WPS System in the UAE

WPS System in the UAE - Makebiz

The Wage Protection System (WPS) in the United Arab Emirates is a revolutionary initiative of the Ministry of Human Resources and Emigration (MOHRE) in conjunction with the Central Bank. It is designed to ensure that employees are fully paid their salaries at the appropriate time without delay. WPS doesn’t just ensure that employees receive their money — it builds a new level of trust between workers and employers, positively impacting the country’s economy as a whole.

The mandatory registration in the payment system applies to all firms registered in the UAE mainland and some freezones. In particular, this applies to organizations in DMCC and JAFZA. The likelihood of further expansion of mandatory registration to other EEZs in the future is very high. It is advisable to keep up to date with updates from the Ministry and relevant freezone authorities to keep abreast of the latest developments.

Key benefits of WPS

  • Minimization of labor disputes. Payment of wages within the agreed timeframe significantly reduces conflicts in the work environment.
  • This frees up resources for both parties that could have been spent on legal proceedings, allowing them to focus on productive work. Statistics show a tangible reduction in the number of complaints at MOHRE after the implementation of the system.
  • Increased employee motivation and loyalty. Knowing that their wages are protected, employees feel more confident and relaxed. This has a direct impact on their productivity, loyalty to the company and reduces staff turnover, which in turn saves the employer money on finding and training new employees. Confidence in a stable income is a powerful motivational factor.
  • Transparency and security of financial transactions. WPS excludes the possibility of misuse of funds and fraud. All information about salaries and other payments is electronically documented and controlled by the state, which ensures maximum transparency. This protects the rights of employees and creates a fair competitive environment for business.
  • For government agencies, the online system provides a tool for effective tracking of financial flows and control over compliance with labor laws. This allows timely detection and suppression of violations, ensuring legal protection of employees and maintaining the stability of the labor market.

Step-by-step guide to registration 

The process is usually carried out through specialized financial institutions or government agencies. 

Step 1: Preparing the necessary documents is the key to successful registration:

  • Company License (Trade License): original or notarized copy. Make sure that the license is valid and corresponds to your current activity.
  • Employer identification documents: original passport or Emirates ID. These must match the information on the license exactly.
  • Employee identification documents. Copies of passports, Emirates ID and visas must be provided for each employee. All copies must be clear and easy to read. Make sure all information is up to date — out of date information can cause delays. 
  • Company bank account details: full bank name, company account number and SWIFT code (if required for international transfers). Enter the correct information, as this is the account that will receive funds for salary payments.
  • Employee List. Prepare a detailed list of employees with their full names, passport/Emirates ID numbers, job titles and bank details. The format of the list should comply with the WPS requirements, which you can check with your bank or on the official website of the system.

Step 2: Select a partner.

Not all financial organizations are WPS partners. Choose one that provides integration services with this system.

Step 3: Applying for registration.

After collecting all the required documents, apply for registration in WPS through the selected partner. The application process may vary from company to company, so check with your manager for details. You may need to visit the branch in person to submit original documents.

Step 4: Sign the contract and activate the account.

After verifying the documents provided, the partner may request your personal presence to sign the documents to connect to the payment system. Carefully read all the clauses before signing. After that, the account with login and password will be activated.

Step 5: Upload employee data and update information regularly.

Regular updating of data (change of bank details, redundancies, new employees) is an integral part of working with WPS. Neglecting this rule may result in penalties.

Principle of operation

The system works on the basis of electronic data exchange. The employer creates a Salary Information File (SIF) containing basic items about the employee: name, passport/ID number, position, salary, bank account details, etc. This file is sent to MOHRE through an authorized partner where the correctness of the data will be thoroughly verified. Once verified, the regulators initiate the sending of Salaries to the employees to their accounts. The entire process is automated and monitored at every step.

Delayed payments or mismatched data in the system often results in several consequences:

  • Warnings and inspections from MOHRE.
  • Suspension of the issuance of new work permits.
  • Fines ranging from AED 5,000 to 50,000.
  • Downgrading of the organization to the third category (making it difficult to obtain new visas and contracts).

Registration with the Wage Protection System is not just a formality, but an important step towards ensuring the legal and transparent operation of any organization operating in the UAE. Compliance with the law ensures the avoidance of fines and maintains a positive image of the firm. It safeguards the rights of employees, improves business efficiency and builds trust in the working environment. In order to minimize the risks, it is advisable to seek assistance from experts in accounting and legal advisory services in UAE.

Schedule a free consultation with Makebiz and learn more about how to register for the WPS system. 

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