UAE: Employers Are Encouraged To Use WPS For All Wage Payments

UAE Employers Are Encouraged To Use WPS For All Wage Payments

The Ministry of Human Resources and Emiratisation in the UAE (MoHRE) has called on employers in the country hiring domestic workers to register them in the Wage Protection System (WPS) and pay salaries using the services under the scheme.

Starting April 1, 2023, salaries can be paid using WPS to 5 out of the 19 categories of domestic workers approved in the UAE. Domestic workers registered as personal trainers, personal assistants, housekeepers, private agricultural engineers, and personal tutors, will need to have their salaries credited using WPS.

Wage Protection System(WPS)

Payments for the above-mentioned five categories via WPS can be excluded under the below circumstances:

  • In case the domestic worker is unemployed or has a pending complaint under the consideration of the labour court.
  • If the domestic worker has an “Absence from Work” notice issued against them.
  • In case the domestic workers are newly registered and are still within 30 days of beginning their new employment contract.
Wage Protection System(WPS)

The other categories of domestic workers in the UAE include housemaids, nannies, family drivers, cooks, gardeners, security guards, private nurses, farmers, falcon caretakers, sailors, private representatives, general help workers, and shepherds.

Even though WPS was initially applicable only to businesses, the system was provided as an option for families hiring domestic workers from January 27, 2022. The opening of WPS for families hiring domestic workers was a move that allowed employers to prove that salaries were paid on time, which also helped to ensure that a healthy and trust-filled relationship existed between the employer and the employee.

The Wage Protection System in the UAE, introduced back in 2009 by the Ministry of Human Resources and Emiratiusation in cooperation with the Central Bank of UAE, is an electronic wage transfer system in the country that allows employers to easily pay their employees’ salaries on time. It also gives the government bodies to monitor the salary processing, in case the need arises, to ensure that employees are paid the salary that they are eligible to receive as per their employment contract.

All businesses operating in the UAE and employing a workforce within the country are legally bound to be registered the business as well as its employees in WPS.

Benefits of the WPS scheme include the ability for businesses to speed up the process of paying salaries to their employees, and also gives the employees to have a record of their salaries so that in case of any disputes, all the salary-related information is available within a system that’s also accessible by the government.

As per labour laws in the UAE, employees are eligible for the previous month’s salary on the first day of the current month, if not specifically altered as part of the employment contract. Thus, businesses operating in the UAE are bound to pay the salaries of the previous month to their employees on the first day of the current month. Businesses that do not pay employee salaries within the first 15 days of the current month are considered defaulters. The 15-day time period can be shorter in cases specifically mentioned as part of the employment contract.

Even though there is no concept of minimum wages set in the UAE, the labour laws in the country do mention that salaries provided to the employees must be sufficient enough to cover their basic necessities.

Salary payments by establishments to their employees, under the WPS, can be done through financial institutions or banks that are authorized for the activity by the UAE Central Bank. Almost all the banks in the country, including Emirates NBD, Emirates Islamic, RAK Bank, UAQ Bank, Bank of Fujairah, ADCB, FAB, Standard Chartered, HSBC, etc. are eligible to process the salaries of businesses.

The MoHRE does not process transactions or deal with owners of businesses operating in the country that aren’t registered with WPS or in case they do not process employee salaries using the system.

Generally, payment of salaries using WPS is done in the Emirati Dirham currency. However, if the salary payment is agreed upon in any other form of currency as per the employment contract, then that can also be done with WPS.

Businesses failing to meet the salary payment guidelines set by MoHRE are faced with several penalties.

For instance, businesses failing to pay salaries by the deadline will have electronic monitoring conducted on them to ensure salaries are paid on time.

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In case the salary payment is delayed by 3 to 10 days, then notifications and reminders of the same will be sent to the defaulting businesses.

In case the delay in salary payment crosses 17 days, then new work permits will no longer be issued for the business. Moreover, a notification explaining the suspension of new work permit issuance will be sent to the business.

In case a delay of 17 days or more is done by a business that employs over 50 employees, then they will undergo inspections under the Electronic Monitoring and Inspection System, wherein an inspector will validate the situation and issue necessary warnings.

If the business delays salary payment for 45 days or more, then the public prosecutor is notified about the violation and competent federal/local authorities are notified to take further legal actions.

In case the businesses commit the same salary delay violation again within the next 6 months, then fines will be imposed on the businesses and the business will be recategorized as Category (3), which defines the business to be violating UAE Labour laws and executive regulations, standards for the protection of rights of the labour, and resolutions that regulars the labour market.

An OG 90's Middle East-born Indian guy with a love for everything "Gulf". My love for culture, food, and opportunities in the UAE makes me want to share the latest news and events in the UAE to keep my fellow UAE residents in the loop of what's happening around us in the country.

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