Dubai: More free zones in the country are moving to implement the UAE Wage Protection System (WPS) to ensure employees at licensed companies receive their salary and other dues from their employers on time each month.
Such a move would bring all such companies registered with free zones in sync with rules that apply to UAE mainland companies on wage guarantees. It was in 2009 that the UAE introduced the WPS, creating processes that allowed for timely salary payments and, most important, bring about transparency into the process. It meant that employers could not walk away from their obligations, even when it comes to salaried staff not having bank accounts.
In January, all DMCC had to mandatorily be on the WPS platform, failing which they would face penalties. DMCC had actually brought in the WPS in 2023, but January was the cut-off point by when all licensed entities had to sign up.
DMCC’s database lists more than 24,000 companies, and a sizeable number had signed up during 2019-23, with a fresh burst of entries from crypto and other new-age businesses.
“As probably the fastest growing free zone in the country, DMCC insisting on WPS makes for a defining statement,” said an HR consultant. “What it does is broad-base the rules applicable on the UAE mainland into free zones too. There are also significant penalties too for non-compliance.”
Currently the Jebel Ali Free Zone too authorises all licensed entities to follow the WPS procedure.
Why WPS matters
Under WPS, a company has to meet its payroll requirements through a bank, money exchange house or financial institution. At the time WPS was brought in, a sizeable portion of the workforce, essentially the blue-collar workers, were not holding bank accounts. What WPS allowed was make sure even such staff got what was their monthly dues, and were duly notified about this on their mobiles.
In effect, full transparency.
But business and HR consultants say the current push for widening the WPS regime to free zones go beyond that. “There is less room for labour disputes when salary payments go through regulated processes,” said a source. “Dubai is attracting a flood of white-collar professionals to be part of a growing business landscape. Their rights will be protected by WPS, and with that there is less chance of labour disputes.
“That will be a big win-win for all stakeholders. If companies find themselves in financial difficulties and unable to meet their employee commitments, there are processes such as bankruptcy laws to ease the path. But rules-based operations are a must for all, particularly on employee welfare.”
