Ensuring compliance with the Wage Protection System (WPS) in the UAE as several companies have recently been suspended with the MOHRE system due to non-compliance.
The Wage Protection System (WPS) is an electronic salary transfer system that requires all companies to pay employee salaries via banks or an approved Exchange House. The system, developed by the Central Bank of the UAE, allows the Ministry of Human Resources and Emiratisation (MOHRE) to create a database that records wage payments in the private sector to guarantee the timely and full payment of agreed-upon wages. The WPS covers all institutions registered with the Ministry across all sectors and industries.
Although there has been some flexibility from MOHRE taking Covid-19 into consideration, this is now being fully enforced once again and companies not adhering will have their company labour card suspended.
Points to consider:
1. Employee salaries should be paid before the 15th of each month (e.g. salaries for the month of May should be paid no later than the 15th of June)
2. Salary deduction cannot be more than 20 percent of the gross salary stipulated on the labour contract
3. Employers should ensure that a minimum of 90 percent of employee salaries are paid via WPS
Employees under below categories are exempted from WPS:
1. If out of the UAE as per salary date
2. On probation
3. Employees who have only received a pre-approval work permit
4. Employees whose labour cards have been cancelled and visa cancellation is under process
5. If an exemption request application has been submitted (this involves submitting an application stating the months the employee will be unpaid / receive a reduced salary
6. Absconding employees
7. Employees with labour complaints
8. Unpaid leave
Consequences of Failing to adhere with WPS:
1. Ability to apply for new work permits will be suspended
2. Penalties can be issued by the MOHRE
3. Referral to Judicial entities to take further action
How can we help?
For more information or if you require any assistance with labour contract amendments / submitting applications to avail of any exemptions please do not hesitate to get in touch with Deepa Rajesh or +971 (0) 4 446 3900.
/Disclaimer: All information provided in this article was correct at the time of publishing on 04/07/2022.