This July, the UAE’s Ministry of Human Resources and Emiratisation (MoHRE) announced an update to the Wage Protection System (WPS), the country’s electronic wage transfer system.
Under the new resolution, the MoHRE will implement a series of administrative procedures against establishments that do not follow the provisions of the WPS, depending on the duration of the delay in paying workers’ salaries, the size of the establishment and the number of employees that have not been paid.
The resolution also stipulates that MoHRE will monitor establishments registered in its database, regardless of their size, through field visits and the electronic monitoring and inspection system to ensure it pays its employees on time. The Ministry will also issue reminders and notifications to non-compliant establishments, and in the case no action is taken following the receipt of notifications, the issuance of new work permits for such establishments will be suspended.
Nazar Musa, CEO at UAE-based company service provider PRO Partner Group, discusses the update to the Wages Protection System (WPS), including how it will affect companies and employees.
What is the WPS?
The Ministry of Human Resources and Emiratisation issued Ministerial Resolution No.43 of 2022, an update to the UAE’s Wage Protection System (WPS). It highlights the requirements and clarification on private sector businesses’ obligations to remain compliant with the WPS.
The Wage Protection System (WPS) was established in 2009 by the Ministry of Human Resources and Emiratisation (MoHRE) in conjunction with the Central Bank of UAE.
WPS is an electronic wage transfer system. It oversees the correct and timely payment of employees’ salaries in the UAE. It allows the MoHRE to keep a record of private sector salary payments and helps to identify if an employer is failing to pay their staff on time.
What does the update to the Wages Protection System entail? And why were the new guidelines put in place?
Under WPS, employees’ salaries will be transferred to their accounts in banks or financial institutions, which are authorised by the Central Bank of the UAE to provide the service by the 15th of each month. The employee’s labour file number is linked to the MoHRE system and further the employee’s bank account. The WPS will check the registered salary level on the employee’s work contract and make sure it matches the amount paid. Payment is made in the national currency of the UAE (Emirati Dirham) or in another currency, only if agreed between both parties in the employment contract.
The minimum amount of an employee’s salary which must be paid via the WPS is 80 per cent.
How will the changes affect businesses?
Paying employee wages on time is the responsibility of every employer. Private sector employers should ensure to pay their staff’s salaries through the Wages Protection System to avoid penalties and fines.
The WPS does offer employers some flexibility with a 30-day grace period to transfer new employees’ salaries via the WPS.
Private sector employers must pay every employee's salary through the WPS. However, the below categories are excluded from WPS compliance and are detailed below by The United Arab Emirates Government Portal:
- those who filed a lawsuit related to wages
- those who have been reported absent as per a ‘work abandonment’ report
- new employees during the first 30 days from the due date of the wage
- those who are on unpaid leave, provided that supporting documents are duly submitted to MoHRE
How will the changes affect employees?
The system is designed to ensure that companies meet their obligations to their staff and ensure employees’ rights are upheld. WPS exists to protect employees in the UA by ensuring they are paid their correct salary and on time.
Employees also have access to government support and can contact the Ministry of Human Resources and Emiratisation (MoHRE) or register a labour complaint if they experience unpaid or delayed salaries.
What happens if a company doesn't follow the new guidelines?
If salaries are not transferred by the 15th of the month, the company may be blocked from the system the following month. 80% of total salaries must be transferred monthly to avoid the company being blocked and subject to fines and penalties. Failure to meet these rules can result in a Labour court case against the company if the salaries are not correctly paid.
The WPS system provides excellent protection for employees in the UAE. It ensures that the employer remains accountable for the timely and correct payment of wages. The system has been very successful in the UAE, in ensuring the rights of employees are upheld and payroll is processed correctly each month.
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For companies looking for assistance with setting up their staff and payroll on the WPS system in the UAE, and for other Labour and Employee Visa matters, they can get in touch with PRO Partner Group at www.propartnergroup.com.
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