If you manage payroll in UAE, you’ve probably heard of WPS. But if this is your first time, let’s run you through it.
What is WPS?
WPS stands for the Wages Protection System. The Wages Protection System is a system of electronic salary transfer that makes sure companies pay their employees through a WPS agent such as a bank, exchange house, financial institution or company like Edenred to guarantee timely and complete payment of wages to employees.
Why was it introduced?
Previously, in the UAE, there was no way to track how employees were paid, if they were paid on time or if they were paid at all.
That’s why in 2009, the Government of UAE introduced the Wages Protection System (WPS). It became mandatory for companies to process their employees’ salaries through an electronic salary transfer system regulated by the Ministry of Human Resources and Emiratization (MOHRE) and Central Bank of UAE.
WPS ensured that companies could easily pay their employees transparently, without much effort, protect their rights by law, and as a result reduce disputes between employers and employees.
Which companies are required to comply with WPS regulations?
All companies in the UAE registered with the Ministry of Human Resources and Emiratization (MOHRE) across all sectors and industries as well as companies in certain free zones such as Jebel Ali Freezone (JAFZA) must comply with WPS regulations.
All companies registered under the following authorities:
How does it work?
In order to process salaries through WPS, you must have a contract with a WPS agent such as bank, exchange house, financial institution or Edenred which is registered with the MOHRE. After you have run payroll from your side, your WPS agent will be responsible for the payment of wages to your employees.
The complete cycle of WPS involves:
First you need to register on the MOHRE website and set up your account with your login credentials.
You will need to provide the following:
- Your corporate bank account information.
- An employee list with details of the WPS agent your company processes salaries with. They should be registered with MOHRE.
- The bank or payroll card your employees receive salaries with.
The date on which salaries need to be paid.
2. Transfer of salaries
After you’ve created your account, you need to create and submit the Salary Information File (SIF). The Salary Information File (SIF) is an excel sheet with the employee list and the details of the WPS agent your company processes salaries with.
When creating a SIF, the information you need are:
- The wages or salaries (basic salary, deductions, allowances, overtime payment, additional bonus, among others) of each employee, i.e., the employee details record (EDR)
- The 14-digit labour card number in the card issued by the MOHRE when the employee visa is secured
- Your bank routing code, which you would have received from the bank, exchange houses, or Edenred.
- Employee bank account number (IBAN)
- Start date of salary
- End date of salary
- Number of days salary paid
- Basic or fixed salary
- Variable salary
- Number of leaves per year
Every time you want to pay salaries, you must fill out and submit the SIF on the WPS. You need to export the excel file as .CSV and then rename it as .SIF while saving it.
It’s important to ensure there are no errors in your SIF to get quick validation from the Central Bank and MOHRE. With Edenred Payroll you don’t have to worry about this, we’ll ensure your file is correct and follows all the guidelines.
3. Payment of Wages
WPS salary check by the MOHRE and the Central Bank
After submitting the SIF to the WPS, the MOHRE and Central Bank will verify that all the details you submitted in the SIF are accurate and in compliance with the WPS requirements.
These are some mandatory rules to meet the WPS requirements while processing salaries:
- At least 80% to 90% of all employees must be paid (excluding some unpaid leave).
- Employees must be paid 80% or above of their salary (apart from some salary deductions).
- Employees must be paid their salary for a month latest by the 15th of the next month. If not, employers will be considered late in paying unless otherwise specified in the employment contract. For example, an employee’s salary for the month of June must be paid latest by the 15th of July.
- Do not skip paying any contracted employee’s salaries for 3 consecutive months.
- Make sure that you pay any bank fees, expenses, or provider fees related to the payment.
Authorization by WPS
If the Central Bank approves your salary check, they will issue a payment order to your WPS agent. If there are any mistakes in the SIF, you will receive an email asking you to update the SIF to correct the errors. Avoiding errors would ensure you don’t get fines or penalties for payment delays.
Transferring money to your employees
After your WPS agent receives the payment order, they will transfer the money to your employees. If you are partnered with a company like Edenred, your employees will receive their salaries safely and securely in a WPS payroll card called C3Pay.
- The Wage Protection System (WPS) was introduced to protect employees’ rights by ensuring secure and timely payment of salaries through an electronic salary transfer system.
- All companies registered with the MOHRE and in certain free zones must follow WPS.
- How does the WPS work:
- Register your company with the MOHRE.
- Create and submit the SIF to WPS through a WPS agent such as Edenred.
- Ensure you follow the WPS guidelines, and your SIF does not have any errors, so salaries are transferred easily.