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Payroll Outsourcing in the UAE – How to find the right provider?

10 things to consider when selecting your payroll outsourcing provider

Payroll processing seems so easy in the UAE. Is it really possible to go wrong when picking a payroll provider for processing your payroll in Dubai or Abu Dhabi? Unfortunately, it is. There is an abundance of payroll outsourcing providers in the UAE with varying track records and sometime questionable business practices. Only few of the service provider are reliable and meet the international service quality expectations.

Here are 10 items that you should cover during your payroll outsourcing partner selection process in the UAE:

  1. Service Scope – Like with any other professional services, defining and understanding the scope of the payroll outsourcing services is the most critical part of the service provider selection process. A good service provider should provide you a very clear scope description, which outlines unmistakably your and their responsibilities. You are in trouble if their scope fits on one page and it does not cover the following items:
    1. Regulatory updates
    2. Statutory filings and payments
    3. End-of-service calculations
    4. WPS and salary transfers
    5. Distribution of payslips and reports
    6. Audit assistance
    7. Retroactive calculations
    8. Financial accruals
    9. Leave management
  2. In-Country Presence – Many service providers claim that they provide payroll outsourcing services in Abu Dhabi, Dubai, UAE and elsewhere in the Middle East but in reality have no offices or employees in these locations. Stay away from the providers who process your payroll but cannot help you when an inspector from the Ministry of Labor walks into your office.
  3. Global Payroll Network Membership – Make sure that the potential service provider is a partner of a global payroll outsourcing network. Service providers have to go through a vigorous due diligence process before they are accepted as a partner of a global network. You are less likely to go wrong with a payroll provider that has passed this due diligence. Their membership also ensures that you have an easy access to a global payroll outsourcing network when your business expands and you need payroll outsourcing services outside the UAE.
  4. Service Level Agreement – Ensure that the service provider is willing to enter into a service level agreement, which ties their service fees to specific performance goals, including:
    1. Number of payroll calculation errors
    2. Processing and payment timeliness
    3. Turnaround time for queries and questions
  5. Professional Indemnity Insurance – Confirm that the service provider has sufficient professional indemnity insurance cover. This allows you to recover any losses caused by the gross negligence of the service provider, including any governmental fines for wrong or late payroll or tax calculations.
  6. Payroll Software – It is surprising how many payroll outsourcing services providers use either Excel or third-party software to calculate payroll. Almost all the Big 4 accounting firm in the UAE process their client’s payroll manually or using third-party software solutions. This makes their services very expensive. Even the slightest changes or customizations to the payroll reports are either not possible or very expensive.
  7. Electronic Interfaces – Check whether the service provider is able to electronically interface with your existing software solutions, including:
    1. Accounting Software for electronic uploading general ledger transactions
    2. Human Resources software for downloading HR records
    3. Time & Attendance software for downloading employee attendance data; i.e. overtime, absences, etc.
  8. Employee Self Service – Ask the payroll outsourcing provider whether they are able to provide your employees with an access to an employee self-service portal and mobile app for updating their personal information, requesting leaves, recording overtime, viewing payslips, etc.
  9. Helpline – Make certain that the service provider can provide access to their service delivery staff during the non-working hours and weekends. Payroll is extremely time sensitive. You do not want to be facing a situation when you need to urgently reach the payroll outsourcing provider because your WPS file was rejected or payroll calculations need to be revised and you cannot reach anyone at the service provider’s office.
  10. References – This goes without saying. Make sure that you check the reference of the provider.

Outsourcing your payroll function is probably one of the best things you can do in the UAE or Middle East in general. It will save you money and will allow you to focus on other business critical activities. There is no shortage of payroll outsourcing service providers in Abu Dhabi and Dubai. However, you need to be very careful when selecting a payroll outsourcing services provider for your organization. You will find the right and reliable service provider if you ask the right questions during the selection process.

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