The UAE Wages Protection System

The MinisterialDecree 788 of 2009 (Protection of Wages) ("WPS") came into force on 1September 2009 in the United Arab Emirates ("UAE").

Since 2009, The United Arab Emirates has demonstrated significant efforts towards ensuring and protecting the rights of workers in the UAE with the implementation of the Wages Protection System (WPS). The WPS initiative ensures that salary payments are properly regulated; payment of employee wages must be made by direct electronic transfer into local bank accounts via regulated domestic banks, exchange bureaus, or financial institutions approved and authorized to provide the service.

Developed by the Central Bank of the UAE, the Wages Protection System allows the Ministry of Labour to create a database that records salary payments in the private sector to monitor and guarantee the timely and full payment of wages. Through the database, defaulting companies can be easily identified and penalized. The WPS covers all institutions registered with the Ministry of Labour across all sectors and industries in the UAE and compliance with the WPS is mandatory. Government entities are exempt from WPS and it is also not applicable in Free Zones.

How It Works:

1.        Open an account with one of the banks operating in UAE.

2.        Select a WPS agent that is approved and authorized by the Central Bank of the UAE (WPS agent service can be provided by a bank, exchange bureau, or a financial institution).

3.        Create a detailed wages list for all employees and send a copy to WPS agent.

4.        Issue instructions to the bank to transfer wages to workers. Instructions must be accompanied by the detailed wages list.

5.        The bank will send the payroll details for the employer to the WPS agent.

6.        The WPS agent will send detailed wage list and salary transfer instructions electronically to the Central Bank of the UAE, who will then forward details to the Ministry of Labor database.  Data received will be checked to ensure that the details correspond with information already registered with the Ministry of Labour.

7.        Once approved by the Ministry of Labour, the WPS will send the salary information and authorization for payment to the appointed WPS agent in order to start paying the wages.

Employers must submit employee salaries via the WPS within two weeks of wage due date if paid on a monthly basis. Employers who fail to transfer payments on time will have work permits suspended until wage payments are made in full. Repeat violations can lead to suspensions of applications for work permits for a month or more.

Employers must also bear all costs associated with implementing the WPS (bank fees, agent fees, etc.). In no form may an employer attempt to share or deduct costs from employee wages.

The Ministry of Labor provides companies with a tool to create detailed wage lists. For steps how to download and use the WPS service, please refer to The Ministry of Labor – Wages Protection System User Manual.