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23 July 2024

Wage system to only cover dirham salaries

There was confusion among banks as to how salaries paid in foreign currencies could be included in the WPS scheme. (SALEM KHAMIS)

Published
By CL Jose

The UAE Central Bank has clarified that the newly introduced wages protection system (WPS) will entertain only salaries paid in dirham, said banking sources.

The new system will ensure that all employees of companies with a workforce of not less than 100 receive their monthly salaries through a bank or exchange company pre-decided by the employer.

There was confusion among banks as to how salaries paid in foreign currencies could be included in the WPS scheme, which is designed to handle only payments in the UAE currency.

"Several multinational firms make payments partly in foreign currencies, especially to those who have come to the UAE on deputation, and we were waiting to hear from the Central Bank how this can be dealt with," said a banker.

Talking to Emirates Business, Nilesh Sarker, Assistant Vice-President, Banking and Finance, at Raqmiyat, the company that developed the solution for banks and exchange houses for WPS, said the solution is designed exclusively to deal with dirham-based salary payments, which will roll out for the September salary, from October onwards.

An HRD manager of a Dubai-based company said: "The Ministry of Labour will naturally look at the salaries agreed in the labour contract, which obviously does not include payments made in foreign currencies."

The new system will require all firms to pay their employees' salaries within a stipulated time in the ensuing month, failing which will invite the authorities' intervention. The system requires all employers to deposit the salaries in their respective banks with employee files that contain key details such as the employee's name, identity number, the salary amount, as well as the period for which the salary is paid.

This will go to the Central Bank, which in turn will forward it to the respective agents of the employees – banks or exchange houses – where the final payment of salaries can take place.

"Raqmiyat's new software complies with the latest Central Bank 'Process Document', and has been designed to automate all WPS cycles and help streamline the timely payment of wages. Raqmiyat has already met with more than 30 banks which are interested in the WPS solution," said Sarker.

He said Raqmiyat WPS Connect provides an interface for banks and exchange houses to connect to the Central Bank's WPS system based on stipulated file formats.

"It allows banks to use their existing file transfer mechanisms [with their corporate customers], while providing adequate security elements to arrest any possible file tampering," said Sarker.

 

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