UAE Payroll Guide (2026): WPS Files, 15-Day Deadlines & Gratuity Accrual

WPS is an electronic salary-transfer system operated by the UAE Central Bank with MOHRE. The employer sends a Salary Information File to an approved agent — a bank, exchange house or financial institution — which transfers the money to each employee's account and reports the payment back to MOHRE.

Salaries must be paid within 15 days of the due date. Once an establishment is late, MOHRE can block new work permits, and repeated non-compliance escalates to fines and downgrading of the establishment's classification. This is why payroll timing, not payroll calculation, is the compliance risk most UAE employers actually face.

The SIF is a fixed-format file with an employer record and one employee detail record per person. Every field has to match what MOHRE already holds — a mismatch in the labour card number or the establishment ID rejects the whole file, not just the line.

Gratuity is calculated on basic salary only — not allowances — and accrues at 21 days' basic pay per year for the first five years of service, then 30 days per year thereafter, capped at two years' total pay. Unlimited and limited contracts were unified under the current Labour Law, so resignation no longer reduces the entitlement the way it did under the older regime.

The accounting point matters as much as the calculation: gratuity is a liability that builds every month an employee works, not a cost that lands when they leave. Accruing it monthly keeps the balance sheet honest and prevents a large unbudgeted hit in the month of departure.

Salaries are outside the scope of VAT — an employment contract is not a taxable supply — but the adjacent costs are not. VAT on staff benefits is only recoverable where the benefit is a legal or contractual obligation of the employer, so personal-use items, entertainment for staff and family visa costs typically block recovery.

For corporate tax, employee costs are deductible, but payments to owners and connected persons must be at arm's length to be deductible in full. Keeping director remuneration documented and market-benchmarked avoids a disallowance at return time.

GulfAccount stores each employee's labour card details, IBAN and salary structure, splits fixed and variable pay for the SIF, and produces the WPS file for upload through your agent. Gratuity accrues monthly against a liability account, leave and unpaid days feed the payment automatically, and payroll journals post straight into the general ledger so the payroll cost, the bank payment and the accrual always agree.