Wages Protection System is a digital platform that transfers employee salaries via approved and authorized financial entities such as banks, bureaux de Change and other financial institutions.
To establish a database for recording wage payments in the private sector, the UAE central bank has developed a system that helps the Ministry Of Labor, enabling the employed to receive their agreed-upon wages without delay and in full. This system was established in the year 2019.
The Objective Behind the Introduction of WPS
- To ensure the security of the salary of employees.
- Safeguard employees’ interests and provide a system that minimizes time and resources.
- The UAE should upgrade job security within the private sector and work to strengthen the relationship between employees while upholding their rights.
- Open and uncomplicated payment method.
- To protect employees and minimize labor conflicts related to wages
Participants for WPS
- Workers: A person employed in the private sector based on an assigned salary and also who holds a labor card published by the ministry.
- Employers: Anybody who owns a company or establishments registered with the ministry and has one or more workers.
- Bank: The employer uses a bank account at a financial institution to transfer payments through the WPS system to the appointed agent responsible for distributing payments to employees.
- Agents: it is possible for any financial institution, bank, or bureau de change approved by the central bank of the UAE can offer wage payment services through the wage protection system. A regular update will be issued by the Central Bank containing the names of approved and authorized agents.
Enrolling for WPS Needs
- The business must be registered with the ministry.
- There should be a bank account with any of the banks that are functioning in the UAE.
- The company must enter into a contractual agreement with the bank, bureau de Change or financial institutions approved by the Central Bank of the UAE to access the service.
- It is via WPS that the payment of workers will be processed by the deadline mentioned in the ministerial resolution No.788 of 2009.
- Within two weeks of their due date, the institution has to transfer workers’ wages via WPS. or on the specified date in the employment contract, in cases where wages are distributed more frequently than monthly.
- It is the responsibility of the employer to incur all associated expenses upon joining the WPS. Such as bank fees, service provider charges, and all other costs. It is not permitted for employers to share any costs with workers that include deducting from their wages directly or indirectly. If you need any professional assistance you can visit the business setup in Dubai.
The WPS Application Process
- There should be a bank account with one of the operating banks in the country.
- There should be a contractual agreement by the company with an APS agent, which is approved by the Central Bank of the UAE to offer the required service. It may either be the bank bureau de Change or a financial institution.
- The employer provides instructions to its bank to transfer wages to workers. There are detailed instructions regarding the wage list, and a copy should be forwarded to the agent.
- The central bank of the UAE will receive the details and wages, even the salary transaction instructions, from the WPS system, which transmits electronically.
- To start paying wages, the WPS sends the information that has been approved to the designated agent. You can also visit the Company Setup in IFZA for additional reference.
Outcomes of Not Being in WPS
There will be a denial of obtaining new work permits if the institution fails to transfer workers’ wages by the deadlines specified. This ban can only be lifted after the complete transfer of workers’ salaries.
If there is a delay in payment of wages for more than one month of the due date, you will be deprived of the right to obtain a new work permit, including all institutions owned by the violating entity. Also, all those responsible for the violation will be referred to the court in compliance with Ministerial Resolution No.788 of 2009.
Conclusion
The details mentioned above indicate a vital requirement for WPS in the UAE. The business entity should align with the guidelines provided by the Central Bank of the UAE. You can contact Golden Fortune for all the information regarding the business setup to avoid penalties and other consequences.
