A Guide to the Wage Protection System & Payroll Compliance in UAE

The Wages Protection System (WPS) is an electronic payroll transfer system in the UAE that ensures employees are paid on time and in compliance with UAE labour laws. Established by MOHRE and the Central Bank, WPS promotes fair and secure salary distribution across the private sector.

What is the Wage Protection System in UAE? 

The Wages Protection System (WPS) was introduced as a collaborative initiative by the Ministry of Human Resources and Emiratization (MOHRE) and the UAE Central Bank.  

This payroll management process was launched to ensure transparent, timely, and fully compliant salary payments across the private sector.  

By digitizing the payroll process, WPS guarantees employee financial security and upholds employers’ legal obligations under UAE labour laws. 

Key Functions of WPS in Payroll Compliance 

1. Overseeing Wage Payments in UAE  

Through WPS, MOHRE closely monitors your payroll activity to confirm that each payment follows UAE regulations. This oversight protects both you and your employees, creating a transparent payroll record that reduces errors. 

2. Ensuring Timely Salary Disbursement 

WPS ensures that all employees receive salaries promptly and in full. The system promotes transparency, helping to create an environment where employees feel valued. This helps with building trust between you and your employees.  

3. Resolving Salary Disputes 

When salary disputes arise, WPS provides resolution guidelines. WPS has the capacity to provide official records of each transaction. This allows you to resolveany conflict ordiscrepancies between you and your employees quickly.  

4. Enforcing Payroll Compliance with UAE Labour Laws 

The WPS ensures that you comply with UAE labour regulations. Using WPS for salary payments helps you avoid risks such as cash handling issues, underpayment, and non-compliance with wage laws.

Wages Protection System Compliance Guidelines 

To ensure compliance with WPS, here’s what you need to do: 

• WPS Registration: If your company is registered with MOHRE, you must register with WPS and make salary payments through it. 

• Employee Enrollment in WPS: You must add new employees to WPS within 60 days of signing their employment contract. Make sure to submit accurate information for each employee to avoid any discrepancies. 

• Avoid Cash and Cheque Payments: Cash or cheque payments are not allowed under WPS regulations, as this makes it difficult for MOHRE to verify payment records.  

• Salary Deduction Limitations: You cannot deduct more than 10% of an employee’s salary, unless specified by law.  

• Salary Payment Deadlines: Salaries must be paid within 15 days of the due date. If you fail to pay at least 80% of the salaries on time, you risk fines, having your WPS account blocked, or facing labour court proceedings. 

• SMS Payroll Reminders: WPS sends you SMS reminders on the 5th and 10th of each month to help you stay on track with salary deposits and meet deadlines, ensuring compliance. 

Who is Exempted from WPS Compliance in the UAE  

Employers Exempted from WPS

• UAE nationals who own fishing boats 
• UAE nationals who operate public taxis 
• Banks  
• Houses of worship (e.g., mosques, churches, temples and any religious institution) 

Employees Exempted from WPS

• Employees involved in a labour lawsuit against the company 
• Employees with an official absconding report filed by the employer 
• Foreign employees paid outside the UAE (allowed only if employer consent and MOHRE approval are granted) 
• Newly hired employees within the first 30 days after the salary due date 
• Employees on authorized unpaid leave (supported by documentation submitted to MOHRE) 

How To Register Your Company for the Wage Protection System (WPS)

Required Documents for WPS Registration

• Company Name and Trade License details, including incorporation and expiry dates 
• Freezone ID (if operating within DMCC and JAFZA freezones) 
  
• Ministry of Labour Establishment ID 
• Memorandum of Association 
• Certified Emirates ID or passport copy of the company’s beneficial owners 
• Employee list with necessary payroll details 

WPS Registration Guide

Here's how you can register your company for WPS: 

1. Register Your Company with MOHRE 

Start by registering your company with the Ministry of Human Resources and Emiratisation (MOHRE). This step is essential for accessing the WPS. 

2. Open a Corporate Bank Account 

Set up a corporate bank account with a UAEbased bank approved by the Central Bank. You’ll need this account to process employee salaries through WPS. 

3. Select a WPS Agent 

Choose an authorized WPS agent, such as a bank, exchange house, or financial institution approved by the Central Bank of the UAE. Your WPS agent will handle the technical and administrative aspects of the system. 

4. Sign a WPS Agreement 

Sign an agreement with your selected WPS agent to formalize your registration. This agreement outlines your responsibilities and the agent's role in salary processing. 

5. Set Up WPS Software 

Work with your WPS agent to access the software or system required for submitting Salary Information Files (SIF).

The WPS Process Explained

If you’re wondering how to process payroll through WPS, here’s a simple breakdown to help you: 

Prepare and Submit a Salary Information File (SIF) 

First, you'll need to create a Salary Information File (SIF) that includes details of your employees' salaries. After the SIF is ready, upload it through exchange house or your corporate bank account for submission to the Ministry of Human Resources and Emiratisation (MOHRE) and the Central Bank.

Issuance of Payment Order 

Once your file is validated, a payment order will be issued to your WPS agent; usually through the exchange house or through your bank if it's a direct upload. 

Salary Disbursement 

Your WPS agent will initiate the salary transfer process, and the central bank will then release the salary through the employee's respective bank accounts.

Receive Payment Confirmation 

After the salaries are paid, you’ll get confirmation to close out the payroll process for that month.

How to Generate a WPS SIF File for WPS  

Step #1: Start a New Excel File 

Begin by opening a new Excel file. This will be the foundation of your SIF. 

Step #2: Input Employee Salary Information 

Enter all employee record details row by row in the following order

• Column A: Type “EDR” in every row. 

• Column B: Enter the 14digit Person ID number from the Ministry of Labour. If shorter, add leading zeros (e.g., 1234567890 becomes 00001234567890).

• Column C: Enter the 9digit Agent ID (routing code) for the employee’s bank. 

• Column D: Enter the employee’s account number or salary card number (up to 16 characters). 

• Column E: Enter the PAY START DATE in “YYYY-MM-DD” format. 

• Column F: Enter the PAY END DATE in “YYYY-MM-DD” format. 

• Column G: Enter the number of days the salary covers. 

• Column H: Enter the fixed income amount (e.g., basic salary, housing allowance). Example: If an employee’s basic salary is 3000 AED, housing allowance is 1000 AED, and transportation allowance is 500 AED, the total fixed income amount would be 4500.00 AED. 

• Column J: Enter the number of DAYS ON LEAVE FOR PERIOD. 

Step #3: Add Employer Information 

In the last row, enter the following details for the employer: 

WPS Non-Compliance Penalties for Employers 

Whether you have a small or large team, non-compliance can lead to costly fines, penalties, and even business disruptions. Here’s a breakdown of what could happen depending on the size of your company.