Wage Protection System of the UAE DMCC
The Dubai Multi Commodity Centre (DMCC) free zone is among the excellent free zones in the world as it provides you with several advantages. If you are a labour or employee in the DMCC free zone, you may feel happy to learn that this free zone has introduced a wage protection system in UAE. However, this law is also essential if you are a business owner. Do you want to know everything about the wage protection system in the UAE DMCC? In that case, you should spend your valuable time with us. Here, we will provide you with an in-depth guide to the wage protection system in DMCC in the UAE.
DMCC Wage Protection System - Overview
We are sure that most of you don’t know the basics of the DMCC Wage Protection System. Therefore, you should initially understand the complete meaning of this system. As we mentioned above, the Dubai Multi Commodity Centre (DMCC) free zone has recently introduced the Wage Protection System as a part of the ongoing effort to improve fair labor practices and protect employees’ rights.
The Central Bank of the UAE (CBUAE) develops the Wage Protection System in the UAE. You should be aware that the Wage Protection System (WPS) is an electronic salary transfer system that monitors and oversees salary payments in the UAE. This system lets the DMCC free zone record wage payments to ensure all wage payments are accurate and paid on time. The implementation of the Wage Protection System is a large step towards promoting economic stability and your employees’ rights.
What are the advantages you can enjoy with the Wage Protection System in the DMCC Free Zone?
There are countless benefits that you can get with the help of the Wage Protection System in the DMCC Free Zone. We have listed the top advantages of the Wage Protection System in this Free Zone below:
Initially, the UAE wage protection law ensures transparent and timely payment of your employees, promoting the financial stability of the workers.
This system boosts the trust and goodwill between you and your employees, which enhances retention rates and productivity.
This law aims to minimize salary discrepancies and increase adherence to labour laws in the DMCC Free Zone.
The system also provides an advanced solution that helps you safeguard your interests and decrease the hassle linked with paying your employees.
The law mandates the DMCC to regularly update private sector wage data.
You might be delighted to know that the Wage Protection System (WPS) has become a strength in developing companies and conducting business operations by creating a system that processes payments seamlessly and gives a good working nature.
How does the Wage Protection System (WPS) work?
You might be aware that the UAE Central Bank adopts the Wage Protection System (WPS) model. This model is where information flows from employers like you through WPS to one or more of the contracted agents for payment of the wage to the employees. The CBUAE secures funds from the employers before dispatching data to the agent.
Instruction on the registration of your employees under the Wage Protection System
From 15th February 2023, you must register your company’s employees holding an active or expired employment visa or Personal Identity Card (PIC) for the Wage Protection System (WPS) salary transfer with a bank or exchange house if your company is registered with DMCC Free Zone. Whether your employee does or does not have a bank account, you need to register all your employees for the WPS salary transfer. Thus, the employee salary payment for all member organizations via the Wage Protection System (WPS) is mandatory in this Free Zone.
Apart from your existing employees, you must also register your new employees as the DMCC-registered companies are mandated to register new employees for the following scenarios:
You should register your new employee immediately after the issuance of the Company Employment Card (CEC)
You must also register your new employee immediately after the approval of the Personal Identification Card (PIC) application.
How to register your employees for the Wage Protection System (WPS) in the DMCC Free Zone?
As you read in the previous section, your employees' registration for the WPS salary transfer is mandatory if you own a DMCC-registered company. The following is the list of steps you need to follow to register your employees for the DMCC wage protection system:
You should initially obtain the list of your employees with or without a bank account.
Once getting the list, you must log in to the DMCC member portal.
Next, you should visit the “My Report” section, choose the “WPS Salary Report” section, and give the needed information for each of your employees to create a salary report.
After creating the salary report, you should save the report soft copy.
Later, you should approach the bank to request the salary file creation per employee if your employees already have a bank account. If your employees don’t have a bank account, you should approach the exchange house for the same task.
Once the salary file has been created, you can transfer your salary via WPS. As a result, the DMCC can monitor salary transfers and delay in them.
Are you required to register your shareholders for the WPS in the DMCC?
Shareholders holding member company-issued residence visas are not required to register for the Wage Protection System (WPS). Indeed, you have guessed it right! You are not required to register your shareholders for WPS.
What happens if you do not register your employees for WPS?
As per the DMCC guidelines, no portal sanctions or fines were applicable during 2023. However, if you fail to transfer your employees’ salary dues as per the WPS, the DMCC may implement the portal fine or sanctions starting in 2024, which will be deducted from your portal account.
How Can Flyingcolour Tax Consultants help you?
If you are a DMCC-registered company owner, you must mandatorily register your employees for the wage protection system in UAE. Flyingcolour Tax Consultants can help you register your employees for the Wage Protection System in this Free Zone. Our experts can also answer any of your queries about the DMCC WPS.
To learn more about What is the Wage Protection System of the UAE DMCC?, book a free consultation with one of the Flyingcolour team advisors.
Disclaimer: The information provided in this blog is based on our understanding of current tax laws and regulations. It is intended for general informational purposes only and does not constitute professional tax advice, consultation, or representation. The author and publisher are not responsible for any errors or omissions, or for any actions taken based on the information contained in this blog.