The Most Common Payroll Services in UAE Mistakes Businesses Make

Payroll Services in the UAE are a critical business function, one that requires extra attention. Your employees expect to be paid on-time with accuracy. Regulators also expect the companies to comply with labor laws, tax rules and reporting requirements. However, a lot of businesses tend to struggle with payroll, especially SMEs and startups. What is a simple task can become complex when you need to consider compliance, calculations and deadlines.

The labour laws and Wage Protection System have strict guidelines, which means you are more likely to make mistakes. This can increase fines, and penalties increasing the chances of dissatisfaction. The good news is that you can prevent these errors by implementing these practical steps.

·         The biggest mistake you are likely to make with payroll would be paying the employees late. Delayed payments can cause frustrations among the employees in UAE and put your company at WPS violation risk. You can avoid this mistake by automating the payroll system to fix the payment schedules. You should always ensure there is sufficient cash flow in the planning so that you don’t miss salary deadlines. Next, you should outsource payroll to professionals who have experience managing WPS compliance and timelines.

·         The tax accounting services in Dubai believe that incorrect salary calculations can also cost you heavily. Errors while calculating overtime, allowance and commission are common. But, these common mistakes can make your employee lose trust in you. That’s why you should use a payroll software that applies that UAE labor laws for overtime and benefits. This way you can avoid calculating them manually. You should maintain clear employment contracts that comprise detailed allowance and entitlement breakdowns. Audit the payroll records regularly to catch inconsistencies. This way you can avoid this error.

·         You must classify your employees properly for the right calculations. However, a lot of you may make the mistake of classifying the full-time employee as a contractor to save costs. In some cases businesses tend to forget upgrading the employee’s records when role changes. This misclassification can cause compliance issues according to the payroll services in UAE. You should follow the UAE labour laws properly while categorizing the employees to avoid this issue. Make sure to review the contracts for better accuracy. Lastly, always work with HR and legal advisors who can help prevent these classification errors.

·         When you ignore or mismanage the WPS compliance, it can cost your business heavily. The WPS is an mandatory aspect for the UAE businesses, especially when paying salaries through approved banks. You can use a payroll partner that is WPS compliant to avoid this situation. You should always submit the salaries on time in the WPS format. Lastly, monitor the payment confirmation to ensure the employees can receive wages without delays.

·         The big mistake would be to ignore the end-of-service benefits that is gratuity. If you miscalculate this or do not budget it, you may face disputes. You should be updated on the calculation rules. Add a payroll software to automate these calculations. Include provisions for financial planning that covers gratuity liabilities.

Lack of data security can also cost you according to the tax accounting services in Dubai.