What is WPS in the UAE? A Guide to Salary Payment Compliance

The Wage Protection System (WPS) is an electronic salary transfer system established by the UAE Ministry of Human Resources and Emiratisation (MOHRE) in collaboration with the Central Bank of the UAE. Its primary goal is to ensure that employees are paid accurately and on time, in compliance with the UAE’s labour laws.

Since its implementation, WPS has become mandatory for most private sector companies in the UAE. Businesses that fail to comply risk severe penalties, including fines, suspension of work permits, and reputational damage.

How Does WPS Work?

• Employers transfer salaries through UAE-licensed banks, exchange houses, and financial institutions approved by the Central Bank.
• The payment instructions are sent to the WPS, which verifies the data and ensures the salary matches the employment contract.
• Funds are then credited directly to employees’ accounts or issued via payroll cards.

Who Must Use WPS?

• All companies registered with MOHRE are required to use WPS for salary payments.
• Certain free zones have their own salary protection systems, but many follow WPS rules or equivalent mechanisms.
• Domestic workers and some specific employment categories may be exempt, but most employers fall under the system’s scope.

WPS Compliance Requirements

To remain compliant, employers must:

1. Pay salaries on time – within a maximum of 10 days after the due date.
2. Pay the full agreed amount – as stated in the employment contract.
3. Submit salary information accurately – including allowances, deductions, and overtime pay.
4. Maintain proper payroll records – for at least 2 years.

Penalties for Non-Compliance

• Administrative fines: Starting from AED 1,000 per unpaid employee.
• Suspension of new work permits until salaries are settled.
• Referral to public prosecution for repeated violations.
• Company downgrade in MOHRE’s classification, affecting government contract eligibility.

Benefits of WPS

• Protects employees’ rights by ensuring timely and accurate salary payments.
• Reduces salary-related disputes between employers and employees.
• Enhances the UAE’s reputation as a fair and transparent labour market.

Expert Guidance with Caspian Accounting and Bookkeeping

Navigating WPS requirements can be challenging, especially for new businesses or companies managing large workforces. Caspian Accounting and Bookkeeping provides complete payroll management solutions, ensuring your salary payments meet all WPS compliance rules and protecting your business from costly penalties.

Need help with WPS compliance? Contact Caspian Accounting and Bookkeeping today for professional payroll services and expert advice.