
Scaling and Optimizing Your WPS-Compliant Payroll System
As your company grows, your HR needs increase. Adopt a strategic approach to handle payroll to avoid compromising on compliance. Here are helpful tips:
- Plan for Business Growth and Payroll Expansion: Invest in scalable HR infrastructure that supports business expansion. Ensure these systems efficiently manage employee data and multi-country payroll complexities, including multi-currency transactions and tax compliance in various geographies. This fosters accurate and compliant payroll processing, even as your workforce expands across borders.
- Leverage Technology to Automate and Optimize Payroll: Automating payroll calculations, deductions, and tax filings reduces manual efforts and errors. Take RemotePass. With features that integrate payroll management and automate payments and regulatory compliance, our all-in-one HR and payroll tool transforms how organizations handle WPS compliance into a seamless experience.
- Train Your HR and Payroll Teams: Provide regular training sessions on WPS compliance, system updates, and best practices for payroll management to ensure your team is well-equipped to handle payroll processing.
Implement WPS Compliance with RemotePass
Navigating WPS payments across various UAE zones can be complex. Without automation, it’s a process fraught with manual errors, missed deadlines, and heavy penalties. The peculiarities of each zone and its stringent regulations demand an efficient solution built for precision and regulatory compliance.
That’s where RemotePass comes in.
Our Local Payroll solution easily integrates with your payroll system to facilitate accurate and prompt WPS payments for UAE employees in Mainland, DMCC, and JAFZA zones. In addition to WPS, our system also automates DEWS and ESOB calculations. What’s more? It processes payroll for global contractors and EOR employees and handles pension contributions, all in a single AED payment.
Book a demo with RemotePass today to streamline WPS-compliant payroll and achieve long-term business growth.
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