The Wage Protection System (WPS) is a UAE government initiative aimed at protecting workers’ rights and ensuring transparency in wage payments. The system was developed by the Ministry of Human Resources and Emiratisation (MOHRE) in collaboration with the Central Bank of the UAE and is mandatory for all employers. WPS is not only a mandatory system for compliance with UAE legislation, but also a tool that increases employee trust in the employer. Correct and timely payment of salaries creates a positive image of the company and helps to avoid HR problems, such as employee turnover or decreased motivation. From a business strategy perspective, using WPS helps to strengthen the company’s reputation and build trust with employees, as well as reduce operational risks associated with possible fines and sanctions.
In this guide, we will analyze the key steps for implementing WPS in business and tell you how to avoid fines and comply with legal requirements.
In this guide, we will analyze the key steps for implementing WPS in business and tell you how to avoid fines and comply with legal requirements.
Step 1: Understanding WPS Requirements
What is WPS?
WPS is an electronic system that allows companies to pay employees through approved channels, including banks and money changers. All payments must be recorded and confirmed through the system to ensure transparency and timeliness of payments.
Mandatory requirements:
Penalties for non-compliance with WPS:
Case Study 1: The Problem of Delayed Salaries and Its Consequences
Company X had been late with salary payments via WPS for several months, which led to dissatisfaction among employees and a decrease in productivity. Due to the constant late payments, the company also received fines from MOHRE amounting to AED 50,000 and a temporary block on the issuance of new employment contracts. This slowed down the company’s growth as they were unable to hire new employees. After implementing an automated payroll system and integrating with WPS, all payments began to be made on time, which restored employee confidence and led to the lifting of the sanctions.
Case Study 2: Successful Implementation and Optimization of WPS
Company Y, being a small startup, integrated WPS into their accounting system from the very beginning. Using automated solutions from the bank, they set up all the processes so that every month salaries were automatically paid through the approved bank and all data was sent to MOHRE without errors. Thanks to this proactive strategy, the company avoided fines and continued to expand while remaining fully compliant with UAE laws.
WPS is an electronic system that allows companies to pay employees through approved channels, including banks and money changers. All payments must be recorded and confirmed through the system to ensure transparency and timeliness of payments.
Mandatory requirements:
- All companies registered with MOHRE and with employees are required to use WPS.
- Payments must be made in UAE Dirhams and through approved financial institutions.
- Failure to meet deadlines or incorrect submission of data to WPS will result in fines and penalties.
Penalties for non-compliance with WPS:
- Delay in salary payment: AED 1,000 to AED 5,000 per employee.
- Data inconsistency (e.g. incorrect IBAN): fine up to AED 20,000.
Case Study 1: The Problem of Delayed Salaries and Its Consequences
Company X had been late with salary payments via WPS for several months, which led to dissatisfaction among employees and a decrease in productivity. Due to the constant late payments, the company also received fines from MOHRE amounting to AED 50,000 and a temporary block on the issuance of new employment contracts. This slowed down the company’s growth as they were unable to hire new employees. After implementing an automated payroll system and integrating with WPS, all payments began to be made on time, which restored employee confidence and led to the lifting of the sanctions.
Case Study 2: Successful Implementation and Optimization of WPS
Company Y, being a small startup, integrated WPS into their accounting system from the very beginning. Using automated solutions from the bank, they set up all the processes so that every month salaries were automatically paid through the approved bank and all data was sent to MOHRE without errors. Thanks to this proactive strategy, the company avoided fines and continued to expand while remaining fully compliant with UAE laws.
Step 2: Registering a company in the WPS system
To get started with WPS, your company must be registered with MOHRE and connected to one of the approved banks or exchange offices.
Registration process:
Practical advice: Choose a bank that offers easy tools to integrate with your payroll system and support WPS.
Registration process:
- Register with MOHRE: Register your company with the Ministry of Human Resources and Emiratization (MOHRE) if you have not already done so.
- Choosing a bank or exchange office: Work with banks that support WPS. The most popular ones in the UAE include: Emirates NBD, Abu Dhabi Commercial Bank (ADCB), Mashreq Bank, RAKBANK, FAB (First Abu Dhabi Bank), UAE Exchange
Practical advice: Choose a bank that offers easy tools to integrate with your payroll system and support WPS.
Step 3: Setting up and managing salary payments via WPS
Setting up WPS requires proper integration of employee and accounting data.
Key points:
Recent updates:
Key points:
- Deadline compliance: Salaries must be paid within the deadlines specified in the employment contract (e.g. monthly). Delays in payment of more than 15 days may result in fines and restrictions.
- Correct employee data: Ensure that bank account numbers (IBAN), labor cards and other information are entered correctly in the system.
- Employment contract compliance: All salaries must be transferred in strict accordance with the terms of the contract, including additional payments and bonuses.
Recent updates:
- Since 2024, companies are required to submit a monthly WPS report to MOHRE. Failure to do so will result in automatic warnings and fines.
Step 4: Regular monitoring and compliance with WPS requirements
To avoid penalties and fines, it is necessary to regularly monitor compliance with WPS standards.
How to ensure compliance:
How to ensure compliance:
- Verify and update data: Regularly review employee data, especially when hiring or firing them.
- Automate accounting: Use specialized software to automatically calculate and submit salary reports.
- Monitor payments: Ensure that salaries are paid through approved channels and on time.
Tips for Process Optimization through Automation
Automating the process of paying salaries through WPS will help reduce human errors and reduce administrative costs for data processing.
Tips:
Tips:
- Use specialized software for calculating salaries. Such systems automatically check the compliance of salaries with the employment contract, the correctness of the specified data (IBAN of employees, etc.) and promptly send data to WPS. Examples of such programs: Zoho Payroll, Tally ERP and others.
- Integration with a bank. Many banks in the UAE offer solutions for integrating WPS with the company's internal systems, which allows you to automatically send salaries to employees and provide reporting to MOHRE. Examples of such banks: Emirates NBD, FAB and ADCB. Banks also offer integration with accounting programs, which simplifies the process of submitting data to WPS.
- Regular checks of employee data. It is important to periodically update information about employees, especially when their bank details or employment contract terms change. For this, it is convenient to use databases with automatic notification of the need to update information.
- Automatic reporting. Set up regular submission of payroll and WPS compliance reports through your accounting software or HRMS to avoid errors and delays.
Step 5: Troubleshooting Common WPS Issues
Some issues may arise due to data inconsistencies or delays in payments.
Common errors and how to avoid them:
Common errors and how to avoid them:
- Incorrect employee data: Update data in the system to avoid transaction blocks.
- Delays in payments: Process all payments on time to avoid late fees.
- Regulatory updates: New regulations include stricter measures against companies that delay salaries or provide incorrect information in the WPS.
Step 6: Learning and continuous updating of knowledge
Laws in the UAE change frequently, so it is important to stay up to date and educate yourself regularly.
How to stay informed:
Taxera Academy offers a unique opportunity to gain a deeper understanding of all aspects of working with the Wage Protection System (WPS) in the UAE. Our courses will help you not only understand the basic requirements of the system, but also teach you how to effectively and accurately integrate WPS into your business, minimize risks and avoid fines.
How to stay informed:
- Subscribe to MOHRE newsletters and updates.
- Attend seminars and courses on labour laws.
- Our offer: Take the Advanced Accounting and Full Compliance in the UAE course to gain a deeper understanding of WPS and stay up to date with all legislative changes.
Taxera Academy offers a unique opportunity to gain a deeper understanding of all aspects of working with the Wage Protection System (WPS) in the UAE. Our courses will help you not only understand the basic requirements of the system, but also teach you how to effectively and accurately integrate WPS into your business, minimize risks and avoid fines.
What you will get by completing training at Taxera Academy:
- Full understanding of legal requirements: You will learn all the laws and regulations related to WPS, including the latest updates and mandatory steps for compliance.
- Practical skills of WPS integration: We will show you how to easily set up processes in your company so that payroll payments via WPS are automated and error-free.
- Minimization of fines and sanctions: You will learn about all possible fines for non-compliance with WPS and receive clear strategies on how to avoid financial losses and business interruptions.
- Setting up automated systems: Our experts will teach you how to select and integrate accounting programs and services that fully comply with WPS requirements.
- Consultations from specialists: We provide personal consultations with experts who will help to tailor the training to your specific business realities and tasks.
Who is the training suitable for?
- Business owners who want to ensure compliance with UAE laws and avoid fines.
- Accountants and HR professionals responsible for payroll and reporting to MOHRE.
- CFOs and CFOs looking to improve business processes through automation and compliance.
Recent changes in the UAE
Starting from 2024, new regulations have come into force in the UAE that tighten the requirements for timely payment of salaries via WPS. Now, companies are required to not only regularly submit salary data, but also provide a report for each employee. MOHRE has also introduced automatic notifications and fines if the reports are not submitted on time. These measures are aimed at strengthening control over compliance with labor laws and protecting the rights of workers.
What to do:
Implement automatic notifications in your payroll management system to avoid missing important deadlines.
For consultation or registration for a course, please leave your phone number.
What to do:
Implement automatic notifications in your payroll management system to avoid missing important deadlines.
- Follow legal updates through official MOHRE channels and participate in relevant training events and seminars.
- Proper integration of WPS is a guarantee of business stability in the UAE. By following these steps and maintaining up-to-date knowledge, you will avoid fines and improve your operations.
- For a detailed study of WPS and expert support, enroll in our course - and get all the necessary knowledge for professional accounting in the UAE!
For consultation or registration for a course, please leave your phone number.
Exclusive offer: All course participants will receive a free subscription to updates on legislation and accounting in the UAE!
