Wage Protection System: what it means for UAE businesses.

What wage protection system means

Also called: WPS.

The Wage Protection System (WPS) is the electronic salary transfer system run by the Ministry of Human Resources and Emiratisation (MoHRE) through approved banks and financial institutions. The Labour Law (Federal Decree-Law No. 33 of 2021) requires wages to be paid on their due dates, and its Executive Regulation, Cabinet Resolution No. 1 of 2022, requires every establishment registered with MoHRE to pay through WPS or another system the Ministry approves.

Ministerial Resolution No. 340 of 2026, in force from 1 June 2026, replaced the old 15 day grace period with one due date: wages for a Gregorian month must be paid by the first day of the next month. An establishment counts as compliant if it transfers at least 85% of total wages due by that date, a margin that allows for lawful deductions. MoHRE starts alerts from the second day after the due date, suspends new work permits on the fifth day and applies a fine from the eleventh day.

For an SME, WPS is also bookkeeping discipline. The WPS salary file, the bank transfer and the payroll journal should agree every month, and together they support the salary costs claimed for Corporate Tax.

How it works

• Due date: the first day of each Gregorian month, for the previous month's wages (Ministerial Resolution No. 340 of 2026, Article 1).
• Compliance threshold: at least 85% of total wages due, transferred by the due date (Article 2).
• Escalation: alerts from day 2, work permit suspension on day 5, a fine on day 11, and for larger or repeat cases from day 16 and day 21, labour dispute registration, travel bans and referral to the Public Prosecution (Annex 1).
• Exclusions include workers on approved unpaid leave, workers whose wage claim is before a court, and staff of foreign companies paid abroad with their approval (Article 4).
• An employer may appoint someone else to pay wages but stays responsible if payment is late (Article 5).
• Wages are paid in dirhams unless the contract agrees another currency (Labour Law, Article 22).

Worked example

A Dubai contracting SME with 12 staff owes AED 96,000 in September wages. Cash is tight and it transfers AED 80,000 through WPS by 1 October.

September wages due	AED 96,000
Minimum to transfer by 1 October (85%)	AED 81,600
Transferred through WPS by 1 October	AED 80,000
Shortfall against the 85% threshold	AED 1,600

At 83.3% the establishment is treated as late and the escalation steps begin, even though most staff were paid.

Common mistakes

• Planning payroll around the old 15 day window. Since 1 June 2026 the due date is the 1st of the month.
• Paying part of the payroll in cash. The resolution requires payment through WPS, and the establishment must be able to prove payment.
• Not reconciling the WPS file with the payroll ledger, which leaves unexplained salary differences at year end.

The law

• Federal Decree-Law No. 33 of 2021 Regulating Labour Relations, Article 22, and Cabinet Resolution No. 1 of 2022 on its Executive Regulation, Article 16
• Ministerial Resolution No. 340 of 2026 Concerning the Wage Protection System, Articles 1 to 5, 7 and 8 and Annex 1

Frequently asked questions

Does WPS apply to free zone companies?

The resolution applies to establishments registered with MoHRE. Many free zone employers are registered with their free zone authority instead, so check the zone's own payroll rules.

Can we pay salaries in US dollars?

Only if the employment contract says so. Article 22 of the Labour Law requires wages in UAE dirhams unless both parties agree another currency in the contract.

Related terms

End of service gratuity · Accruals and prepayments · Month-end close · Mainland company. See every term in the UAE tax glossary.

For the full picture, read our guide: Month-end close for UAE SMEs: a practical checklist.

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