Since 1 June 2026, salaries in the UAE private sector are due on the first day of the month after the month they were earned, and they must go through the Wage Protection System (WPS) unless the employer or the worker falls in a narrow exempt list. That is the whole change, and it is the reason a lot of small companies that ran payroll "around the 10th" are now technically late every month. This guide explains the new rule, what compliance actually means, what happens as the days pass, and what a five-to-twenty-person company in Dubai, Sharjah or Abu Dhabi should change in its own books.
Deadline: wages for September 2026 are due on 1 October 2026. There is no contractual due date to fall back on and no 15-day grace period.
What changed on 1 June 2026
The Ministry of Human Resources and Emiratisation (MOHRE) issued Ministerial Resolution No. 340 of 2026, which replaced the earlier WPS framework and came into force on 1 June 2026. Two things went away with it:
- Contract-set pay dates. Previously the wage due date followed what the employment contract said. Now the calendar sets it: the first day of the following month, for every establishment registered with MOHRE.
- The grace window. The old framework gave employers roughly a fortnight after the due date before a file was treated as delayed. Payment after the due date is now classified as delayed from the start, and the enforcement ladder begins running.
There is no small-business carve-out. A company with three employees on MOHRE work permits is under the same rule as a company with three hundred.
What "compliant" means in practice
Reporting on the resolution by UAE employment-law firms describes a two-part test: an establishment is treated as compliant when at least 85% of total wages are paid on time, and when each individual employee receives at least 85% of their own wage, after deductions that UAE labour law actually permits. In effect that caps lawful WPS deductions at 15% of the wage in the file, below the 20% ceiling that labour law allows in other contexts.
The practical reading for a small employer: you cannot hold back a third of someone's salary against a loan, an advance or damaged equipment and still show up as compliant in the WPS file, even if the employee agreed to it in writing. Spread the deduction over more months.
Two numbers matter in every WPS file, and they should match your books exactly:
| Field in the file | What it means | Where it comes from in your records |
|---|---|---|
| Basic salary | The contractual basic, before allowances | The employment contract |
| Allowances / variable pay | Housing, transport, commission, bonus for the period | The payroll run for that month |
| Deductions | Lawful deductions only, capped in practice at 15% | Advances, loans, authorised penalties |
| Net paid | What actually leaves the bank | The bank transfer confirmation |
A mismatch between the salary in the file and the salary in the contract is the single most common trigger for a MOHRE query at a small company.
The escalation ladder
Enforcement under the resolution is scaled: it starts as a nudge and becomes expensive if the delay persists. Published summaries by law firms describe roughly this sequence after the due date passes:
| Roughly | What happens |
|---|---|
| Day 2 | Automated notification to the establishment that wages are overdue |
| Day 5 | New work permits frozen — you cannot hire or renew while wages are outstanding |
| Day 11 | Financial penalties on repeat offenders |
| Day 16 | Larger employers (broadly 25+ workers) referred as collective labour disputes |
| Day 21 | Escalated enforcement, including asset attachment and referral to prosecution |
Treat these day counts as the shape of the regime rather than as a schedule you can plan against — MOHRE publishes the operative detail and it can be updated. The one number worth memorising is day 5: a work-permit freeze stops hiring, renewals and visa work dead, which is usually a bigger problem for a growing company than the fine.
Who is exempt
The exemptions are narrow and worth knowing so you do not pay for a WPS file you do not need.
Exempt establishments include banks and financial institutions, places of worship, and individually owned public taxis and fishing boats.
Exempt workers include those with an active absconding report, workers with wage claims already before the courts, employees on approved unpaid leave, people whose freedom is legally restricted, seafarers on vessels where the Ministry has approved it, foreign workers paid outside the UAE with approval, and holders of mission work permits of three months or less.
Note what is not on that list: freelancers you pay on invoice, contractors, and staff of DIFC and ADGM entities, which sit under their own employment regimes rather than MOHRE's. If you run a mainland company and also engage freelance designers on a permit, the designers are payables, not payroll, and they belong in your bills rather than your WPS file. Free zones vary — several route payroll through WPS, some do not — so confirm with your own free-zone authority rather than assuming.
Gratuity and the final settlement
End-of-service gratuity is not part of the monthly WPS file, but it is the other payroll number a small employer gets wrong. Under the current federal labour law, an employee who has completed at least one year of continuous service is entitled to:
- 21 calendar days of basic salary for each of the first five years of service, and
- 30 calendar days of basic salary for each year beyond five,
capped at the equivalent of two years' total pay. Gratuity is calculated on basic salary only — housing, transport, overtime, commission and bonuses are excluded. The final settlement, gratuity included, is due within 14 days of the end of the contract.
This is why the split between basic and allowances in the contract is a real financial decision, not paperwork. A AED 12,000 package that is AED 6,000 basic produces roughly half the gratuity of the same package that is AED 10,000 basic. Whatever split you choose, keep it consistent across the contract, the WPS file and your accounts.
What to change in your own records
Four habits cover most of the risk for a small company:
1. Move the payroll run earlier in the month. If salaries must be in employees' accounts on the 1st, the payroll has to be approved and the file submitted with enough banking days in hand. For most small employers that means finalising numbers around the 25th–27th and treating the last week of the month as processing, not calculation.
2. Freeze variable pay one cycle behind. Commission and bonus figures are almost never final by the 25th. The clean fix is to pay variable elements one cycle in arrears — September's commission goes in the October payroll — so the deadline is never waiting on a client to confirm a number.
3. Reconcile the file to the ledger every month. Total gross in the WPS file, total salary expense in the books and total bank outflow should agree. When they do not, the difference is nearly always an unrecorded deduction or a reimbursement that never made it into the accounts.
4. Accrue gratuity monthly. A company with eight employees is quietly building a liability of tens of thousands of dirhams. Booking roughly one month's basic per employee per year as an accrual keeps the balance sheet honest and stops the final settlement from being a cash-flow event.
From the platform: Staks holds the payroll side of this — employees, recurring monthly payroll runs, and per-employee records with basic salary, bonus, commission, reimbursements and deductions that post straight into the ledger as salary expense, so the payroll total and the P&L always agree. Commissions earned on won deals can be pushed into a chosen payroll month in one step, which is what makes the "one cycle in arrears" habit workable. Staks does not connect to WPS and does not generate bank salary files — that stays between you and your WPS-enabled bank or exchange house. What it gives you is the record the file should be built from, and the audit trail if MOHRE ever asks.
Frequently asked questions
Does the 1st-of-the-month rule apply if my employees are paid weekly or fortnightly?
The resolution sets the monthly wage as due on the first day of the following month. More frequent payment is not a problem — paying early is never a violation. The deadline is a backstop, not a schedule.
What if the 1st falls on a Friday or a public holiday?
Bank clearing is the practical constraint. Submit the file with enough working days for the transfer to land on or before the due date; a transfer initiated on the 1st that clears on the 3rd is a delayed wage in the system's eyes.
Can I pay part of a salary in cash and the rest through WPS?
No. The wage in the WPS file should be the wage in the contract, paid through the system. Cash top-ups outside the file are exactly the pattern the framework exists to catch, and they leave you unable to prove payment in a dispute.
Are freelancers and consultants included in WPS?
No. People engaged on a service contract or a freelance permit are suppliers: they invoice you, you record a bill and pay it on your normal terms. Only employees on your establishment's work permits belong in the WPS file.
Does a delay of one day really matter?
The system logs it. One late month at a company that is otherwise clean is usually a notification. The cost lands on repetition: a work-permit freeze while you are trying to hire, and fines once a pattern exists.
Related reading
- How to invoice as a freelancer in the UAE — the other side of the relationship, if you engage contractors.
- How to chase late payments in Dubai — because payroll deadlines are only comfortable when receivables land first.
- How to track project and client profitability without timesheets — where payroll cost meets the work it paid for.
Payroll is the one deadline in a small UAE company that is now fixed by the calendar rather than by a contract. Get the run finished a week early, keep the file and the ledger reconciled, and the rest of the regime never touches you. Start a 14-day free trial of Staks to keep payroll, commissions and the ledger in one place.