The Wage Protection System, or more commonly known as the WPS, is the UAE’s official wage monitoring system. It is used by the Ministry of Human Resources and Emiratisation (MoHRE), approved banks, and exchange houses to track whether employees are being paid as per their contractual agreements, on time, and compliantly. The WPS gives MoHRE the visibility over salary payments made by UAE employers operating in mainland UAE and specific freezones such as DMCC.
There are currently 10 financial institutions registered with the UAE Ministry of Human Resources and Emiratisation (MOHRE) to support companies with WPS salary transfers. Recent additions include ADIB, Al Fardan Exchange, Wio Bank and Habib Bank Zurich. Other approved providers include Al Ansari Exchange, Lulu Exchange, GCC Exchange, Botim, MBank and Etisalat, offering employers a range of options to ensure compliance with WPS requirements.
A WPS issue can arise when MoHRE’s system cannot see that salaries have been paid properly. The most common reason for a WPS non-compliance flag arising is salaries not being paid to the employees on time, and salaries not being paid in accordance to the employees contractual agreement. However, WPS non-compliance can be flagged even if the employees have been paid. In some cases, the company may have paid salaries through outside the WPS routes, such as through an overseas bank account, in cash or direct bank transfer without uploading Salary Information File (SIF) which contains employee and company MOL numbers.
SIFs are the UAE’s formatted files that need to be uploaded to a Company’s bank account in order to disburse salaries. The SIF file is the main link between the Ministry of Labour (MOL) and the Central Bank of the UAE. These files generally contain the Company’s MOL ID number, as well as the employees’ MOL ID number. This linkage is what allows WPS to confirm that employees have been paid through the right entity, at the right time, and in accordance with their contractual obligations. These files need to be carefully prepared, as any errors on them can result in a failed payroll run.
It is also important to understand the distinction between being flagged for WPS non-compliance and receiving a WPS block. A flag is usually a warning or compliance issue showing that MoHRE has identified a salary payment concern, and it is up to the Company to rectify that at the earliest possible opportunity. A WPS block is more serious as it can restrict the Company’s ability to process services, including issuing new work permits and visas. Under the WPS regulations that are regulated by the UAE Labour Law as well as the Ministerial Resolution No. 598 of 2022, all employers who fail to pay wages within the required timeframe and method are subject to receiving a WPS block and, along with it, accompanying sanctions.
Here are some scenarios on what may cause a WPS block and how to resolve them:
Company A Has Not Been Paying Employee Salaries Through WPS
In practice, the way to unblock WPS is dependent on the reason for the WPS block. If we look at the more common situations, the first reason is in a situation where an employer has not been paying their employees’ salaries at all. This could be down to several reasons, such as the employee has been paid in cash, or the Company is unable to make payments to the employee due to economic constraints, business foreclosure, and more. Regardless of the reasoning why, the employer will need to settle the outstanding salaries first to unblock their WPS. Once the outstanding salaries have been paid, the Company will need to prepare clear proof of payment, such as bank transfer copies. It is also helpful to obtain a signed confirmation from each affected employee confirming that they have received their salary due to them for the relevant period.
Company A Has Been Paying Salaries Through An Overseas Bank Account
Another scenario is where the employees have been paid, but through the Company’s international bank account rather than their registered UAE corporate bank. This often happens where the employer does not yet have a UAE corporate bank account or where salaries have been transferred from an international account. In these cases, the Company can submit a WPS exemption request. This exemption request generally should include proof of those international payments made to each employee, along with payslips for the months in question, and a clear, legally translated explanation in Arabic as to why WPS regulations were not followed. A signed employee acknowledgment confirming that they received their contractual salaries is also very important.
Company A Has Not Been Paying Salaries To An Overseas Employee
A similar scenario in which a Company may receive a WPS non-compliance flag is where an employee is being paid outside of the UAE payroll route, for example into a non-UAE bank account or from the Company’s international bank account. In these cases, the employee may have been paid in full and on time, but because the salary has not been processed through the usual UAE WPS channels, MoHRE’s system may not be able to automatically identify or reconcile that payment against the employee’s registered UAE employment contract. The result is that the employee may appear, from a WPS monitoring perspective, as unpaid or underpaid, even where there has been no actual failure to pay salary.
The WPS rules do recognise a limited exception for certain foreign employees who receive their wages outside the UAE, but this is not automatic. The employer must be able to justify the arrangement, obtain the employee’s consent, retain clear supporting evidence of the external salary payments, and submit the relevant application to MoHRE so that the employee is correctly treated as exempt from the ordinary WPS payment requirement. Without this formal step, the Company may still receive a non-compliance notification because the system has no visibility over the off-system payment, even though the salary itself has been paid.
WPS Exemptions
There are certain circumstances under which a WPS exemption can be applied. These exemptions do not remove the employees’ right to receive their agreed wages, but they recognise that there may be a valid reason why a salary does not appear through the usual Wage Protection System payment route for a particular month. Common examples include:
- All new employees who have recently joined a Company are granted a 30 day grace period from WPS. This means that an employee who joins mid-month will be exempt to be paid through WPS till the second payroll run.
- Employees who are placed on unpaid leave and where the leave has been properly registered and submitted to the MOHRE. Companies are required to notify and submit an unpaid leave request with MoHRE, including the relevant period that the employee will remain on unpaid leave.
- All employees who have an active labour related complaint or case that has been referred to the judiciary. In these circumstances, employees’ salary position may be subject to an ongoing formal dispute or court process.
- Employees who have been formally reported as absconding. This exemption should only be relied upon where the correct absconding report has been submitted through MoHRE. A Company should not treat an employee as exempt from WPS simply because they are absent from work or currently unreachable. Absconding cases can be filed in situations where an employee has left the UAE unannounced and refuses to return to work.
- Employees who are currently outside of the UAE on a long-term secondment or agreed time away and are receiving their wages into an overseas bank account or through an international payroll arrangement. This too needs to be submitted and justified to MoHRE and there needs to be a clear consensual agreement from the Employee confirming that they acknowledge their wages will be paid through other channels.
The key point here is that a WPS block is not always impossible to fix. The Ministry usually needs does a WPS block check and requires evidence, consistency, and a clear explanation. Companies should act quickly when they become aware of WPS non-compliance, keep salary records organised, ensure employees confirm receipt of payments, or are sent monthly payslips, and move future salary payments through WPS wherever possible to avoid salary delays. Payroll and electronic salary transfer system salary payments are important for WPS compliance and therefore incredibly important for you to manage properly. For support with employee salaries, accurate payment and payroll services that adhere to WPS, contact us.
