In brief
The United Arab Emirates Ministry of Human Resources and Emiratization (MOHRE) has issued Ministerial Resolution No. (340) of 2026 Concerning the Wage Protection System (WPS) ("Resolution"). The Resolution introduces strict timelines for salary distributions, refines compliance baselines, and implements an automated, escalating penalty system that employers will need to ensure that they navigate carefully.
This represents one of the most significant tightening of WPS enforcement to date, materially increasing the risk of immediate operational disruption for non-compliant employers. Wages must now be transferred via WPS by the 1st of the following Gregorian month (effectively standardizing payment timing regardless of contractual payroll cycles).
Scope
The Resolution applies to all private companies registered with MOHRE.
When was the Resolution effective?
1 June 2026.
What are the key changes?
| Topic | Previous Position | New Position | Change/Commentary |
| Wage due date |
Based on contractual payroll cycle (e.g., end of month/15th). |
Unified due date of 1st of each Gregorian month for prior month wages. |
Fundamental change – removes flexibility and standardized across all companies. However, while not expressly stated in the Resolution, it is currently understood that early payment (i.e., before the first of the month) is acceptable on the system in practice. |
| Grace period |
15-day grace period before WPS non-compliance triggered. |
No grace period. Payments after the 1st are treated as 'delayed', triggering the start of an automated enforcement process. |
No flexibility. Payments are almost instantly deemed delayed if not paid on 1st of the month. |
| Compliance test |
An establishment is legally deemed compliant with its wage obligations if it successfully transfers at least 80% or more of the total wages due to its workforce. |
An establishment is legally deemed compliant with its wage obligations if it successfully transfers at least 85% of the total wages due to its workforce by 1st of the month. |
WPS compliance thresholds have increased from 80% to 85%, reducing the operational margin for unpaid or withheld wages. |
| Definition of "paid" employee |
Employee treated as paid if at least 80% of monthly salary received, subject to lawful deductions. |
Employee treated as paid if at least 85% of monthly salary received, subject to lawful deductions. |
Operational margin for underpayment/withholding is reduced (85% threshold), subject to lawful deductions. |
What are the penalties for non-compliance?
No formal grace period applies, and delayed payments trigger immediate classification as non-compliant, with rapid escalation.
Pursuant to the Resolution, if an employer misses the first-of-the-month deadline:
- Day 2: automated warnings and alerts shall be issued.
- Day 5: MOHRE will suspend the issuance of new work permits and issue a further payment warning.
The speed of the escalation significantly reduces the ability to remedy technical or banking delays.
In the event of a further instance of delayed payment within six months, on day 11 the employer will be subject to an administrative fines under Cabinet Resolution No. 21 of 2020 (as amended), commonly understood to be AED 1,000 per affected employee (capped at AED 20,000) and demoted to the third category in MOHRE's classification system resulting in higher processing costs for MOHRE transactions.
For larger organizations or frequent offenders, the enforcement measures escalate significantly once the delay has exceeded 14 days:
- On the sixteenth day of delay, establishments employing 25 or more workers across any sector — or those under shared ownership reaching a collective 25 unpaid workers in key industries like construction, transport, security, cleaning, recruitment agencies or domestic worker recruitment offices ("Key Industries") may trigger the registration of a labour dispute (on an individual or collective basis).
- On the twenty-first day of delay, entities employing 50 or more employees or those under shared ownership in the Key Industries reaching a collective 50 unpaid workers will be subject to precautionary attachment measures, may result in escalation to relevant authorities, including potential referral to Public Prosecution in repeat or serious cases, and possible travel ban restrictions on responsible individuals.
What immediate steps should employers take to comply?
In practice, employers will need to treat the 1st of each month as a hard regulatory deadline, not an internal payroll target.
- Align payroll calendars to ensure WPS transfer is completed by the 1st each month (for prior month wages).
- Stress-test payroll processes (bank cut-offs, file upload timing, WPS processing times) to avoid "technical" late payments after the 1st.
- Validate wage structure and deduction practices: ensure any shortfall not take pay below 85% of entitlement.
- Ensure documentation readiness: maintain the data/documents evidencing wage payment.
While WPS compliance has historically involved some tolerance in practice, the Resolution signals a clear policy shift towards strict, technology-driven enforcement. In particular, the removal of the grace period and early-stage operational sanctions mean that payroll compliance is now a time-sensitive regulatory obligation.
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Sami Nasr, Paralegal, has contributed to this legal update.