A Guide to Wage Protection System (WPS) in UAE

What is a Wage Protection System?

Wage Protection System or WPS is one of the successful HR services introduced by MoHRE (Ministry of Human Resource and Emiratization) in cooperation with the UAE Central Bank. It is an electronic system of salary payment that helps the organizations to transfer wages to their workers through bureau de change, banks, or any financial authorities that provide this legal service. The WPS was enforced in the UAE in July 2009 as per the Ministerial Decree no. 788. Some reinforcements were made in the system in the year 2016 as per the Ministerial Decree no. 739 and now the system covers 92% of the UAE. In the whole Arab region, one of the best HR services ever introduced was the Wages Protection System which solely focused the efforts of the UAE in safeguarding the wages of the working community. It enhanced the competitiveness and transparency inside the organizations of the country and had a positive effect on the work relationships within institutions. The research found out in 2015 that almost 3.5 million non-Emirati workers are advantaged by the WPS in UAE.

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Benefits of WPS

WPS has been enacted by the UAE in order to make the economy of the country strong and dynamic by the complete and on-time transfer of fixed wages to the workers to protect their interests. Following is how WPS benefits the workers, the organizations, and the country;

• It protects the wages of the workers that are fixed by the mutual consent of the workers and the organization.
• It makes the process of salary transfer easy, effortless, and less time-consuming. It is for sure an innovative way of protecting the interests of the workers
• It ensures that the workers are given equal rights, secures their employment, and improves work relationships inside the organizations.
• It makes the organizations more transparent towards protecting the laborers’ interests. In this way, it attracts more talented workers in the UAE from all around the world.
• WPS helps not only in reducing but also in dealing with various kinds of disputes regarding the workforce of the organizations.
• The ministry of Labor keeps the record of wages and updates it continuously which aids the government of the UAE in monitoring the labor force of the country efficiently.
• It helps the organizations in managing huge financial amounts and prevents correlated risks.

Also Read : Benefits of Outsourcing HR services in UAE

Targets of WPS

WPS impacts four different types of entities such as the following;

• Employers

Employers are one or more individuals that own a registered institute or organization. WPS takes the money/wages from the employers.

• Employees

Employees are workers of an institute or organization that work together to achieve a goal for the organization. WPS gives employees wages taken from the organization.

• Banks

WPS uses banks to keep the wages secure and transfer them to the employees. The institutions need a bank account for this purpose.

• Financial Agents

Financial agents are agents similar to banks that legally provide the services of payment using WPS. These financial agents are legalized by the Central Bank UAE.

Requirements to Join WPS

WPS is not only one of the excellent HR services but it is also a requirement to get your business legally registered with the Ministry of Human Resource and Emiratization. Every company, business group, or organization that is working under MoHRE needs to join WPS. Following are some necessary requirements that any UAE company needs to fulfill in order to join WPS;

1. The organization that wants to join WPS needs to register itself with MoHRE.
2. Since WPS uses banks and financial agents, the organization will need to have a bank account in any bank or financial authority.
3. The bank chosen for this purpose should be registered with UAE Central Bank in order to perform the WPS services. The ministry also provides a list of authorized agents that can be chosen for this purpose. Once a bank or agent is selected, both entities should sign the contract of agreeing upon payments and services, etc.
4. The Ministry has its own rules and regulations about when the wages would be received from the employers and sent to the employees. Everything happens according to the deadlines set by the Ministry in the same Ministerial Resolution no. 788.
5. All the charges involved in the process of joining and using WPS are solely the responsibility of the employers and the employer will not be able to charge the employees or deduct their salary for this purpose.
6. The employers will be responsible for handing over all the wages to the WPS to avoid any inconvenience.

Also Read : Why HR is important for your Business

WPS Fine in UAE

Frauds and crimes are possible in every field in today’s day and age. MoHRE has come up with ways to handle any fraudulent acts and the following is how fines apply as per Ministerial Resolution no. 15 of 2017;

1. If anyone tries to circumvent or evade the law and provides fake data for this purpose will have to pay 5,000 AED in case of a single worker and 50,000 AED in case of more than one worker.
2. The Ministry has defined certain due dates that need to be followed when it comes to paying wages. If an employer fails to pay within the due date, the fine would be 1,000 AED for each worker.
3. In case the employer forces the workers to sign fake salary slips, the fine would be 5,000 AED for each worker.

Similarly, there are other fines and penalties for different fraudulent acts.

Who Needs to Join WPS?

All the businesses, organizations, and institutions that are authorized by the Ministry of Human Resource and Emiratization need to join WPS in order to provide their services in the UAE. Any company that is not registered with MoHRE and wants to join WPS will first be required to get itself registered.

Consult FAR Consulting Middle East

The processes of WPS can be difficult to understand on one’s own self. Consult the best HR service providers i.e, FAR Consulting Middle East. You will be provided all the guidance you need in the process of setting your business, registering it, and working with WPS. From business registration to joining WPS, we will help you with the whole process with our excellent services.