The Wages Protection System (WPS) has been in operation for several years now across the GCC. In 2009, UAE was the first country to enact the WPS infrastructure, gradually followed by KSA, Oman, Qatar, Kuwait and finally Bahrain. WPS is a legally established initiative to protect employees. It is heavily regulated with many mandatory requirements, with a business “registering into the WPS” being one of the primary ones.
One of the major problems concerning GCC or middle-east payroll, in general, is adhering to the precise, sensitive and constantly changing payroll regulations. This is even more complex when it comes to countries like UAE with a WPS. These are primary reasons why even large-scale organizations are opting for outsourced payroll services to ease their payroll compliances, especially for WPS adherences. To give you more details on this topic, here is a clear breakdown of why WPS exists and how outsourcing your payroll services can simplify WPS transactions while also avoiding your company the risk of WPS penalties.
The Purpose of WPS
Wage Protection System (WPS) is an electronic salary transfer system that allows organizations in the private sector to pay their employee’s wages via banks, bureau de change, and approved financial institutions. It is in operation as a transparent means of securing the timely payment of employee salaries and regulating employer non-compliance. In-scope employers are obliged to pay wages into local currency at least once a month and into a locally regulated bank account.
The wages of the workers should be transferred via the Wage Protection System in accordance with the deadlines stipulated in the law of the given country. The law also requires that the company is registered with the Ministry of Labour for the WPS to apply.
While this is only the rough concept of how WPS works, carefully following all its rules as and when they are updated is complex. And failing to do this can easily put your company at risk with heavy penalties. That’s where outsourced payroll proves beneficial to your company in the following ways.
A payroll outsourced company has dedicated teams to handle all your payroll functions which include WPS adherence as well. Because these companies have years of expertise in dealing with WPS updates and their changing regulations, they have appropriate strategies and approaches to make sure your payroll function complies with the established WPS laws of a given country effectively. Likewise, you can avoid all potential risks of non-compliance and the related penalties by outsourcing your payroll to safe hands.
Most importantly, outsourced payroll will ensure the payrolls of a given month are processed according to the due dates set by the WPS of a given country, thereby avoiding penalties for delay. This is very likely to be overlooked with the interference of other payroll tasks if your company is using an in-house payroll team.
Moreover, as the specializations and the learning curve each HR professional takes in understanding the latest WPS updates varies, it’s hard to make sure your payroll function will effectively comply with a country’s WPS through an inhouse-payroll team. This might also call for consistently replacing payroll professionals or facilitating them with appropriate training and development programs, which are overwhelming and costly.
Accurate and Efficient
For an outsourced payroll company handling your payroll is their core function, and so they are trained to do them meeting the highest standards and in the most efficient way possible. This is the only way payroll outsourcing companies can prove beneficial to their clients. These standards and efficiency equally apply in assuring your company’s payroll abiding the WPS as well.
Another significant gain in outsourcing your payroll is these service providers have direct representatives and networks in different countries based on the markets they provide their services to. These representatives are solely responsible for giving these payroll outsourcing companies the correct information on any possible payroll legislation changes, including WPS updates. That way, even if your company has a multi-country payroll, a payroll outsourcing company will be able to maintain your WPS compliance duly based on accurate and reliable information, provided that their outsourcing services cover the regions of your business operations.
Instant alerts on changing WPS regulations can lead to instant updates in your payroll functions, thereby, allowing your company to release payroll documentation that accurately complies with the latest WPS requirements of a given country. This effortlessly takes off the burden of your company, risking any penalties for noncompliance concerning WPS.
Doing this in an in-house payroll context is tedious, time-consuming and overwhelming as professionals should wait to be informed with reliable information and learn new changes made to WPS laws and then come up with ways to make relevant changes. So by the time your payroll actually incorporates the latest changes, you might already have a pile of outdated documents that need to be revised or updated.