Key Changes to the Wage Protection System (WPS) in the UAE: Ministerial Decision No. (340) of 2026
The Ministry of Human Resources and Emiratisation (“MOHRE”) has issued Ministerial Decision No. (340) of 2026 concerning the Wages Protection System (“WPS”), effective from 1 June 2026. The Decision repeals and replaces Ministerial Decision No. (598) of 2022 and introduces a revised regulatory framework governing wage payment obligation for private sector establishments registered with MOHRE.
The new Decision reflects the UAE’s continued policy objective of strengthening labour market governance, safeguarding employee wage rights, and enhancing regulatory oversight over employer compliance practices. More significantly, the Decision demonstrates a shift towards stricter monitoring, earlier regulatory intervention, and escalated enforcement mechanisms against establishments failing to comply with wage payment obligations.
Unified Wage Due Date and Mandatory WPS Compliance
One of the key amendments introduced under the Decision is the standardisation of wage due dates across the private sector. The first day of each Gregorian month has now been designated as the official due date for payment of employee wages relating to the preceding month. Consequently, any salary payment processed after this date shall constitute a delayed wage payment for WPS purposes.
The Decision further reiterates the mandatory requirement for all establishments registered with MOHRE to process employee salaries through the approved Wages Protection System or through other Ministry-approved payment mechanisms. Employers are additionally required to maintain adequate payroll records and supporting documentation evidencing salary disbursement and WPS compliance.
From a regulatory perspective, this amendment enhances MOHRE’s ability to electronically monitor payroll compliance in real time and standardises enforcement thresholds across the private sector.
Introduction of the 85% Wage Compliance Threshold
A notable regulatory development under the Decision is the introduction of the 85% wage payment compliance threshold.
Under the revised framework, an establishment shall be considered compliant with WPS obligations where it transfers at least 85% of the total wages due to employees by the prescribed due date. Similarly, an employee shall not be categorised as unpaid where at least 85% of the employee’s wage entitlement has been paid, provided any deductions are lawful and effected in accordance with Article 25 of Federal Decree-Law No. (33) of 2021 regulating labour relations.
However, the Decision expressly preserves the employee’s right to claim any outstanding unpaid balance. Accordingly, while the threshold may provide temporary regulatory relief from immediate WPS penalties, it does not extinguish or compromise substantive employee entitlements under UAE Labour Law.
Legally, this amendment appears intended to balance operational realities faced by employers while simultaneously preserving employee wage protections. Nevertheless, employers should exercise caution in relying on the 85% threshold as a routine payroll practice, particularly where repeated underpayments may expose the establishment to labour disputes, contractual claims, or allegations of non-compliance.
Escalated Enforcement Mechanism for Wage Payment Delays
Perhaps the most significant aspect of Ministerial Decision No. (340) of 2026 is the enhanced graduated enforcement framework set out under Annex No. (1).
The Annex establishes a phased regulatory mechanism enabling MOHRE to progressively escalate enforcement action against non-compliant establishments.
Commencing from the first day following the wage due date, MOHRE electronically monitors establishments to assess compliance with wage payment obligations. From the second day onwards, the Ministry may issue electronic notices, warnings, and reminders directing employers to immediately regularise outstanding salary payments.
Where non-compliance persists until the fifth day, MOHRE may suspend the issuance of new work permits for the establishment and formally notify the employer of its breach of WPS obligations.
More stringent measures apply by the eleventh day of continued default, particularly in cases involving repeated violations within a six-month period. In such instances, administrative penalties may be imposed pursuant to Cabinet Resolution No. (21) of 2020, together with the reclassification of the establishment to Category Three under Ministerial Resolution No. (209) of 2022. These measures are especially targeted towards labour-intensive sectors such as construction, transportation, security services, cleaning, recruitment, and domestic worker services involving establishments with 25 or more unpaid employees.
By the sixteenth day of non-compliance, MOHRE may automatically register individual or collective labour complaints on behalf of affected employees and suspend work permit issuance for the relevant establishments.
Where violations continue beyond twenty-one days, enhanced regulatory and judicial enforcement measures may be initiated, particularly where the establishment employs 50 or more employees, repeatedly breaches WPS obligations, or where MOHRE determines that the non-compliance may impact labour market stability. Such measures may include referral to the Public Prosecution, initiation of labour proceedings, issuance of executory instruments for wage recovery, precautionary attachment over company assets, travel bans against responsible individuals, and coordination with competent authorities for additional enforcement action.
The escalation framework reflects a deliberate regulatory shift from passive monitoring to proactive enforcement and demonstrates MOHRE’s increasing willingness to intervene directly in wage recovery matters.
Exemptions from WPS Calculations
The Decision also clarifies categories of employees and establishments excluded from WPS calculations. These include employees with wage disputes pending before competent courts, workers reported as absconding, detained employees, employees on approved unpaid leave, certain seafarers, specified foreign workers paid outside the UAE, mission work permit holders not exceeding three months, fishing boats and public taxis owned by UAE nationals, banks, and places of worship.
These exclusions appear designed to account for practical operational and jurisdictional considerations while ensuring that the WPS framework remains focused on active employment relationships and enforceable payroll obligations.
Delegation of Wage Payments and Continuing Employer Liability
The Decision permits establishments to appoint third parties to process employee salary payments, provided the Ministry is furnished with the relevant delegation documentation and details of the authorised entity.
Importantly, however, the Decision expressly confirms that the employer retains ultimate legal responsibility for timely payment of employee wages notwithstanding any such delegation arrangement. Accordingly, employers cannot contractually transfer or avoid statutory WPS obligations through outsourcing arrangements or payroll service providers.
Legal and Commercial Implications for Employers
Ministerial Decision No. (340) of 2026 materially strengthens the UAE’s wage protection regime and increases the legal, operational, and regulatory risks associated with delayed salary payments.
Employers should proactively review their payroll structures, WPS compliance procedures, employment practices, and internal financial controls prior to the Decision’s implementation date. Particular attention should be given to ensuring timely salary disbursement, maintaining accurate payroll documentation, implementing lawful deduction practices, and establishing internal escalation mechanisms for payroll compliance monitoring.
Businesses operating in labour-intensive sectors or employing significant workforce numbers may face heightened regulatory scrutiny under the revised framework, especially where repeated WPS breaches occur.
From a broader regulatory perspective, the Decision aligns with the UAE’s continued efforts to strengthen labour market transparency, reinforce employee welfare protections, and promote greater confidence and stability within the private sector employment landscape.
For further information, legal clarification, or assistance regarding the implications of UAE Ministerial Decision No. (340) of 2026 and Wage Protection System compliance requirements, please feel free to contact Khalifa Bin Huwaidan Alketbi Advocates and Legal Consultants.
FAQs
Yes. The Decision introduces an 85% compliance threshold, whereby an establishment may still be treated as compliant if at least 85% of the total wages due are paid on time, subject to lawful deductions permitted under UAE Labour Law.
MOHRE may impose escalating regulatory measures, including warnings, suspension of work permits, administrative fines, downgrade of establishment classification, initiation of labour complaints, referral to the Public Prosecution, precautionary attachment over assets, and travel bans against responsible persons.
Yes. Employers may appoint third parties or payroll service providers to process wages, provided MOHRE is notified and the relevant documentation is submitted. However, the employer remains ultimately responsible for timely salary payment compliance.
No. Certain categories are excluded from WPS calculations, including employees with pending wage disputes before courts, absconding employees, detained employees, employees on approved unpaid leave, and specific categories of workers exempted under the Decision.
Employers should ensure timely salary processing, maintain accurate payroll and WPS records, monitor lawful deductions, document exempt employee categories properly, and establish internal payroll compliance monitoring systems to mitigate regulatory exposure.
