All employees must receive their salaries through the salary protection system by the 15th of each month.
A new resolution has just been issued by the Ministry of Human Resources and Emiratization. Ministerial Resolution No. 43 of 2022, is an update to the Emirates Wage Protection System (WPS).
It includes new measures and updates regarding the scope of the system for private sector companies to remain in compliance with the authorities.
Reminder on WPS in Dubai
As a reminder, the Ministry of Human Resources and Emiratization (MOHRE) has decided to implement a payroll processing system to facilitate payments and ensure the distribution of salaries to employees of private companies registered in the Mainland (this system does not concern companies registered in the Free Zone).
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What are the key new points in the resolution that employers need to be aware of?
The main change in this resolution, concerns the minimum amount of the employee’s salary that must be paid through the WPS system. Previously, the employer had to pay at least 80% of the employee’s salary, but with the new resolution the amount has increased to 90%.
The resolution also outlines several other key points with which employers are required to comply:
- All employee salaries must be paid by the due date via WPS.
- If wages are not transferred by the 15th of the month, the company will be blocked in the system from the 17th of the following month.
- Every month, 90% of the wages must be paid through the system to avoid the company being blocked and subject to fines.
- A 30-day grace period will be given to employers to pay salaries through the WPS to their new employees.
How to comply with the MOHRE?
In order to be fully compliant with the authorities, business leaders and their teams must ensure that the following points are met:
- A minimum of 90% of all employees’ salaries must be paid through WPS.
- For all employees who have left the company but remain under the sponsorship of their employer, it is necessary to immediately cancel their visas or place them on unpaid leave.
- Salary reduction agreements, for any reason, must be settled after payroll is processed.
- MOHRE only allows salary reductions for employees on unpaid leave and the employer must request this “advance unpaid leave” through the MOHRE system with a contract addendum signed by both parties.
- Only a 20% deduction from the employee’s monthly salary is allowed.
- WPS waivers are only allowed for employees who are out of the country.
How do I register for the WPS?
All private companies registered in the Mainland must register with the WPS. The following requirements must be met:
- The company must have a business bank account with a local bank;
- Have a contract with a bank, bureau de change or other financial institution in the UAE authorized by the Central Bank to make salary payments to employees;
- Pay all expenses related to the WPS, which may include bank and other institutional fees. Companies are not allowed to pass on these costs to their employees.
The changes brought about by this new resolution strengthen the protection of employees in the UAE, ensuring that they are paid on time.
How can Merritt Middle East help you?
Our firm advises and assists you to be compliant with the authorities and the MOHRE.
Our team also assists you in setting up the WPS system for your employees. Our HR package includes payroll and WPS management by our team of experts.
Also, we are competent in company formation and residence visas for you and your employees.
If you need help contact us by email email@example.com .