UAE Payroll Processing Guide: Monthly Cycle and WPS Compliance
Complete guide to UAE payroll processing including monthly cycle, WPS compliance, SIF file preparation, salary calculations, and MOHRE requirements for employers.
Quick Summary: Complete guide to UAE payroll processing including monthly cycle, WPS compliance, SIF file preparation, salary calculations, and MOHRE requirements for employers.
UAE employers must process payroll through the Wage Protection System (WPS) to ensure timely salary payments. This guide covers the monthly payroll cycle, WPS compliance, SIF file preparation, and MOHRE requirements.
Salary must be paid within 10 days of the due date, and all payments must be made in AED through a WPS-enabled bank.
| Aspect | Details |
|---|---|
| Payment Deadline | Within 10 days of due date |
| WPS | Mandatory for all employers |
| Currency | UAE Dirhams (AED) |
| Method | Bank transfer through WPS |
| Records Retention | 5 years minimum |
UAE Payroll Calendar
Monthly Cycle
| Day | Action |
|---|---|
| 1st | New month begins |
| 25th-28th | Prepare payroll |
| Last working day | Process WPS |
| Within 10 days | Payment must be received |
Key Deadlines
| Deadline | Requirement |
|---|---|
| Salary payment | Within 10 days of due date |
| WPS submission | Before bank cutoff |
| SIF file | Submit monthly |
| MOHRE reporting | As per compliance |
Annual Tasks
| Month | Additional Tasks |
|---|---|
| January | Annual increment processing |
| June/July | Eid bonus (if applicable) |
| December | Year-end bonus processing |
| Ramadan | Adjusted timing |
Payroll Processing Steps
Step 1: Gather Attendance Data
| Data Needed | Source |
|---|---|
| Working days | Attendance system |
| Absences | Leave records |
| Overtime hours | Time tracking |
| Late arrivals | If policy applies |
Step 2: Calculate Gross Salary
| Component | Calculation |
|---|---|
| Basic salary | Fixed monthly |
| Fixed allowances | As per contract |
| Overtime | Hours × rate |
| Variable pay | Commission, bonus |
| Total Gross | Sum of above |
Step 3: Apply Deductions
| Deduction | Type |
|---|---|
| Absences | Unpaid leave |
| Loans | Repayment installments |
| Other authorized | With employee consent |
Step 4: Calculate Net Salary
Net Salary = Gross Salary - Authorized Deductions
Step 5: Prepare WPS File
| Field | Content |
|---|---|
| Employee details | As per Emirates ID |
| Bank details | Account, routing |
| Salary breakdown | Fixed, variable, deductions |
| Net amount | To be transferred |
Step 6: Submit and Transfer
| Action | Details |
|---|---|
| Upload SIF file | To WPS bank portal |
| Verify details | Double-check amounts |
| Authorize transfer | Management approval |
| Execute payment | Bank processes |
WPS Compliance
What is WPS?
The Wage Protection System is an electronic salary transfer system:
- Mandatory for all private sector employers
- Ensures timely salary payments
- Tracks payment compliance
- Protects employee rights
Registration Requirements
| Requirement | Details |
|---|---|
| Trade license | Valid and active |
| Bank account | With WPS-enabled bank |
| Employee data | Emirates ID, bank details |
| Contract registration | MOHRE registered |
SIF File Format
| Field | Description |
|---|---|
| EDR | Employer unique ID |
| EID | Employee Emirates ID |
| Bank routing | Employee bank code |
| Account number | Employee account |
| Days worked | Actual working days |
| Fixed salary | Basic + fixed allowances |
| Variable salary | Overtime, commission |
| Deductions | Leave, loans |
| Net salary | Transfer amount |
WPS Banks: Emirates NBD, ADCB, FAB, Mashreq, DIB, RAK Bank and most UAE banks are WPS-enabled.
Salary Calculations
Basic Monthly Salary
Monthly Salary = Contracted amountDaily Rate = Monthly Salary ÷ 30
Overtime Calculation
| Type | Rate | Formula |
|---|---|---|
| Normal overtime | 125% | Base hourly × 1.25 |
| Night/Holiday | 150% | Base hourly × 1.5 |
| Friday work | 150% | Base hourly × 1.5 |
Base Hourly Rate:Hourly Rate = (Basic + Fixed Allowances) ÷ (Working Days × 8)
Absence Deduction
Daily Deduction = Monthly Salary ÷ 30Unpaid Leave = Daily Rate × Absent Days
Pro-Rata Calculation (New Joiners/Leavers)
Pro-rata Salary = Monthly Salary ÷ 30 × Days Worked
Different Scenarios
New Employee (Mid-Month Start)
| Scenario | Calculation |
|---|---|
| Start date | 15th of month |
| Days worked | 16 days (15th-30th) |
| Salary | Monthly ÷ 30 × 16 |
Example: Monthly: AED 15,000 → Daily: AED 500 → Payment: AED 8,000
Employee Leaving (Mid-Month)
| Component | Calculation |
|---|---|
| Days worked | Up to last day |
| Pro-rata salary | Daily × days |
| Final settlement | Plus gratuity, leave |
Unpaid Leave
| Scenario | Deduction |
|---|---|
| 5 days unpaid | Monthly ÷ 30 × 5 |
| Full month | No salary |
Payroll Records
Required Records
| Record | Retention |
|---|---|
| Salary registers | 5 years minimum |
| WPS receipts | 5 years |
| Attendance records | 2 years |
| Leave records | 5 years |
| Contracts | Duration + 5 years |
Monthly Documentation
| Document | Purpose |
|---|---|
| Payroll register | Complete salary details |
| WPS confirmation | Proof of transfer |
| Pay slip | Employee record |
| Bank statement | Payment verification |
Pay Slip Requirements
Mandatory Information
| Element | Details |
|---|---|
| Employer name | Company details |
| Employee name | Full name |
| Pay period | Month/dates |
| Basic salary | Amount |
| Allowances | Itemized |
| Gross salary | Total earnings |
| Deductions | Itemized |
| Net salary | Take-home amount |
Pay Slip Components
Earnings:
- Basic Salary
- Housing Allowance
- Transport Allowance
- Other Allowances
- Overtime
Deductions:
- Unpaid Leave
- Loan Repayment
- Other authorized deductions
Ramadan Payroll
Adjusted Hours
| Aspect | Change |
|---|---|
| Working hours | Reduced by 2 hours/day |
| Overtime base | Adjusted accordingly |
| Salary | No reduction |
Considerations
| Item | Treatment |
|---|---|
| Eid bonus | Process if applicable |
| Holiday pay | Public holidays |
| Leave requests | Often higher |
Important: While working hours are reduced during Ramadan, employee salary remains unchanged at the full contracted amount.
Frequently Asked Questions
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Our team of HR professionals and legal experts specializes in UAE labor law compliance, with extensive experience helping businesses navigate MOHRE regulations, Emiratisation requirements, and workforce management in the UAE and GCC region.
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