A Guide to WPS in the UAE: Registration, Penalties & More

Who Must Register for WPS?

All private sector employers registered with MOHRE are required to register for WPS, regardless of company size or industry. This includes small and medium-sized enterprises (SMEs).

Some free zones have their own payroll systems, but most are integrated with or aligned to WPS. Employers operating in free zones must check specific requirements with the respective authority.

Exemptions:

• Government entities.

• Domestic workers.

Prerequisites for WPS Registration

Before registering with WPS, companies must ensure:

1. Valid Trade License – The business must hold an active trade license.

2. MOHRE Registration – The company should be registered with MOHRE and have an establishment card.

3. Corporate Bank Account – A UAE-based corporate account is necessary for salary transfers.

4. Employee Records – Employees must be registered with MOHRE and hold valid labor contracts.

5. Agreement with Bank/Exchange House – Employers must partner with a bank or exchange house authorized by the Central Bank to process WPS payments.

WPS Registration Process

Step 1: Open a Corporate Account

Employers must have a corporate account with a UAE-licensed bank.

Step 2: Sign a WPS Agreement

The employer signs a WPS service agreement with their bank or an authorized exchange house.

Step 3: Prepare a Salary Information File (SIF)

The SIF is a specially formatted file containing details such as:

• Company establishment number.

• Employee names and labor card numbers.

• Salary details and pay period.

Step 4: Submit the SIF

The employer submits the SIF to the bank or exchange house, which validates and forwards it to the WPS system via the Central Bank.

Step 5: Salary Disbursement

Once approved, the salaries are transferred directly to employees’ accounts or payroll cards.

Step 6: Receive Confirmation

The employer is notified when the transfer is completed successfully.

Penalties for Non-Compliance

The UAE takes WPS compliance seriously. Employers who fail to register or delay salary payments face strict penalties.

Penalties include:

• Suspension of new work permits if salaries are not paid within 10 days of the due date.

• Financial fines that increase with the length of delay and number of employees affected.

• Company downgrading in MOHRE’s classification system.

• Referral to judicial authorities for repeated or severe violations.

• Temporary or permanent bans on government services.

These penalties not only damage a company’s reputation but can also disrupt business operations significantly.

Benefits of WPS

While some employers may see WPS as an additional administrative task, the system offers long-term benefits for both employers and employees.

For Employers:

• Ensures compliance with labor laws, avoiding fines and restrictions.

• Enhances corporate reputation as a fair and responsible employer.

• Provides clear wage records for internal auditing and financial management.

For Employees:

• Guarantees timely and accurate salary payments.

• Reduces disputes and enhances job security.

• Builds trust between employees and employers.

Common Mistakes to Avoid

Employers sometimes face issues due to common mistakes in WPS processing. These include:

• Submitting incorrect or incomplete SIF details.

• Not updating employee information in MOHRE records.

• Delaying salary submissions beyond the deadline.

• Partnering with financial institutions not authorized for WPS.

To avoid such mistakes, companies should train HR and payroll staff, automate payroll where possible, and conduct regular compliance checks.

Tips for Smooth WPS Compliance

• Always prepare and verify the Salary Information File carefully.

• Pay salaries before the due date to avoid penalties.

• Keep employee contracts and records updated with MOHRE.

• Use a reliable bank or exchange house with WPS expertise.

• Monitor compliance updates from MOHRE and the Central Bank.

Conclusion

The Wages Protection System (WPS) is more than a legal requirement—it is a framework designed to safeguard employees’ rights while promoting fair business practices in the UAE. For employers, registering with WPS and ensuring timely compliance is essential to avoid penalties, maintain a good standing with MOHRE, and build a trustworthy reputation.

By following the registration steps carefully, preparing accurate salary files, and paying wages on time, businesses can benefit from smoother operations, happier employees, and long-term growth in the UAE’s competitive market.