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Payroll & HR

Payroll and WPS Compliance Guide for UAE

8 min read
Last updated: December 2025

Table of Contents

Introduction to WPS

The Wage Protection System (WPS) is a mandatory electronic salary transfer system introduced by the UAE Ministry of Human Resources and Emiratisation (MOHRE) to ensure timely and full payment of wages to employees.

Key Requirement: All private sector companies in the UAE must pay employee salaries through WPS-registered banks or exchange houses by the agreed salary payment date.

WPS Compliance Requirements

Mandatory Elements

  • Register with WPS-approved financial institution
  • Pay salaries electronically through WPS
  • Upload SIF file with salary details
  • Maintain employee bank account details
  • Issue digital or physical payslips

Payment Timeline

  • • Salaries must be paid by the agreed payment date in employment contract
  • • Maximum allowed delay: 10 working days from the agreed date
  • • Overtime must be paid within 2 months of performance

Payroll Processing Steps

1

Calculate Gross Salary

Basic salary + allowances + overtime

2

Apply Deductions

Pension contributions, loans, advances, absences

3

Calculate Net Salary

Gross salary minus all deductions

4

Generate SIF File

Salary Information File for WPS upload

5

Upload to Bank

Submit SIF file to WPS-registered bank

6

Process Payment

Bank transfers to employee accounts

7

Issue Payslips

Provide salary breakdown to employees

8

Record in Books

Post payroll journal entries to accounting system

Salary Components

Standard Additions

  • • Basic Salary
  • • Housing Allowance
  • • Transportation Allowance
  • • Overtime Pay
  • • Commission
  • • Bonus

Common Deductions

  • • Pension Contribution (5%)
  • • Loan Repayments
  • • Salary Advances
  • • Absence Deductions
  • • Late Coming Penalties
  • • Other Authorized Deductions

Non-Compliance Penalties

MOHRE Penalties for WPS Violations

  • Late salary payment: Fine of AED 5,000 per affected employee
  • Non-payment of wages: Fines up to AED 1 million
  • Work permit suspensions: Cannot hire new employees
  • License cancellation: Business closure for repeated violations

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