Global Payroll Outsourcing Leader Issues an Alert
UAE announces changes to the Wage Protection System (WPS)
The UAE government has announced, that the Ministry of Human Resources and Emiratization (MOHRE) systems are now linked with the systems of the Identity, Immigration and Passports Authority. This will allow employers to exclude the following categories of employees from the Wage Protection System (WPS) compliance requirements:
- Employees stationed outside the UAE;
- Employees who have been reported absconding by their employers by filing “Escape Reports”;
- Employees who have filed a lawsuit against their employer in the Labour Court.
In addition, the MOHRE has provided the following additional guidelines with respect to the general WPS compliance:
- At least 70% of all salaries must be paid through.
- A new employee must be added to the WPS process within 60 calendar days from the execution of their employment agreement.
- No more than 10% of an employee’s salary can be deducted for any reason.
All salaries must be paid through WPS by the 15th calendar day of the following month. The employer’s MOHRE account will be blocked if salaries are not processed on time. The MOHRE account will be unblocked automatically if salaries are paid before the last calendar day of the month. In the event the employer fails to pay employees’ salaries before the end of the following month they were due, an administrative penalty will be imposed on the company for the late payment of wages.
MOHRE has created two alternatives for employers to unblock their services due to late salary payments:
- Employer pays all salaries due in full, pays a penalty for any salaries below the accepted threshold rate of 70% and requests a “paid-fee assessment visit”. OR
- Employer pays all salaries due in full and process three sequential payrolls through WPS on time.
In case an employer is late with its salary payments three or more times during a calendar year, the company owner or their representative is required to attend a guidance session at MOHRE.