2.5. Payroll: Gratuity and WPS

Theory

Key Terms & Definitions

Payroll Accounting — The process of calculating, recording, and paying employee salaries in compliance with UAE Labor Law.

UAE Labor Law — The legal framework governing employment contracts, wages, benefits, and employee rights in the UAE.

Wage Protection System (WPS) — A mandatory salary payment system requiring employers to pay wages through approved UAE banks.

MOHRE – Ministry of Human Resources & Emiratisation — The UAE authority responsible for monitoring payroll compliance, WPS submissions, and labor inspections.

WPS File — An electronic file submitted by employers detailing employee salaries, payment dates, and bank details.

End-of-Service Gratuity (EOSG — A statutory payment owed to eligible employees upon termination after at least one year of service.

Basic Salary — The fixed salary component used to calculate gratuity, excluding allowances and bonuses.

Gratuity Calculation — The statutory formula based on days of basic wage per year of service (21 days for first 5 years, 30 days thereafter).

Payroll Deductions — Amounts deducted from salary, such as insurance premiums, salary advances, or unpaid leave.

Payroll Deductions — Amounts deducted from salary, such as insurance premiums, salary advances, or unpaid leave.

GPSSA – General Pension and Social Security Authority — The authority managing mandatory pension contributions for UAE nationals.

Payslip — A document showing gross salary, deductions, and net pay for a specific pay period.

Payroll Audit — A review by MOHRE or auditors to verify legal compliance and accuracy of payroll records.