UAE employers must process payroll through the WPS (Wages Protection System). This guide explains how to calculate UAE salaries and WPS obligations in 2025.
UAE Salary Structure
UAE salaries are typically structured as: Basic salary: the base salary amount. Housing allowance: often 25-40% of basic salary. Standard for UAE employment contracts. Transport allowance: typically AED 500-1,500/month. Other allowances: medical, education, and other benefits as negotiated. For WPS filing purposes: the total salary (all components) must be submitted in the Salary Information File (SIF). The SIF format requires: employee ID, employee name, bank IBAN, and total gross salary.
Calculating UAE Gratuity
End-of-service gratuity (EOSB) calculation (under UAE Labour Law 2021): First 5 years of service: 21 calendar days of basic salary per year of service. After 5 years of service: 30 calendar days of basic salary per year of service. Example: Employee with AED 10,000 basic salary, 3 years service: (AED 10,000 / 30 days) x 21 days x 3 years = AED 21,000 gratuity. Cap: total gratuity capped at 2 years total remuneration. Gratuity is calculated on basic salary only — not total salary (allowances excluded). New Savings Scheme (DEWS): DIFC employees participate in the DEWS (End of Service Benefits Scheme) — a managed fund alternative to the traditional lump-sum payment.
WPS Filing Process Step by Step
Step 1: generate SIF (Salary Information File) from your payroll software or manually. Step 2: log in to your UAE bank online banking portal. Step 3: upload SIF file to the WPS section of your bank portal. Step 4: bank validates the file and debits your account on the payment date. Step 5: MOHRE receives WPS confirmation automatically. Step 6: employees receive salary in their UAE bank accounts or salary cards. Deadline: WPS must be submitted within 10 days of the contracted salary date.