What is WPS, and how it helps employees and employers?
In the Arab world, New WPS rules in UAE Wages Protection System was the first of its kind, reflecting the pioneering role of the UAE in safeguarding the worker’s wages and enhancing transparency and competitiveness to strengthen the work relationships in the country.
In 2015, it was estimated that approximately 3.5 million foreign workers benefited from WPS. Thus, more than 92% of the country is protected by the WPS. The wage Protection System (WPS) of the UAE is an electronic salary transfer system created by the Ministry of Human Resource & Emiratization (MOHRE). It is associated with the Central Bank of the United Arab Emirates. Followed by the Ministerial Decree No. 788 of 2009, the
WPS came into force in July 2009 and was further strengthened by another Ministerial Decree No 739 of 2016. The provision allows the Ministry of Labor to form a database that records wages in the private sector to safeguard the timely and complete payment of agreed wages. It instructs all the businesses registered under the MoHRE to remit wages to their employees via banks, bureau de change, and other financial institutions approved and authorized by the UAE Central Bank as a payment system. WPS covers all institutions registered with the Ministry across various industry types and labor sectors.
If you are planning to start a new enterprise or business in the UAE, it is pertinent to notice more about the Wage Protection System. This article will know more about the WPS, its features,
Requirements, consequences of failing to use WPS, and how this system works.
Features of Wage Protection System :
The wage Protection System is the initiative of the UAE labor law aimed to enable a dynamic economy that guarantees the timely and complete payment of the agreed-upon wages to safeguard the interests of the workers and attract talent across the globe. The targets of WPS are workers, employers, banks, and agents. The significant features of the Wage Protection Benefits of the WPS System can be summarized as follows:
1. It Safeguards the worker’s wage and the payment of stipulated salaries;
2. Making the salary process easy for employers and providing innovative
Solutions for employers to protect their interests are time-consuming and effortless;
3. It improves job security and strengthens work relationships in the UAE, which ensures all the workers’ rights;
4. It provides protective and proactive measures to avoid labor/ industrial disputes which involve workers.
5. It enhances transparency and competitiveness in work relationships;
6. It allows the UAE Ministry of Labor to regularly update the wages data in the private sector, which will help the government administer the labor market effectively; and
7. Anticipate and prevent the risk correlated with handling a massive
Company Requirements for WPS for the employer :
If you’ve started and new business, you should know about WPS and how to register for WPS.
Wages Protection System is a mandatory legal requirement in the UAE for businesses registered under the MOHRE. Such registered companies must adhere to this system as their mode of salary payment. There are some requirements to be fulfilled for joining WPS, as the company summarized as follows:
1. The company must be registered with the Ministry and have a bank account with any banks operating in the UAE;
2. The company must enter into a contract
With any of the banks or financial institutions approved by the Central Bank of the UAE to issue services. The MoHRE has a list of authorized agents, and the employer could choose anyone from the list. Both parties should agree on the services, payments, and other charges;
3. The institution will transfer the wages through the WPS by the deadlines defined in Ministerial Resolution No. 788 of 2009. Within two weeks of their due date or on the date stipulated in the employment contract, the financial institution will transfer the salaries through WPS; and
4. All the bank fees, expenses, provider charges, and other costs incurred on joining the WPS will be the employer’s responsibility, as the employer cannot deduct any such costs from the workers’ wages.
Mechanism to Apply in WPS
For joining the Wages Protection System, there are specific steps and procedures. There are five essential steps to apply in WPS, termed mechanisms. They are summarized as follows:
Step 1: The company must open an account in one of the banks operating in the UAE.
Step 2: The company shall enter into the contract with a WPS agent sanctioned by the Central Bank of the UAE, such as banks, bureau de change, or any other financial institution. The company will receive a login ID for the WPS e-portal through which everything is done.
Step 3: The employer shall give directions to the bank to transfer the salaries to the workers. Details such as an elaborate wage list and copies of such lists are sent to the agent.
Step 4: WPS will dispatch the workers’ wage details and salary transfer instructions to the Central Bank of the UAE electronically and will be further forwarded to the labor database of the Ministry to ensure that the details received correspond and are appropriate with those registered in the Ministry.
Step 5: The WPS will send authorized information to the scheduled agent to release the payments and credit the worker’s accounts accordingly.
Penalties for the Delayed Payment of the Wages
WPS is compulsory for all businesses or companies registered with MoHRE as they must adhere to the system to pay wages for the workers. So, there will be consequences who fail to join WPS. The companies that fail to join WPS will be blocked from all new work permits until the salary is paid fully. If the employer continues the violation, all new work permits will be denied for a month after the wages are paid. In the instances of third and repeated violation employer will be banned from the work permit for two months, and for the fourth, it will be three. The ban will only be lifted only after the complete payment of the worker’s wage if the institution that delayed the wage payment a month after the due date will be subjected to suspension of their licenses. The work permits of such companies will be denied along with the all-other
Institutions owned by the owner of the violated institution, i.e., no new visas are allowed for the new applicants of the same owner. Hence such companies will be downgraded to the ‘Third category’ Let’s look into the fines for evading WPS. The application for the WPS submission and the steps to avoid any penalties could have been easily carried out if a competent corporate lawyer had been hired at the time of company registration.
Fines for Avoiding WPS
An employer is considered a late payer if the salaries are not remitted to the workers within ten days of the due date: the next day of the salary period. As per Ministerial Resolution No 15 of 2017, fines are charged for WPS’s illegal or fraudulent usage.
1. Any person who entered incorrect data for evasion will be charged with a fine of AED 5000 for each worker and a maximum of AED 50,000 in the case of multiple workers.
2. If any failed pay the wages on the due dates through WPS, they will be charged a fine of AED 1000 per worker.
3. If any employer forced their workers to sign fake payment slips stating that they have received their salaries, they would be charged a fine of AED 5000 per worker.
A commonly raised question is whether there is any specified minimum salary or prescribed number of workers for joining WPS. No, there is no minimum wage for workers. Employing one or more workers and anyone registered with MoHRE adheres.
To join the Wage Protection System for the electronic payment of their wages. Staff on mission visas are also paid via WPS, which means all employees must be paid through this system. The companies must pay less than 80% of the registered salary. Otherwise, MoHRE will block the company and charge an immediate fine. Through WPS, salary withdrawal is very convenient, and workers can withdraw using the card system. The system reflects the UAE’s willingness to protect and ensure all the fundamental rights of concerned parties. Thus, Wage Protection System is a step in the right direction, as efficiency in the system could provide excellent transparency and stability in wage payments.
How to check WPS status?
How to remove the WPS block in UAE
How can a ban be lifted?
According to the post by MOHRE, these are the steps a company needs to take in order to lift a ban that may have been placed on it: – Establishment must pay their workers’ wages via WPS. – Establishment must pay their registered workers’ wages via WPS, even if they are outside the country.
How to register with WPS in UAE?
• Hold an account with a UAE bank.
• Contract directly with a UAE bank, bureau de change, or financial institution authorized by the Central Bank to deliver the salary and wage payments.
• Agree to meet the deadlines for payment as set out in Ministerial Resolution no. 788 of 2009 and as amended by Ministerial Decree 739 of 2016.
• Transfer wages at least once a month within ten days of them becoming due, or more frequently and on specified dates if stipulated within the worker’s contract.
• Agree to meet any expenses associated with WPS, including bank charges and other institutional fees.
Companies are not allowed to pass these costs on to their employees.
The WPS Payment Process
Once the account has been successfully registered, the next step is to process the payment with the following steps,
Step 1: With an approved bank or an agent, the employer has to open a bank account if he still needs to get a bank account based in the UAE.
Step 2: The employer needs to sign a WPS agreement with the bank or agent.
Step 3: In the UAE, the bank or agent notifies the WPS, which sends the details of an employee’s wages and salary transfer via an electronic system to the UAE Central Bank.
Step 4: For cross-checking, the UAE Central Bank forwards all details to MOHRE.
Step 5: To the employer’s bank or agent, WPS issues authorization to pay the employee wages.
Step 6: The bank transfers the salary to the employee’s bank account.
WPS salary check
Withdraw Through WPS Card
In the UAE, employees without a relevant bank account can opt for a WPS card to withdraw salaries. Moreover, companies registered with WPS can quickly.
Tie-up with money exchange in the UAE, offering a cost-effective WPS-compliant payroll solution. To the employees, these exchanges provide fund transfer facilities and salary disbursements. The exchanges also issue the WPS card, which can be used all over the emirates across different locations.
Through ATM Machine
Employees with a relative bank account in the UAE with an ATM card can withdraw their salary; the process is straightforward. Then, the bank sends the notification of the salary transfer with which you have a personal account. It can be through SMS or email.
WPS UAE fines
Penalties for Enterprises Employing over
100 Employees
In the UAE, if a minor, medium-sized private company with over 100 employees fails to pay the employee salary not exceeding ten days, then they are liable for the below penalties,
• Starting from the 16th day from the date of delay in wages, the company will not get any work permits.
• For more than a month from the due date, companies that have delayed wages will be referred to the judicial authorities for further measures.
• In the UAE, if the company owner has another registered office with WPS, the same penalties will apply to them.
• The owners will not be allowed to register for any other company.
• Bank guarantees of employees will be liquidated.
• The company will have to face low grading to the third category
• Workers will be allowed to search for other job opportunities.
If the wages are delayed for over 60 days, a fine of AED 5,000 per employee (whose wage has been delayed) will be charged up to a maximum fine of AED 50,000 for multiple employees.
WPS Penalties for Companies With a Workforce of Fewer Than 100 Employees
In the UAE, if a small to medium company with less than 100 employees, within 60 days from the due date, fails to pay employee salaries, then they are liable to the below-mentioned penalties,
• Work permits issuing a ban
• For further proceedings, referral to the court
• The company will be liable to fines by MOHRE.
If the company fails to pay wages twice in one year, MOHRE will apply the same penalties for more prominent firms with more than 100 employees.
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