The Wages Protection System (WPS) is a government initiative to implement that employees receive their wages on time in UAE.
It plays an important role in UAE Labor Law, but many employees face difficulties in understanding this concept. However, both employers and employees need to understand about WPS meaning.
In this blog, we will dive into the concept of, what Wage protection system is in Unites Arab Emirates?
What is WPS meaning in UAE - Introduction, Origin and Benefits
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The WPS full form in UAE – Wages Protection System came into existence in July 2009 with Ministerial Decree No 788. It was one of the initiatives of the Ministry of Human Resources Emiratization (MoHRE) in association with the Central Bank of UAE. The Ministerial Decree No 739 of 2016 started boosted this initiative. They showed the clarifications and regulations on September 1, 2019.
WPS meaning system to protect the wages of employees working in the UAE. WPS payroll UAE ensures that employees in the UAE received proper compensation on time. Furthermore, it possesses a database where employers in UAE must upload the salary of their employees for MoHRE and Central Bank to validate this information.
Such a system in UAE is necessary to avoid illegal activities by employers such as paying inappropriate salaries to employees, delaying salaries, using illegal sources of funds etc.
These unfair practices break the relationship between the employer and the employees working in the organization.
What are the Benefits of WPS in UAE ?
The WPS Wage protection system in United Arab Emirates ensures that employers pay accurate and timely salaries to their employees. Moreover, it ensures disputes between employees and the employer are minimized. This system protects the rights of the employees as mentioned in the UAE Labor Law.
However, this not only benefits the employees but also employers by streamlining the processes of payroll and avoiding legal complications. WPS Dubai acts as legal proof for employers.
How to register for WPS in UAE?
As long as you are an employer in the UAE, you must adhere to the Wages Protection System UAE as it benefits both employees and the employer as per new rules in UAE.
Before registering for, you must be aware of the following requirements:
1. The employer must possess a corporate bank account registered in the UAE.
2. There must be a contract with the WPS Dubai agent who will be responsible for payment of wages to the employees in the organization. A agent can be a bank, exchange house, fintech or any other financial institution.
3. Wages must be paid to employees as per the deadlines stated in Ministerial Decree No 788.
4. An employer must pay 70% of all staff (except for some unpaid leave) and at least 75% of wages or salaries.
5. An employer must agree to pay fees, charges or any other expense incurred in Dubai WPS system .
How does Wage Protection System in UAE work ?
Once you fulfill all the conditions and register your account, using wage protection system UAE becomes very easy.
In this process with WPS meaning there are four simple steps for Dubai involved :
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1. Preparation and submission of SIF
SIF stands for Salary Information File and contains some basic information about the employer and the employees such as CTC, Basic Pay, perks, deductions etc.
Every time you pay wages or salaries you must submit the SIF on the WPS in UAE. First, the file will go to a agent who checks if there are any errors and then finally it's submitted. However, you don’t need to fill SIF when you are paying commissions, bonuses, gratuities etc.
2. Salary check by the MoHRE and Central Bank of UAE
Once you fill the SIF to Wage Protection system, the MoHRE and the Central Bank conduct a salary check to ensure all details are correct in the SIF and adhere to the guidelines of WPS in UAE.
For example – MoHRE will check if you are fulfilling the criteria of paying at least 75% of salaries to employees.
3. Issuance of payment order to your WPS agent
If positive results are provided after the Wage protection system in UAE check, the MoHRE and Central Bank will issue a payment order to the agent.
However, if there are any errors in the SIF, the employer will receive an email requesting to update the SIF and correct all the errors identified. Therefore, it is necessary to identify errors to avoid any penalties and late fines with wage protection system UAE.
4. Transfer of money from agent to employee account
WPS Wage protection system agents will transfer the money to the employees' bank accounts once they get the payment order.
Moreover, many banks that act asagents issue a special WPSPayrollcard. So, this card works like any other debit card.
Therefore, to maximize efficiency, employers should ensure that their employee holds a bank account and a debit card to withdraw their salary.
How to prepare SIFs for Wage protection system UAE ?
As discussed earlier, evident from above, the preparation of error-free SIFs is necessary to use. Now, understand how to prepare SIFs or the format of SIFs.
The wage protection system UAE SIF Format
Firstly, understand that every SIF file is maintained in an Excel document. So, the first thing is to open a blank Excel file.
Secondly is to enter the Employee Detail Record (EDR) which is the basic information you should include for every employee.
The following details should be included in each column for each employee:
Fines and penalties for non-compliance
In addition, refusal to meet the requirements in UAE results in fines and penalties.
Payment delays
In case of payment delay, the fine or penalty imposed may vary depending on the size of the organization.
For organizations in UAE, that have 100 or more employees the following will apply if they fail to pay wages of employees within 10 days of the due date:
- Beginning with the 16th day from the date of delay in wages of employees, the company will no longer get any work permits.
- The employer cannot issue any other new company
- MoHRE has the right to take action against all the other companies owned by the defaulting employer
- The organization will be downgraded to the third category
- Workers will be allowed to move
Other forms of non-compliance
In addition, for organizations that intentionally provide incorrect information for evading salaries, a fine of up to AED 5,000 will be imposed per affected worker up to a maximum of AED 50,000 for multiple employees affected.
Conclusion
In addition to complying with the above-mentioned requirements, you can maximize the return by choosing the right agent for wage protection system UAE . The right agent will avoid any penalties and fines and wouldn't miss the deadlines.
Moreover, the right WPS in UAE agent will help the employer to make the payments to your staff in a cheap, easy and reliable manner. Agents also make sure that all the employees receive their salary on time irrespective of their salary level. Making up the correct decisions with WPS meaning will help and with this the payroll process is made much easier. Book a demo more to know how the process runs smoother with automation.
Frequently Asked Questions (FAQs)
What is WPS meaning in UAE?
Wage Protection System (WPS) meaning is an electronic wage transfer system to protect the rights of employees in the UAE.
What is WPS meaning in UAE?
WPS full form refers to Wage Protection System.
What is WPS full form?
All employers who are registered with MoHRE (Ministry of Human Resources and Emiratization) must subscribe to Wage protection system and pay wages to their employees accordingly.
What is WPS full form?
In order to get WPS payroll card in UAE, employers need to go through a registration process with MOHRE and then select a WPS-approved bank or agent for processing salaries. Thereafter, they merely need to submit the company and employee documents for the system’s activation.
What is the meaning of WPS Salary in UAE?
Employers and employees can check the status of system Dubai through the official website of MoHRE as per Dubai wage protection system.
What is the meaning of WPS Salary in UAE?
Companies with a minimum of 10 employees must adhere to the guidelines.
How to get WPS in UAE?
The penalty is for wage protection system Dubai is AED5000.
How to get WPS in UAE?
How do I check my company WPS in UAE status?
What are the minimum number of employees for WPS?
What is the penalty for WPS in UAE ?
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What is the Wage Protection System in Saudi Arabia?
