UAE: Now, 90 per cent of employees’ total salaries must be paid via Wages Protection System
UAE: Now, 90 per cent of employees’ total salaries must be paid via Wages Protection System
At least 90 per cent of an employee’s minimum salary must be paid via the UAE’s Wage Protection System (WPS).
The Ministry of Human Resources and Emiratisation (MoHRE) recently issued Ministerial Resolution No.43 of 2022 – an update to the WPS.
The update includes amendments to specific requirements and clarification on private sector businesses’ obligations to remain compliant with the WPS, clarified Nazar Musa, CEO of PRO Partner Group, a UAE company services provider.
He explained, “One of the main changes from the previous requirements is an increase in the minimum amount of an employee’s salary, which must be paid via the WPS. As per the new amendments, this has been increased from 80 per cent to 90 per cent.”
Dr Abdulrahman bin Abdulmanan Al Awar, Minister of Human Resources and Emiratisation, issued a ministerial resolution last week specifying a series of administrative procedures against establishments that do not pay workers’ salaries on time.
Khaleej Times has reached out to a labour law expert to clarify the new WPS amendments. Here is everything you need to know:
What is the WPS?
Wages Protection System (WPS) is an electronic salary transfer system that allows institutions to pay wages via banks, bureaux de change, and financial institutions approved and authorised to provide the service.
Could you list the main changes that were made to the existing WPS?
The resolution highlights several other vital requirements which must be adhered to by private sector employers:
- All employee salaries must be paid on the due date through the WPS
- If salaries are not transferred by the 15th day of the month, the company may be blocked from the system from the 17th day of the following month
- 90 per cent of total salaries must be transferred every month to avoid the company being blocked and subject to fines. Earlier, only 80 per cent of the wages needed to be paid via WPS
- Employers will have a 30-day grace period to transfer new employees’ salaries via the WPS
“This has meant that companies in the UAE must immediately review their salary and payroll processing procedures to ensure they conform to the new rules,” said Musa.
What do these changes mean for UAE employees? Does it benefit them?
These changes further strengthen the protections for employees in the UAE, ensuring they are paid correctly and on time.
The WPS system has been very successful in the UAE in ensuring the rights of employees are upheld and payroll is processed each month correctly, said Musa.
“The new system also allows more flexibility and time, through the 30-day grace period for an employer to onboard a new employee onto the WPS system – further ensuring that the employee can be correctly set up in the system to ensure they are paid through WPS,” he added.
Why was the WPS installed?
The WPS is an integral part of the UAE’s labour regulations. It is a system designed to ensure that companies meet their obligations to pay their employees promptly and that workers’ rights are upheld.
It was established in 2009 by the Ministry of Human Resources and Emiratisation (MOHRE) in conjunction with the Central Bank of UAE.
Essentially, it is an electronic wage transfer system that monitors and oversees the payment of workers’ salaries in the UAE and allows the MOHRE to keep a record of private sector salary payments to ensure that employers failing to pay their staff on time can be identified.
How does WPS work?
The employee’s labour file number is linked to their work contract in MOHRE. This is connected to the Central Bank, and companies must clear all payments through their employee bank accounts.
The WPS system will then match the registered salary level on the employee’s work contract to ensure that the correct amount is paid.
If the amount is less than 90 per cent of the registered salary level on the MOHRE work contract, then the company will get blocked in MOHRE and need to resolve the payment issue.
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What happens if the issue remains unresolved?
If the block remains unresolved, the company will be subject to fines, resulting in a Labour court case against the company if the salaries are not correctly paid.
“The WPS system provides excellent protections for employees in the UAE, ensuring they are paid correctly and on time. The system has been very successful in the UAE in ensuring the rights of employees are upheld, and payroll is processed each month correctly,” said Musa.
– dhanusha@khaleejtimes.com
source: khaleejtimes
