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Payroll and WPS in the UAE: the new rules from 1 June 2026

On 1 June 2026 the salary payment deadline in the UAE changed: the familiar 15-day grace period is gone, and wages must reach employees by the 1st of the following month. The system detects a delay on its own, without any complaint from an employee, and by day five a company can lose the ability to issue new work permits. For small companies that used to pay salaries "once the client's money arrives", this is the most sensitive change of the year.

Updated 13 August 2026 · AVANGARD GROUP · accounting and tax in the UAE · Author: Svetlana Pavelchuk, CEO of AVANGARD GROUP

Payment deadline: the 1st of the month
15-day grace period: abolished
Work permits blocked: from day 5
WPS threshold: 85% of payroll

What WPS is, and why it is not "just a salary transfer"

The Wage Protection System is an electronic payment-monitoring system run by the Ministry of Human Resources and Emiratisation (MoHRE) together with the UAE Central Bank. An employer does not pay wages by ordinary transfer: payment goes through a bank or an authorised exchange operator, accompanied by a file in a prescribed format (SIF) listing employees and amounts.

The point of the system is that the state can see who was paid, how much and when. The data is reconciled automatically against the employment contracts registered with MoHRE. A gap between the contract and the actual payment is a breach in its own right, even when the employee has raised no complaint.

The main change: the deadline moved to the 1st

Ministerial Decision No. 340 of 2026, in force from 1 June 2026, replaced the previous regime under which wages were only considered late 15 days after month end. A single date now applies: the first day of the calendar month is the deadline for paying the previous month. Anything later counts as a delay from day one.

What this changes in practice. Companies used to have half a month of buffer: January salaries could be paid up to 15 February with no consequences. That buffer is gone — the payment calendar now has to be built so that the payroll money is in the account before month end, not "sometime next month". For companies whose clients pay on long credit terms, this is a cash-planning question, not an accounting one.

What happens when payment is late: escalation by day

The system records the delay itself — no employee complaint is required. Measures then escalate day by day, but they do not apply to everyone equally: from day 11 onwards they depend on company size, whether the breach is repeated and the sector.

Day 1the system records the missing payment
Day 2notifications and warnings to the employer
Day 5issuance of new work permits is suspended
Day 11where the breach is repeated within 6 months — administrative fines and downgrade to the third category
Day 16for employers with 25 or more staff — automatic registration of a labour dispute and wider work-permit blocking
Day 21for companies with fewer than 50 staff MoHRE issues an executive order to pay the wages; for companies with 50 or more — registration of a collective labour dispute and, where the breach repeats two months in a row, precautionary attachment of assets, a travel ban on the responsible officer and referral to the public prosecutor

The count starts from the 1st: what triggers the system is the missing payment itself, not an employee complaint. From day 11 the measures depend on company size and whether the breach is repeated.

The downgrade to the third category is a separate problem that companies often discover after the fact: your MoHRE category determines the cost of work permits and visas. A downgrade makes every new hire more expensive, and it lasts longer than a month.

If you have seen different numbers — day 3, 10 and 17. Those come from the earlier regime under Ministerial Decision No. 598 of 2022, where the count only started after the 15-day grace period. Decision No. 340 of 2026 revoked it along with the grace period, and the scale is now the one in the table above. Material quoting the old deadlines is still circulating, but it has not applied since 1 June 2026.

Fine amounts

Administrative fines start at AED 1,000 for each employee left unpaid, with a ceiling of roughly AED 50,000 for multiple breaches. Larger employers (100 or more staff) face rates of up to AED 5,000 per unpaid employee for repeat breaches. Deliberately misstating data in the payment file is penalised separately — up to AED 5,000.

The 85% threshold: paying "almost everyone" is not enough

A company is treated as compliant if at least 85% of its payroll for the period went through WPS (the threshold used to be 80%). The 30-day grace period for new hires has been removed — an employee enters the system straight away.

The practical conclusion: you cannot run most of the team through the system and pay a few people in cash or to a personal card. Such a payment does not count at all — neither towards the threshold nor as evidence that the employee was paid.

Who is exempt from WPS

Exemptions exist, but there are few of them and they are read narrowly.

Categories of employees

employees whose wages are the subject of court proceedings;
employees with an open absconding report;
persons whose liberty is restricted by a court decision;
employees on approved unpaid leave;
seafarers on vessels — subject to agreement with the ministry;
foreign employees paid outside the UAE — with the employee's consent;
holders of a mission work permit of up to three months.

Categories of employers

fishing vessels owned by UAE nationals;
taxis owned by UAE nationals;
banks and financial institutions;
places of worship.

A free zone licence does not exempt you from WPS. Free zone companies carry the same obligations as mainland ones: MoHRE supervises private-sector wages regardless of who issued the licence. Only the DIFC and ADGM financial centres run their own wage protection regimes — every other zone follows the general rules.

Owner-directors: a common mistake

A founder holding a residence visa through their own company is an employee as far as labour law is concerned. They need an employment contract, a registered salary and payments running through the system. "I am my own director, why would I pay myself a salary" is a position that breaks in three places at once:

a MoHRE breach — the salary under the contract is not being paid;
questions from the bank — there are no regular payroll payments on the company account even though visas have been issued;
a corporate tax risk — if the owner takes personal spending on the company card instead of drawing a salary, those amounts will be disallowed as deductions.

How to run payroll so sanctions never start

Plan the payroll calendar a month ahead. The payment file is prepared in the last week of the month, not on the 1st: the bank needs time to process it and the system needs time to confirm.
Reconcile against contracts before sending. The amount in the file must match the registered contract. A discrepancy is a separate breach, even where you actually paid more.
Reflect HR events on time. Hires, terminations, unpaid leave and salary changes must land in the same month's file, otherwise the 85% threshold will not add up.
Reserve the payroll cash. If your clients pay on credit terms, payroll money has to be set aside in advance — sanctions apply whether or not your customer has paid you.
Keep the paperwork per employee. Payslips and salary certificates are needed by the employee (for banks, visas and tenancy) and by the company as proof of settlement.

What we do

Service	Fee
Payroll calculation and WPS payment, up to 5 employees	from AED 500
Payslips and salary certificates	included in the retainer
Monthly bookkeeping retainer	from AED 2,000 per month

We calculate payroll, prepare and submit the payment file through your bank or an authorised operator, watch the deadline and the match between payments and registered contracts, and issue the documents for each employee. Related reading: company formation in the UAE — what to put in place before hiring, and corporate tax — how salaries and expenses affect the taxable base.

Let us review your payroll process

We will check whether you meet the new deadline, whether payments match contracts, whether the 85% threshold is at risk and whether the owner-director is set up correctly. The review takes one working day.

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Frequently asked questions

By the 1st day of the month following the month worked. Ministerial Decision No. 340 of 2026, in force from 1 June 2026, abolished the previous 15-day grace period: payment after the first day counts as a delay from day one, and sanctions start automatically.

Sanctions escalate by day: notifications on day 2, suspension of new work permits on day 5, administrative fines and a downgrade to the third category on day 11 where the breach repeats within six months, automatic registration of a labour dispute on day 16 for employers with 25 or more staff, and on day 21 an executive order to pay the wages — while companies with 50 or more staff that repeat the breach two months in a row face precautionary attachment of assets, a travel ban on the responsible officer and referral to the public prosecutor. Fines start at AED 1,000 per employee, with a ceiling of around AED 50,000 for multiple breaches. The regime is set by Ministerial Decision No. 340 of 2026; the older scale ending on day 17 under Decision No. 598 of 2022 no longer applies.

Yes. Free zone companies have the same obligation to pay wages through the system as mainland companies: MoHRE supervises the private sector regardless of which authority issued the licence. Separate wage protection regimes exist only in the DIFC and ADGM financial centres.

Yes, if they hold a residence visa through their own company: for labour law purposes they are an employee, so they need an employment contract with a registered salary paid through the system. Not paying it creates three risks at once: a MoHRE breach, questions from the bank, and personal spending being disallowed as a deduction for corporate tax.

At least 85% of the payroll for the period — the threshold was raised from 80%. The 30-day grace period for new hires has been removed, so employees enter the system immediately. Payments in cash or to a personal card do not count towards the threshold and are not treated as proper settlement with the employee.

Among employees: those whose wages are subject to court proceedings, those with an open absconding report, persons whose liberty is restricted by a court decision, employees on approved unpaid leave, seafarers subject to agreement with the ministry, employees paid outside the UAE with their consent, and holders of a mission permit of up to three months. Among employers: fishing vessels and taxis owned by UAE nationals, banks and financial institutions, and places of worship.

This material is for general information only and is not legal advice. The data is current as of 13 August 2026 and reflects the regime introduced by Ministerial Decision No. 340 of 2026. Fine amounts and the escalation sequence depend on company size, the history of breaches and the circumstances of each case — please confirm the current requirements with the Ministry of Human Resources and Emiratisation at mohre.gov.ae or with us.