In the United Arab Emirates, all private enterprises must seek approval from the Ministry of Human Resources and Emiratisation Wage Payment Protection (MOHRE) to obtain work permits for their employees. Additionally, all MOHRE employers need to work with an authorized provider of payroll solutions in the UAE — a partner agent — so they can use the UAE electronic wage payment protection system.
The UAE wages protection system is the electronic wage-processing system all employers registered with MOHRE must use to pay their employees. It’s a platform owned and operated by the Central Bank of the UAE (CBUAE) for the benefit of MOHRE and, to a certain extent, the Labor Regulatory Authority (LRA).
To use the UAE WPS, you need two things:
A WPS agent can be a bank, an exchange, or some other financial institution. They will serve as an essential conduit between you and the wage protection system.
WPS agents primarily process employee payment orders, subject to the approval and go-signal from MOHRE and the CBUAE. Additionally, they serve as an extra pair of eyes, reviewing and monitoring salary information submissions. Prevent mistakes that can delay salary payments and cause non-compliance penalties.
The UAE WPS is an automated wage payment system that requires a linked funding source or account.
Note: Some WPS agents offer greater flexibility by offering multiple payment methods.
Electronic wage payment systems like the UAE WPS benefit all involved parties, including the government that mandates it and the employees that get paid through it.
The government benefits because the system:
1. Allows regulation and compliance monitoring; e.g., MOHRE can monitor employers’ compliance with labor laws.
2. Provides an easy way to check, as needed, if employers are complying with the terms of their employer-employee contracts; e.g., MOHRE and the Labor Regulatory Authority can perform continuous (or even random) checks on employers’ payment histories, current payments and their employer-employee contracts.
3. Enables the government to protect the welfare of its employees; e.g., MOHRE can enforce the labor law that says salaries must be paid on the first day immediately following a wage cycle.
4. Is a rich source of information and data on fund flows, base salaries, number of employees, transaction values, and transaction volumes; e.g., MOHRE and the LRA can use the data to draw conclusions on the country’s state of employment, salaries, and more.
Employees benefit from electronic wage payment systems because they encourage and operationalize timely and regular payments from employers to employees. Specifically in the case of the UAE WPS:
1. Employees can rely on regular and timely salaries every month.
2. The system enforces labor laws, for instance, the minimum percentage of their indicated salaries employees must receive every cycle.
3. Employee’s rights are enforced.
It becomes easier to check payment records because employers submit this information to the system every month.
Electronic wage payment systems like the WPS force employers to follow labor laws and regulations and be accountable to regulatory bodies and agencies. It’s a system that ensures employers regularly pay their employees’ wages.
They also make it convenient for employers to pay their employees, as they streamline salary disbursements for businesses of all sizes. Here’s a closer look at how this modern approach transforms employer payroll processes:
Flexibility is the most significant advantage of electronic wage payment processing systems over traditional wage disbursement techniques. You can perform transactions on your schedule, regardless of your location.
In the UAE WPS, your partner agent may have a WPS online portal where you can log in to process employee payments. This portal may be accessible on desktops, laptops and even mobile devices, ensuring you will never miss a payment and can work anytime from anywhere.
The flexibility also extends to payment options. Specifically, WPS partner agents may allow enterprises to register multiple payment methods. This ensures you can fund payments using whichever method is most convenient at the time.
Indeed, a mandatory electronic wage payment system like the UAE WPS requires you to complete the necessary steps to get started. However, disbursing employee salaries is more convenient once you’re in the system and have a capable partner agent to rely on. The flexibility ensures that salary disbursements are never delayed, improving employee satisfaction and loyalty.
Agent portals with user-friendly interfaces make navigating through the wage payment processes straightforward. This allows you to complete transactions quickly and efficiently.
Additionally, simple and intuitive interfaces mean new users find them easy to use and get accustomed to. This reduces the learning curve for business owners, minimizing errors and ensuring a smooth wage-disbursal process for employers (and, again, timely employee payments).
Electronic wage payment platforms often come equipped with tools for managing employee information. This centralized employee data management reduces administrative burdens and improves accuracy.
In the UAE WPS, employers must prepare a salary information file (SIF) every payment cycle. The SIF contains all information necessary to disburse employee payments, including the employee’s:
It’s easier to generate SIFs if the partner agent has an employee information management function. You can readily update the employee roster, salaries, bonuses, deductions, and personal employee details.
The improved accuracy also means the SIF is less likely to be returned by the CBUAE (the government department that owns the platform) and MOHRE (which has oversight on employers) for errors or invalid entries. This means fewer delays in salary disbursements.
Note: Accuracy is further improved, and delays are avoided if the WPS platform has a built-in approval system. The salary information undergoes a review process at the WPS partner agent portal before it’s finalized and submitted to the CBUAE and MOHRE.
Since employers disburse salaries electronically, every event can be logged and registered. The system automatically compiles data on salary disbursements, deductions, changes to employee information, funding sources, amounts paid, etc. Consequently, detailed payroll reports can be generated easily, saving time and reducing the potential for human errors in report preparation.
Electronic wage payment processing systems like the UAE WPS make monitoring more straightforward for government agencies, protect the welfare of employees, and ensure convenience for employers. It’s time that all enterprises embrace this new mode of salary disbursal.
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