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The UAE has officially overhauled its Wage Protection System (WPS), introducing one of the most significant shifts in private sector payroll regulation in recent years. Starting June 1, 2026, all private sector companies registered with the Ministry of Human Resources and Emiratisation (MoHRE) must pay employees their previous month’s salary by the 1st day of every Gregorian month. Any payment made after that date will be treated as delayed and the consequences can escalate quickly.
If you’re a business owner or HR manager in the UAE, here’s everything you need to know about the new rules, the penalties, and how to make sure your company stays compliant.
What Has Changed in the UAE Wage Protection System?
The updated rules are governed by Ministerial Resolution No. 340 of 2026, which replaces the earlier Resolution 598 of 2022. The key differences are significant:
Under the old framework, salary due dates were tied to individual employment contracts, meaning some companies paid at the end of the month and others by mid-month. Employers also had a 15-day grace period, a buffer during which late payments were not immediately flagged or penalised.
The new resolution eliminates both of these flexibilities. It introduces a single, standardised deadline across the entire private sector: salaries must be credited by the 1st of each month for work done in the previous month. The 15-day grace period is gone. And enforcement begins almost immediately after the deadline is missed.
The resolution also introduces:
- A proportional 85% compliance threshold (explained below)
- Mandatory use of the WPS or other MoHRE-approved payment channels
- A requirement to submit supporting documents confirming salary payments
- A faster, phased enforcement timeline with clearly defined escalation steps
When Is Salary Officially Due?
Starting June 1, 2026, salaries for the previous month become due on the 1st of the following month.
For example: May 2026 salaries must be paid by June 1, 2026. If payment is processed on June 2 or later, it is officially considered delayed under the new system.
This applies to all private sector companies registered with MoHRE. Payments must go through the Wage Protection System or another payment channel formally approved by the Ministry.
What Is the 85% Compliance Threshold?
One of the more nuanced additions to the new resolution is a proportional compliance measure.
A company is considered compliant if it has transferred at least 85% of total wages due to its employees by the deadline. Similarly, an individual employee is not classified as “unpaid” if they have received at least 85% of their entitled salary, provided the remaining amount is due to legally permitted deductions (such as approved loans, leave-related adjustments, or absence deductions).
This does not mean employers can routinely underpay staff. Employees retain the full right to claim any outstanding balance. The 85% threshold is a compliance measurement tool used by authorities, not a ceiling on what workers are owed.
Penalties for Late Salary Payment: A Day-by-Day Breakdown
The new WPS rules introduce a tightly structured escalation path. Enforcement moves fast.
Day 2: Monitoring and Warnings Begin
From the second day after salaries are due, MoHRE begins electronic monitoring and issues notifications and alerts to employers who have not made payments.
Day 5: Work Permit Restrictions
If salaries remain unpaid by Day 5, the company will be blocked from obtaining new work permits. Employers also receive formal notices to settle outstanding wages.
Day 11: Administrative Fines and Downgraded Classification
By the 11th day, employers face administrative fines under Cabinet Resolution No. 21 of 2020. Companies may also be downgraded to the third business classification category, a designation that affects regulatory standing and the ability to conduct labour-related transactions. Repeat violations within a six-month window attract further action.
Day 16: Labour Disputes Registered Automatically
A significant change from the previous system: from Day 16, authorities can automatically register labour disputes on behalf of affected workers – individual or collective, depending on the number of cases. Previously, workers had to file these complaints themselves. Work permit suspension is also extended at this stage.
This applies primarily to companies with 25 or more unpaid workers, and extends to other entities owned by the same employer if the combined number of affected workers reaches 25. Sectors specifically highlighted include construction, transport and storage, security services, cleaning services, and recruitment agencies.
Day 21: Travel Bans, Asset Seizure, and Public Prosecution
At the most severe stage, authorities may:
- Issue executive orders to recover unpaid wages
- Initiate precautionary asset seizure procedures against the company
- Impose a travel ban on the person responsible for the establishment
- Refer cases to the Public Prosecution, particularly where 50 or more workers are affected across repeat violations
In cases involving repeated violations over two consecutive months, companies with more than 50 employees may be referred to the Public Prosecution, with all relevant documents shared for legal action.
MoHRE also retains the right to intervene regardless of company size if there are risks to labour market stability.
Which Companies and Workers Are Exempt from WPS?
The resolution clarifies that certain situations will not count as WPS violations:
Workers excluded from calculations:
- Employees involved in active wage-related court disputes
- Workers reported as absconding
- Employees on approved unpaid leave (provided MoHRE is notified with the required documents)
- Employees unable to work due to legal detention or court orders
Categories outside the scope of WPS:
- Seafarers (subject to ministry approval)
- Foreign employees of overseas companies paid outside the UAE
- Workers on short-term mission permits of up to three months
Sectors fully excluded:
- Fishing boats and public taxis owned by individuals
- Banks and financial institutions
- Places of worship
What Does This Mean for Your Business?
For many companies that already process salaries on or before the 1st of the month, the practical impact may be limited. The bigger shift is felt by employers who previously relied on mid-month payroll cycles or the old 15-day buffer.
Here’s what businesses should be doing now:
- Review your payroll cycle: If your current process pushes salary processing to the 5th, 10th, or mid-month, you need to restructure your payroll schedule to ensure funds are credited by the 1st.
- Ensure WPS compliance: Salaries must be paid through MoHRE’s approved Wage Protection System. If you use a third-party provider to process payroll, the legal responsibility for timely payment still rests with the employer.
- Maintain documentation: The resolution requires employers to provide documents and data confirming that salary payments have been made in accordance with MoHRE’s procedures.
- Check your employee count in high-risk sectors: If your business operates in construction, transport, security, or cleaning, and you have 25 or more employees, the enforcement measures are applied more strictly and quickly.
How Shuraa Tax Can Help
Understanding payroll compliance in the UAE, particularly under an updated regulatory framework, requires precision and up-to-date knowledge of the rules. At Shuraa Tax, our team of qualified accountants, payroll specialists, and tax advisors help businesses across the UAE maintain full compliance with MoHRE regulations, including WPS requirements.
Doesn’t matter if you need help restructuring your payroll cycle, understanding how the new rules apply to your workforce, or ensuring your documentation is in order, we’re here to support you.
Get in touch with Shuraa Tax today for all your payroll services and let us help you stay ahead of the compliance curve.
Sources:
https://www.khaleejtimes.com/uae/uae-wage-protection-system-salary-payment-first-day-month-2026
