The Wage Protection System (WPS) is an initiative founded by the UAE Government to protect employee salaries and help companies meet their financial obligations.
It offers unrivaled protection for employee remuneration and applies penalties and consequences to any defaulting organization within a very short time frame.
WPS helps improve a company’s efficiency and performance, which helps grow the economy of the UAE and widen our market potential.
Money makes the world go round, as the saying goes, and for many of us, when it comes to salaries, that couldn’t be more accurate.
Our monthly remuneration for a job well done is how we cover our rent or mortgage, how we pay our bills and how we fund our little luxuries from shopping to entertainment.
It’s why so many people put in extra hours or effort and how we can measure our professional worth. It is the accord we make with our employers that gets us out of bed in the morning, and it is one that should always be protected.
That is exactly where the Wage Protection System (WPS) in the UAE comes in.
What is WPS?
The WPS is an initiative that began in 2009 to safeguard the payment of wages by ensuring all companies use an electronic salary transfer system that is authorized, and regulated, by the government. Developed by the Central Bank of the UAE, the WPS allows for payments to be made only through selected financial institutions, including banks and bureaux de changes, all of which must be reputable and approved by them.
Most importantly, the WPS allows the Ministry of Labour to operate a database in which all private sector wages are recorded and verified, thereby ensuring they can guarantee timely and full payments across all sectors and industries and at all levels of an organization, from the bottom to the top. By using the latest technologies, WPS can easily identify and penalize defaulting companies.
How does WPS work?
One primary reason why the Wage Protection System is so helpful for company growth and employee protection is its simplicity and efficiency. The WPS system was designed to utilize efficient technologies and work with existing company systems to allow them to process salaries in a more effective manner.
Firstly, private companies are required to be registered with the Ministry and have an account with a financial institution that is approved and authorized by the Central Bank of the UAE. Every company must then provide a detailed list of their employees, their remuneration agreements and a regular payment schedule. This list is shared with the Central Bank and the Ministry of Labour to ensure it conforms to the company’s registration details. From this point on, all workers’ wages will be transferred via WPS according to the specified dates as per their contract. Employers must bear all costs and make payments within two dates of the agreed timeframe or the company risks Ministry involvement and potential penalties.
Why WPS benefits you
Ultimately, it offers you both protection and insurance. Two topics that are very important to us, so we know how important they are to you.
A company’s ability to operate can be directly impacted by its failure to adhere to the rules of the WPS system, so it is crucial that they meet its requirements every month.
Every employee registered in the WPS system is monitored, and even a one-month discrepancy is noted and highlighted.
The foundation of the WPS was a vital step in the Ministry of Labour’s efforts to bring the UAE into line with international standards and contribute to its position as a regional leader in the global economy.
According to their initial reports, the WPS was specifically designed to act as a model for others to follow that would:
- Demonstrate the UAE’s commitment to protecting the wages of workers at all levels
- Provide an innovative solution that would allow for greater efficiency in salary payments and safeguard the interests of employers and employees
- Strengthen work relationships between companies and employees within the UAE in order to showcase the country as a world leader in job security and attract overseas talent
- Ensure that transparency and competitiveness is entrenched across the private sector
- Keep the Ministry of Labour aware of private sector remuneration data, which would allow them to remain abreast of changes and give them the ability to hold employers to account, especially during market fluctuations
- Act as a proactive measure that would reduce labor disputes surrounding salaries and offer efficient resolutions when such matters arose
Companies that fail to meet the WPS requirements, according to their contracts, can have their ability to open new work permits revoked and will be unable to hire new staff. They can also have further penalties issues against them in accordance with Ministerial Resolution No. 788 of 2009.
Why WPS benefits your company
In a nutshell, a WPS office is a more successful office. Whether you are a company owner yourself or merely an employee, the WPS system in the UAE is good for everyone.
On a company efficiency level, the WPS connect allows for increased fluidity in accounting and highly increased efficiency for the HR and accounts teams. In fact, WPS compatible HR and payroll software solutions, such as Aqeed People, are the leading resources for teams across the country.
The guidelines of WPS will often help newer and smaller companies stay on top of their responsibilities and prevent them from growing too fast.
WPS connect helps SMEs manage their accounting and access assistance with financial planning. It ensures that larger organizations never get complacent about their employees and that no one will fall through the cracks. Its innovative technological development offers a seamless transition for existing HR and accounting software, which saves the company time and money.
These benefits affect everyone in the organization, because if the WPS can help your company perform better, then its profitability will increase, which could only mean good things for a potential salary increase or bonus. Best of all, growth in company performance also benefits the broader market as a whole and acts as a boost to the economy of the UAE.
The introduction of the WPS system in the UAE was a profound moment for the country as a facilitator of economic growth, as well as a guardian of job security and employee rights. It is a vital part of the country’s commitment to growth in business performance today, and long into the future.