Procedure for Payroll Process in UAE


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The Payroll Process is highly important for businesses in the UAE. For this reason, they must know how to carry out each step successfully. This is to avoid any potential issues with the workforce as well as for staying in compliance.

The UAE Labor Law is the one that determines several procedures to which the payroll process in HR must adhere to. So, each company must know how to comply with laws and regulations in the UAE to avoid non-compliance risk.

In this article, you’re going to learn about the steps involved in payroll outsourcing in UAE. In addition, you can gain understanding on the stages of a successful payroll processing. Let’s observe:

  • Procedure for Payroll Process in UAE
  • What tasks are related to payroll processing?
  • What are the main steps involved in payroll processing in the UAE?
  • Why do you need to know about WPS?
  • What are the most common questions related to payroll procedure?
  • How can Connect Resources help you with payroll processing?

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Procedure for Payroll Process in UAE

Running a business in the UAE is one of the greatest opportunities for entrepreneurs and investors around the world. However, establishing a solid presence in the UAE also involves handling a workforce. And a crucial aspect regarding your human resources is the Payroll Process      .

As you may know, managing and administering your UAE payroll can be challenging. This is because the laws and regulations are constantly changing. And you must keep up-to-date with them if you want your business to stay in compliance.

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In addition, learning about some key areas of payroll processing in the UAE can be challenging. So, it’s useful to know about each step you have to go through so you can pay your employees.

How can you pay your foreign workers?

Perhaps you have a workforce in the UAE, but you also have remote workers in your team. In the UAE, it’s very common to hire Indian employees to get their service. So, since you have to pay them you should know about the indian payroll process steps.

In this case, you have to learn about local rules regarding your Indian workers so you can stay in compliance. On the other hand, if you want to get assistance in this matter you can always contact a service provider that can help you make the payments to your international workers.

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What tasks are related to payroll processing?

Building a solid HR team that handles your Payroll Process is a must for your business. You must hire the best local specialists that can assist you with your payroll.

Managing an UAE payroll involves dealing with the entire process for paying all of the employees of your company. In addition, it also involves ensuring they get the correct payments and receive them timely.

So, some of the tasks that payroll processing for small business have to cover are the following:

  • Calculation of payments
  • Keep track of your employees’ work hours
  • Consider paid leave
  • Calculating deductions
  • Preparing and issuing pay slips
  • Calculating taxes

As you can see, there are several payroll functions that you must handle. Additionally, you must also learn about the following to keep your payroll in compliance:

  • Banking
  • Working week
  • Employment law
  • Mandatory and voluntary deductions
  • Tax and social security

Since managing a payroll involves investing tons of resources, time and effort, it can be challenging. However, once you know all the stages or steps for payroll processing, you can create a streamline process that solves your needs.

But, if you don’t want to deal with the complexities of payroll processing, you can always receive support from a third-party. Here in Connect Resources we can assist you with our payroll outsourcing service.

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What are the main steps involved in payroll processing in the UAE?

Once you know all the tasks that you have to do with Payroll Process, you must know where to start. In this regard, here we have the steps for payroll processing in the UAE:

1. Collect detailed information

The first step is having your employee master file. In it, you have the basic information about your employees such as the following:

  • Salary
  • Designation
  • Contact number
  • Allowance amount
  • Payable allowance types

Make sure to have this information updated, and check it constantly. This is to avoid mistake and maintain the proper records of your workforce. When it comes to indian payroll process steps, you also have to carry out this step since it’s very important to have all the information about your employees.

2. Calculation of gross wage

Before the end of every pay period, your HR specialists must carry out the proper calculation of gross wage for each employee. This is done by adding the allowance amount to the basic salary.

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3. Overtime calculation

The employees who have worked overtime hours should receive their proper payments regarding this matter. So, make sure to have a proper track about this data.

Keep in mind that in the UAE, the overtime is divided into normal overtime and Friday overtime. If you find that this task is too complicated, a payroll processing software can be of great help.

4. Extra allowances

After calculating the overtime, the next step is adding the extra allowances. These are typically paid every single month, and some of the most common ones are the following:

  • Bonus
  • Car expenses
  • Sales commissions

So, it’s necessary to know which employee receives which kind of allowances. These have to be added for the pay period.

5. Salary deductions

Calculating salary deductions is a highly sensitive task. This is because your employees don’t want to have unnecessary deductions so you must be careful with this aspect.

When it comes to salary deductions, these can be for absences, fines, violations, etc. It’s also worth noting that there are mandatory and voluntary deductions. Mandatory deductions are those that are required in accordance with the UAE legislation. Whereas voluntary deductions need a written authorization provided by the employee.

If you find payroll processing complicated, you can always use a payroll processing software that can solve your issues. This will be a great solution to automate your payroll and to decrease the likelihood of errors.

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6. Salary statements and Payslips

Salary statements are the summary reports of all the payments made to your employees. You should prepare them including all the information regarding the components of the salary. These are the following

  • Basic salary
  • Deductions
  • Overtime
  • Allowance
  • Absences

You have to keep records for every single pay period, as this will help your business have all the information about the payments for the employees. In addition, you must prepare the pay slips for your employees where they can see all the information regarding their salary.

A pay slip is a document that contains the calculations made for the salary payment. It’s good to prepare them to provide it to your employees since they can keep record of their payments and it’s also good for clarification.

If you don’t want to do pay slips manually, you can have a software that helps you with this matter.

7. WPS file

Once you go through all the stages of the payroll process, the last step is making the WPS sif file. It’s a salary transfer file that you must create in accordance with the format provided by the Ministry of Labor.

Keep in mind that this is the most crucial step in your payroll processing so you have to be careful about how to prepare this file.

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Why do you need to know about WPS?

Creating the WPS file is a crucial part of your Payroll Process. However, some businesses still don’t know what it is and why it’s so important.

The WPS is the Wage Protection System launched by the UAE authorities in 2019. It’s an electronic system used to transfer the salary to employees that work in the private sector. The main objective of the WPS is to ensure that employees get paid on time. In addition, it’s to secure employees’ salaries.

The business that works in the private sector must register for the WPS by entering the MOHRE official website. Once it has a registered account, it must process the payment by following the next steps:

  1. Open a bank account in the UAE
  2. Sign the WPS agreement
  3. The bank/agent notifies the WPS to the UAE Central Bank
  4. The UAE Central Bank forwards the information to the MOHRE to cross-check it
  5. The WPS issues the authorization to the bank to make the payments to the employees
  6. The bank transfers the salaries to each employee’s bank account

Once the business has done the payroll process in HR, then the final step is making the WPS file.

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What are the most common questions related to payroll procedure?

Carrying out the Payroll Process can be complex for a business. Whether you’re a large or small corporation you can face challenges with your payroll processing. For this reason, it’s necessary to clarify all the doubts you may have with this process.

Here we have some of the most common questions businesses have regarding payroll managing and administration:

How frequent do you have to make the payments?

When it comes to payroll processing for small business, many may not know the payment frequency in the UAE. According to the UAE Labor Law, the payments have to be either monthly or bi-weekly. The type of contract will determine this aspect.

What are the statutory pay components?

The employee salary doesn’t have any statutory pay components according to the UAE Labor Law since it’s not defined there.

However, there are fixed pay components that could be basic salary, transport allowance, house rent allowance, etc. Some businesses may include variable components such as overtime, incentives, relocation allowance, etc.

Is there a minimum salary in the UAE?

According to the UAE Labor Law, there’s not a minimum salary payable in the UAE for expatriate workers. However, for UAE nationals there’s a minimum salary but it depends on the individual’s level of education.

What are the statutory deductions in the UAE?

In the UAE, there are not statutory deductions since payroll is not subject to income tax. However, when it comes to UAE nationals, you have to consider the mandatory national pension plans contribution.

What do you have to know about the leave policy?

Learning about the leave policy in the UAE can help you handle your payments efficiently. You should know some of the allowed leaves are annual leave, sick leave, maternity leave, Hajj leave and paternity leave. So, you should know how to handle them, when an employee is entitled to any of these leaves and more.

Are bonuses and incentives mandatory?

No, they’re not mandatory. But many companies choose to provide them to improve the employees’ motivation and retention.

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How can Connect Resources help you with payroll processing?

In Connect Resources we want to help your business succeed and stay in compliance. For this reason, we can assist you with your Payroll Process, so you can focus on your core activities while we handle your administrative tasks.

With our payroll outsourcing dubai service you can receive a customized solution that solves your needs. Our team of specialists is readily available to help you process your payroll and make it efficient. With our dedicated experts you can be completely sure that your payroll is going to be accurate and delivered timely.

Would you like to contact Connect Resources for payroll outsourcing uae services? You can call at +971 433 166 88 or send an email to, and you’ll talk to one of their representatives that will gladly answer all of your questions.

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