Qatar Implements Wages Protections System (WPS) – Consider Payroll Outsourcing Solutions

Implementation of WPS in Qatar poses a new challenge and encourages utilization of payroll outsourcing providers.

Following suit of the UAE and Kingdom of Saudi Arabia, the State of Qatar is implementing Wages Protection System (WPS) to ensure that salaries paid to private sector employees correspond with the terms of their respective employment contracts. The law introducing the WPS was announced on February 18, 2015 and came into force on May 2, 2015. All employers are required to comply with the new law within six months from the date the law came into force or by no later than October 1, 2015. Compliance with the new WPS rules might be a challenge for many companies who have not outsourced their payroll or implemented modern payroll software solutions. Many companies are considering payroll outsourcing in order to be able to produce WPS files in the mandated format.

The key requirements of the new law are:

• All salaries must be paid through electronic bank transfers using a specific WPS file format
• All salaries must be paid to employees’ bank accounts located in Qatar and in Qatari riyals
• Employees hired based on annual or monthly salaries must be paid at least once a month and all other employees must be paid at least every two weeks.

On February 18, 2015, the State of Qatar issued Law No. (1) of 2015 (“Amendment Law”), which amended the Article 66 of the current Qatari Labor Law – Law No. (14) of 2004.

Under the Amendment Law:

• Wages and other benefits payable to employees must be paid in Qatari currency;
• Salaries must be transferred to the employees’ bank account at one of the financial institutions operating in the State of Qatar thus permitting the employees to have access to their wages on the due date;
• Employees recruited on annual or monthly wages should be paid at least once a month and wages of all other employees should be paid at least once every two weeks.

As per article 1 of the Qatar Central Bank Law 13 of 2012, financial institutions are defined as ‘any bank, insurance company, reinsurance company, investment company, finance company, exchange house, representation office, external unit and other financial institutions’ regulated and licensed by the Qatar Central Bank to conduct such banking and similar activities.

The Amendment Law provides that all employers are required to adjust wage processing requirements, in accordance with its provisions, within six months of May 2 2015 (the date the law came into force). By decision of the Minister this deadline may be extended.

Every person who violates any of the provisions of the amended Article 66 of the Labour Law will be punished by imprisonment for a period not exceeding one month, or a fine of no less than QAR 2,000 ($549) and no more than QAR 6,000 or both.