Business organizations registered with the Ministry of Human Resources and Emiratisation (MoHRE) in the United Arab Emirates are required to process employee salaries through the UAE wages protection system (WPS). Instituted to protect employees and ensure timely salary payments, this electronic wage payment system also benefits employers. Through the help of their chosen provider of payroll solutions in the UAE – i.e., their WPS agent – UAE companies can streamline and automate their payroll processing workflows.
The WPS Process
WPS provides a standard electronic payment system, so businesses don’t need to create their own. The Central Bank of the UAE operates the WPS backbone. To take advantage of this service, you need to comply with the Central Bank’s mandated WPS standards and procedures.
Fundamentally, this means that you must submit your salary information to the UAE wages protection system and make the necessary funds available for salary payments via a UAE bank account. Of course, the process is a little more nuanced than that, but not by a lot.
The following are the specific steps you need to follow to use the UAE WPS:
- Prepare your salary information file (SIF); more on this later.
- Submit your SIF to your WPS agent. You can do this electronically through your WPS agent’s online portal or platform.
- The WPS agent reviews the SIF. They will submit it to the UAE WPS if there are no glaring errors. If corrections are needed, your WPS agent will return it to you for revision.
- Once the Central Bank and MOHRE receive your SIF, they will review it for accuracy and compliance with wage payment regulations. If it passes their review, they will issue a payment order to the WPS agent. Otherwise, they will return your SIF to your WPS agent, and the latter will send it back to you. You must address the issues flagged by MOHRE or the Central Bank.
- Once your WPS agent receives the payment order, it will distribute the wages specified in the approved SIF to employee accounts using the funds in the corporate bank account you’ve nominated for the purpose.
Preparing the Salary Information File (SIF)
The salary information file is a digital spreadsheet that contains comprehensive wage information for every employee registered on the WPS. Essentially, it provides an itemized computation of every employee’s salary.
The SIF has three component records: the employee details record (EDR), the employee variable pay (EVP) record, and the salary control record (SCR).
The Employee Details Record
Every employee has an employee details record. EDR rows start with a column that says “EDR” to indicate that the row belongs to the employee details record section.
Every EDR row corresponds to one employee, and it contains the following information, arranged in columns, for that employee:
- The 14-digit labor card number the MOHRE provided when the employer secured the employee visa
- The bank routing code provided by the payroll agent
- The employee’s bank account number
- The wage period start date
- The wage period end date
- The wage period duration
- The base salary, as stated in the employment contract
- Any variable salary
- The number of holidays or days the employee was on leave
The Employee Variable Pay Record
If part of an employee’s WPS salary is from variable pay (bonuses, overtime, commissions, gratuities, etc.), the SIF must include a breakdown of these salary components. Such a breakdown can be found in the employee variable pay record section, indicated by rows that start with a column that says “EVP.”
EVP records have their own rows, and every employee has an EVP record. The columns in the EVP section provide a breakdown of the employees’ variable pay.
The Salary Control Record
The salary control record section provides information about you, the employer. It is a single-row record at the bottom of the SIF, with a first column that says “SCR” to indicate what type of record it is.
The SCR row contains the following information:
- The MOHRE employer ID
- The bank routing code
- The SIF creation date
- The SIF creation time
- Payroll month and year
- Number of EDR entries (essentially the number of EDR rows)
- Total salary paid
- Currency used; should say AED
Naming and Saving the SIF
After filling out all the columns and including all pertinent information on the spreadsheet, save the file as a SIF using the .sif file extension. You must also give it a 25-digit file name that combines the following information:
- The employer’s 13-digit MOHRE-provided employer ID
- The file creation date in the year, month and date (YYMMDD) format
- The file creation time in the hour, minute and second (HHMMSS) format
The UAE Wages Protection System
By its very name and nature, the UAE WPS has been instituted to protect wage earners in the UAE. It ensures the government can easily monitor employers’ compliance with the country’s labor laws and regulations. However, it also benefits UAE employers by providing an easy-to-use electronic payment system that automates payroll processing and makes it more efficient.
Published By: Aize Perez
