Payslips: What you need to know for your UAE business -
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Payslips: What you need to know for your UAE business

As an employer in the UAE, managing your employees’ payroll is a critical aspect of running your company efficiently. Payslips — also known as salary slips, pay stubs, or pay advice — play a crucial role in this process. Let’s take a look at the different components of a payslip, see how to read one, and understand its significance.

What is a payslip?

A payslip is a document provided to employees that outlines the details of their salary, including gross and net pay, deductions, allowances, and other such relevant information. It serves as proof of payment and allows employees to understand how their salary is calculated.

Payslips should be issued every month as a form of a report to inform the employee the details of their income. This fosters transparency, builds trust between employers and employees, and ensures compliance with the UAE labour laws and regulations.

Key Components of a Payslip

Electronic payslips are usually generated on a monthly basis and can be downloaded by employees in a PDF format. A comprehensive payslip typically includes the following information:

  1. Employee details: Name, employee number, and contact information.
  2. Employer’s details: Name, address, contact details and signature/stamp from the employer (or the department concerned).
  3. Earnings: Gross salary, overtime, bonuses, commissions, or any other income.
  4. Deductions: Taxes, social security contributions, pension scheme deductions, healthcare contributions, loan repayments, etc.
  5. Net pay: The amount the employee receives after deductions.
  6. Allowances: Benefits, reimbursements, or allowances such as travel or meal allowances.
  7. Leave balance: Accrued vacation days, sick leave, or other paid time off.
  8. Employer contributions: Contributions made by the employer. Depending on the Employment Contract that you sign with your employees, this could include pension funds or health insurance.

Why Payslips are important

Payslips serve various important functions for both employers as well as employees:

  • Proof of Employment: Quite simply, payslips act as a way of proving that employees work with your company. When they apply for a new job, they need to show this proof as validation of employment, to negotiate their salaries.
  • Record-Keeping: Payslips serve as valuable records for both employees and employers. They help track salary history, tax obligations (if applicable), and other financial aspects.
  • Transparency: By providing detailed information about salary components, deductions, and allowances, payslips promote transparent practices and build trust between employers and employees.
  • Compliance: Payslips ensure compliance with the local labour laws, acting like evidence of fair and accurate payment practices for a company.
  • Financial Planning: Employees rely on payslips to understand their earnings, deductions, and allowances, enabling them to plan their personal finances effectively.
  • Documentation for Loans and Visa Applications: Payslips are often required as supporting documents for loan applications, visa renewals, credit card applications, or other official purposes.
  • Dispute resolution: In case of salary disputes or discrepancies, payslips serve as evidence to resolve conflicts and address employee concerns.

Its significance in Payroll

When running payroll in the UAE, you need a Salary Transfer File (SIF) as mandated by the Ministry of Labour, to comply with WPS. For this, a complete and updated employee file needs to be maintained with details like basic salary, amount, contact details, payable allowance types, gross salary, net pay, and most importantly, deductions specified that need to be taken out from the employee’s salary.

This includes mandatory deductions (such as court orders, violations, fines, child support) and voluntary deductions (such as health insurance contributions, donations, certification deductions).  Of these, mandatory payroll deductions are required to be indicated in payslips, in accordance with the UAE legislation.

What happens if your employee doesn’t get a payslip?

In many parts of the world, it is a legal obligation for employers to provide their employees with payslips within a specific timeframe, containing all the necessary information about their salaries. If an employer fails to comply with these laws and regulations, it can result in fines, court appearances, or receiving an infringement notice for your business, organization, or company.

If you are an employee in the UAE, and you do not receive your payslips, it is advisable to initially check with your employer or manager before filing a formal complaint. However, if the issue remains unresolved and you have yet not received your entitled payslip for over 2 months, you have the option of submitting a claim or filing a labour complaint with the Ministry of Human Resources and Emiratisation (MOHRE).

Conclusion

Payslips are an integral part of payroll management, and help to foster transparency, trust, and compliance between employers and employees. Using a professional payroll services provider or platform can help streamline your payment process, while ensuring accuracy, saving time, and enabling UAE businesses to focus on their core operations and enhance employee satisfaction.

For more information related to your employees’ financial rights, WPS-compliant salary processing or payroll services in UAE, feel free to reach out to us on info.ae@edenred.com

Looking for a payslip?

We'll be happy to email you a sample payslip, for you to see the mandatory fields according to the UAE law.

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