Tim Elliott
Welcome to Lawgical, the UAE’s first and only legal podcast. My name is Tim Elliott. Lawgical comes to you from the Dubai-based legal firm, HPL Yamalova & Plewka. As ever, the Managing Partner, Ludmila Yamalova. Hello.
Ludmila Yamalova
Tim, great to be here with you as always.
Tim Elliott
This time, the WPS resolution. Ludmila, I’ll explain what that is. It’s the Wages Protection System. Now, as I understand it, all employers registered with the Ministry of Human Resources and Emiratisation—who we kind of know as MOHRE for the benefits of the podcast—have to subscribe to the Wages Protection System and pay wages of their employees through this system as per due dates. That’s the law. What I don’t understand or don’t really know much about, however, is how it works.
Ludmila Yamalova
Yes, I think there are several questions regarding this. One is how it works, which is a very relevant question, but two also, what’s the benefit? And I guess perhaps three, who does it apply to?
How it works is this: WPS, as you said, is the Wage Protection System, and it’s an official mechanism, if you will, that exists between the Ministry of Human Resources and Emiratisation (MOHRE) and ultimately the UAE Central Bank. There’s a mechanism between the ministry and the central bank, and therefore the individual banks, which allows employers—almost creating a default mechanism for employers under MOHRE—to pay the employees’ salaries through this WPS system, which is already incorporated as part of their banking operations.
So, if you’re a company registered under MOHRE, then by default, when you open your bank account, you would have this WPS system to use for paying your employees’ salaries. Because it’s a government-mandated mechanism, there’s interplay between the Ministry of Human Resources and the Central Bank, making it, if you will, a government-subsidized or supported tool that ensures employers under MOHRE use the system for the benefit of employees.
Tim Elliott
Okay, so it’s not an individual system companies choose to use or not use?
Ludmila Yamalova
Exactly. It’s a system that companies falling under MOHRE must use. That’s the overarching scope and purpose of WPS. The facilities and scope of the system depend on the type of company—larger companies with more employees will have a more robust WPS.
Ultimately, the purpose of WPS is to protect employees’ interests, ensuring salaries are paid regularly and in full, and that end-of-service benefits and other dues are settled when employment ends.
It’s also significant for resolving disputes. If there’s a dispute between a company and an employee, WPS data—accessible by MOHRE—shows how much an employee was paid. This data is used to calculate entitlements such as end-of-service benefits.
For example, many employees receive a basic salary along with commissions and bonuses. In a dispute, employees would typically need to prove they received these additional payments. However, if the employer is WPS-registered, this data is already logged in the system, offering security, visibility, and transparency.
Tim Elliott
That sounds like a solid system. How does compliance work?
Ludmila Yamalova
To remain compliant, companies must deposit at least 90% of their employees’ wages into WPS monthly. Partial compliance is achieved by transferring 80–90%. Anything below 80% makes the company non-compliant, which triggers issues such as suspension of work permits or penalties.
For example, if a construction company with hundreds of employees transfers only 60% of wages, it gets flagged, and MOHRE may freeze work permits, issue fines, or inspect the company.
The idea is that the authorities intervene early to prevent companies from accumulating unpaid wages, which could harm employees. Salaries must take priority over other liabilities.
Tim Elliott
What happens if a WPS-registered company doesn’t pay wages on time?
Ludmila Yamalova
There’s a staged process. If wages aren’t paid for more than 17 days, the company faces suspension of new work permits. By day 30, public prosecution is notified, which introduces potential criminal implications. Other federal and local authorities are also notified.
This process escalates particularly for companies with more than 500 employees, which are categorized as high-risk establishments. Non-compliance leads to severe penalties, including public prosecution and operational blocks.
Tim Elliott
Does WPS apply to all companies?
Ludmila Yamalova
Not all. WPS primarily applies to mainland companies under MOHRE. Free zone companies are generally excluded, except for JAFZA (Jebel Ali Free Zone Authority), which implemented WPS. Other free zones are excluded from this mechanism.
Tim Elliott
What’s your final take on WPS?
Ludmila Yamalova
WPS is an excellent system that protects employees’ financial rights. It ensures companies prioritize salaries and prevents prolonged exploitation of employees. While it’s not foolproof—partial compliance allows some employees to go unpaid—it significantly reduces risks.
Expanding WPS to cover all companies, including free zones, would create a uniform system and further enhance protections. For employees, having salary and benefits recorded in WPS provides legal and financial security in disputes, ensuring a smoother resolution process.
Tim Elliott
That’s another episode of Lawgical. We’ve explored the Wages Protection System and how it safeguards employees in the UAE. As always, Ludmila Yamalova, Managing Partner at HPL Yamalova & Plewka, thank you.
Ludmila Yamalova
Thank you, Tim.
Tim Elliott
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