The DMCC free zone has communicated the implementation of the WPS system for companies registered under its jurisdiction in 2023. All companies are required to process salary payments for their employees through the WPS system starting from February 15, 2023. No sanctions are anticipated for the year 2023. However, beginning in January 2024, DMCC may enforce sanctions, fines, and other penalties through the portal for non-compliance with WPS.
What is the WPS system?
The Wages Protection System (WPS) represents a significant advancement in the electronic management of salary transfers. Developed by the Central Bank of the United Arab Emirates, this electronic system enables institutions to disburse employee salaries through approved and authorized banks, exchange offices, and financial institutions.
The primary goal of the WPS is to facilitate the Ministry of Labor in creating a comprehensive database that transparently records all salary payments made in the private sector. This initiative aims to ensure timely and complete disbursement of salaries agreed upon between employers and employees.
Covering all institutions registered with the Ministry, the WPS extends across various sectors and industries, providing comprehensive coverage. This inclusive approach benefits diverse categories of workers, ensuring a high level of protection for employees’ rights regarding salary payments.
The implementation of the WPS aligns with a broader initiative to enhance transparency and compliance in salary transactions. Through this electronic platform, salary management processes become more efficient, reducing the risk of errors and ensuring increased traceability of payments.
In summary, the WPS represents an innovative initiative that promotes the security and punctuality of salary payments in the private sector, thereby fostering a climate of trust between employers and employees in the country.
What are the involved parties?
Workers: These are individuals engaged in activities within the private sector, receiving pre-agreed salaries and holding a work permit issued by the Ministry. As beneficiaries of the system, these workers are assured that their salaries will be processed transparently and securely through the Wages Protection System (WPS). The possession of a work permit issued by the Ministry confirms their legal status and entitlement to remuneration in accordance with established agreements.
Employers: Employers encompass individuals owning a duly registered company or institution with the Ministry. They employ one or more workers in exchange for agreed-upon compensation. WPS not only simplifies salary payment processes for employers but also contributes to establishing fair and transparent practices within the private sector. Registration with the Ministry ensures that these employers adhere to legal standards regarding remuneration and the protection of workers’ rights.
Banks: Financial institutions play a central role in the WPS process. Employers maintain bank accounts with these institutions, which are used to transfer salaries through the WPS network. This ensures effective traceability of financial transactions related to salaries. Banks, as essential components of this system, contribute to ensuring the security and reliability of fund transfers between employers and workers.
Agent: Designated agents for salary distribution represent entities such as banks, currency exchange offices, or other financial institutions. These agents are approved and authorized by the Central Bank of the United Arab Emirates to provide payment services via the WPS. The regular publication of an updated list by the Central Bank, listing the names of approved agents, ensures compliance and the quality of services offered. These agents play a crucial role in the execution chain, ensuring efficient and equitable distribution of salaries to private sector workers.
DMCC Companies’ Obligations
Companies registered and operating within the DMCC (Dubai Multi Commodities Centre) free zone are required to take several measures to comply with current guidelines. Firstly, they must register with the WPS (Wages Protection System), a crucial element for electronic salary management. Additionally, they need to register on the DMCC website, demonstrating their commitment to the standards and procedures established by this entity.
A pivotal step for these companies involves establishing monthly salary payments to their employees using an accredited local financial institution. This step entails setting up regular fund transfers via the WPS network, ensuring transparency, traceability, and the security of salary transactions. This obligation reflects DMCC’s commitment to ethical and compliant practices in the realm of human resources and salary disbursement.
Furthermore, companies must ensure the ongoing use of WPS networks in their monthly payroll management. This means that the WPS system must be systematically integrated into payroll processes, ensuring continuous compliance with DMCC’s established requirements. By adhering to these directives, companies contribute not only to their own regulatory compliance but also to preserving the integrity of the salary management system within the DMCC free zone.
Following the implementation of the Wages Protection System (WPS) within DMCC, it is crucial for companies to consult with experts to effectively register their employees, ensuring their businesses comply with DMCC regulations. Our firm assists you in WPS registration: support@ares.tax.
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