Ministerial Resolution No. 340 of 2026 concerning the Wage Protection System took effect on 1 June 2026 and removed the cushion every UAE payroll team had relied on since WPS began in 2009: the 15 day grace period. Wages must now clear through WPS by the 1st day of the following Gregorian month. A payment landing on 2 September for August wages is a delayed payment, and enforcement starts automatically.
For an SME this is sharper than the corporate tax deadlines, because the first consequence arrives on day 5 rather than at year end. Below are the rules, the enforcement clock MOHRE now runs, a worked 85% calculation you can rerun on your own payroll, and the three places we see SMEs get caught.
What Ministerial Resolution 340 of 2026 changed
The Resolution applies to every private company registered with MOHRE. Four things moved at once.
| Item | Before 1 June 2026 | Under Resolution 340 of 2026 |
|---|---|---|
| Wage due date | Driven by the contractual payroll cycle, for example the 28th or the 5th | Unified: the 1st of each Gregorian month, for the prior month |
| Grace period | 15 days before non compliance was triggered | None. Anything after the 1st is a delayed payment |
| Establishment compliance test | At least 80% of total wages transferred | At least 85% of total wages transferred by the 1st |
| When an individual counts as paid | At least 80% of monthly salary received | At least 85% of monthly salary received, after lawful deductions |
The unified due date is the part payroll teams underestimate. Your contract may state that wages are payable on the 28th. That date no longer governs your WPS status: August wages are due on 1 September regardless. Paying before the 1st is accepted on the system in practice, so an SME already running payroll on the 25th is fine, provided the pay period on the file is tagged to the correct month.
Who is actually in scope
All private sector establishments registered with MOHRE, including free zones inside the MOHRE WPS perimeter. Jebel Ali Free Zone and DMCC companies file Salary Information Files in the normal way. DIFC and ADGM run their own employment regimes, so an entity licensed there is not submitting SIFs to MOHRE.
This matters for group structures. If you hold a DMCC trading licence and a DIFC advisory entity, only the first sits under Resolution 340, and the two payroll calendars should not be merged into one bank instruction. The same jurisdictional split shows up in reporting duties, which we set out in our guide to UAE free zone audit requirements and in our comparison of mainland, free zone and offshore structures.
The enforcement clock, day by day
Resolution 340 replaced discretionary inspection with an automated escalating sequence, counted from the 1st.
| Day of delay | What MOHRE does | Who it hits |
|---|---|---|
| Day 2 | Automated warning and system alerts issued to the establishment | All in scope employers |
| Day 5 | Issuance of new work permits suspended, plus a further payment warning | All in scope employers |
| Day 11 | Administrative fines under Cabinet Resolution No. 21 of 2020 as amended, in practice AED 1,000 per affected worker capped at AED 20,000, plus demotion to the third classification category | Employers with a second delay inside six months |
| Day 16 | Registration of an individual or collective labour dispute | 25 or more workers, or shared ownership groups reaching 25 unpaid workers in construction, transport, security, cleaning and recruitment |
| Day 21 | Precautionary attachment, referral to relevant authorities including possible Public Prosecution, and possible travel bans on responsible individuals | 50 or more workers, or shared ownership groups reaching 50 unpaid workers in those same sectors |
The day 11 classification demotion is the cost owners overlook, because it is not a fine. Work permit issuance and renewal fees run from AED 250 to AED 3,450 depending on whether MOHRE places you in category A, B or C, and WPS compliance feeds that classification. An SME hiring 20 people a year that drops to category C pays a recurring premium on every permit long after the late salary run is forgotten.
Worked example: how AED 10,000 fails an AED 1.2 million payroll
Take a Dubai mainland company with 40 employees and monthly wages of AED 1,200,000.
- The 85% establishment threshold is AED 1,200,000 x 0.85 = AED 1,020,000.
- The finance manager holds back AED 190,000 on 1 September: final settlements for three leavers still being calculated, and a deferred commission run for two sales staff.
- Transferred by the 1st: AED 1,200,000 minus AED 190,000 = AED 1,010,000.
- That is 1,010,000 / 1,200,000 = 84.17%. The establishment fails the test.
- The shortfall against compliance is AED 1,020,000 minus AED 1,010,000 = AED 10,000.
Thirty five of the forty staff were paid in full and on time. The company is still non compliant, and on day 5 its work permits stop. Releasing AED 10,000 more would have kept the file clean.
The individual test is just as tight. An employee on AED 10,000 a month who receives AED 8,500 has been paid exactly 85% and counts as paid. At AED 8,400 they are on 84% and count as unpaid, which feeds the 25 and 50 worker dispute thresholds above. AED 100 changes that employee’s status.
If you are going to miss the 1st, do this
- If cash is short but not absent, pay to the 85% establishment line first and keep every individual above 85% of their own salary. A uniform partial payment is safer than paying most staff in full and zeroing a few.
- If a deduction causes the shortfall, confirm it is lawful under Federal Decree-Law No. 33 of 2021 before it enters the file. Unlawful withholdings are not justified deductions.
- If someone is on approved unpaid leave, in their first 30 days, has abandoned work, or is in an active labour case, register that status with MOHRE before the file goes in, not after.
- If the delay is banking related, keep the transfer instruction, timestamp and bank confirmation. You will need that evidence on day 2, not day 12.
- If this is your second delay inside six months, budget for the day 11 fines and the classification demotion.
What most WPS guides get wrong
Three points come up repeatedly in client work and are almost never covered.
- The 85% test runs twice, not once. Nearly every summary quotes the establishment threshold and stops. The Resolution also applies 85% to each individual employee. A business can transfer 92% of total wages, passing the establishment test comfortably, while three specific people received nothing. Those three still count as unpaid workers for dispute registration. Withholding a leaver’s final settlement pending exit clearance is the most common cause we see.
- Early payment is safe only if the pay period on the SIF is right. The Salary Information File carries pay period dates, not just the transfer date. A transfer executed on 27 August tagged to the wrong period does not discharge the September obligation. If your payroll software rolls periods automatically, check the header record after any software update.
- The 1st is not a business day test. The Resolution sets a calendar date. When the 1st falls on a weekend or a public holiday, the practical deadline moves backwards to the last banking day, not forwards. Bank cut offs for bulk WPS files are typically mid afternoon, so treat submission as due at least one full working day before the 1st.
A readiness check for SMEs
- Move the internal payroll cut off to the 25th so approvals, corrections and bank submission all sit before the 1st.
- Reconcile the SIF headcount to your MOHRE establishment list monthly. Staff who left but were not cancelled still show as unpaid.
- Build the 85% check into payroll sign off: total transferred over total wages due, plus a per employee minimum of 85%.
- Confirm your bank or exchange house cut off time for bulk WPS uploads in writing, and test it once.
- Keep six months of transfer confirmations accessible, since the day 11 escalation turns on whether a prior delay fell inside that window.
For most SMEs this is a systems problem, not a cash problem. Where payroll runs on spreadsheets and gets re keyed into a bank portal, the failure point is the file rather than the funding, which is why payroll software implementation and process automation pay for themselves here. The reconciliation sits inside an outsourced bookkeeping engagement, and if cash timing is the constraint, that is a CFO advisory conversation.
Frequently asked questions
When exactly are UAE salaries due under the new WPS rules?
Wages for a calendar month must be transferred through WPS by the 1st day of the following Gregorian month. Ministerial Resolution No. 340 of 2026, effective 1 June 2026, removed the previous 15 day grace period, so August wages are due on 1 September and any payment after that date is treated as delayed.
What is the 85% rule in the UAE Wage Protection System?
An establishment is treated as compliant if it transfers at least 85% of total wages due by the deadline, up from 80% previously. Separately, an individual employee is treated as paid only if they receive at least 85% of their entitled salary after lawful deductions. Both tests must be satisfied.
What is the fine for late salary payment in the UAE in 2026?
Fines are not the first consequence. New work permits are suspended from day 5 of delay. On a second delay within six months, administrative fines under Cabinet Resolution No. 21 of 2020 as amended apply from day 11, commonly AED 1,000 per affected worker capped at AED 20,000, together with demotion to the third MOHRE classification category.
Do DIFC and ADGM companies have to comply with WPS?
No. Resolution 340 of 2026 applies to private companies registered with MOHRE, which includes JAFZA and DMCC entities. DIFC and ADGM operate separate employment regimes and their companies do not file Salary Information Files with MOHRE.
Can we still pay salaries before the 1st of the month?
Yes. Early payment is accepted on the system in practice. The requirement is that the wages for a given month have cleared by the 1st of the next month and that the pay period recorded on the Salary Information File matches the month being paid.
Does an employee on unpaid leave count against our WPS compliance?
Only if the status is not recorded. Employees on approved unpaid leave, within their first 30 days of employment, who have abandoned work, or who are in an active labour case are handled separately, but the status must be registered with MOHRE before the file is submitted. Undocumented unpaid leave shows as an unpaid worker.
Payroll compliance became a monthly risk on 1 June 2026. For a second pair of eyes on your next few WPS runs, talk to our team.