On 1 June 2026, MoHRE's Ministerial Resolution 340 of 2026 came into force, and enforcement went live the same day. It is one of the biggest changes to WPS compliance in the UAE in years. Whether you pay 4 people or 400, three things changed at once: when salaries must land, how compliance is measured, and which SIF file your bank will accept. Here is what actually changed, the three traps SMEs are hitting in month one, and a five-step checklist you can run this week.
What changed on 1 June, in plain language
- Salary by the 1st of the month. Salaries must now reach employee bank accounts by the 1st of each month. Not "processed", not "sent to the bank" — actually sitting in the employee's account.
- An 85% on-time threshold. At least 85% of your staff must be paid on time through WPS each cycle for your company to stay compliant.
- MoHRE blocks for firms that fall short. Non-compliant companies face a MoHRE block — new work permits and other ministry transactions can freeze until the issue is fixed. The exact scope depends on your situation, so confirm the specifics with MoHRE.
- A new WPS 2.0 SIF file format. Banks now require the updated salary information file (SIF) format. Files generated from old templates are being rejected.
The three traps catching UAE SMEs
Trap 1: "By the 1st" breaks the payroll cycle you have run for years
Most SMEs close payroll between the 25th and the 28th, send the SIF file to the bank at month-end, and salaries land between the 2nd and the 5th. Under the old rules, that was fine. Under the WPS UAE 2026 rules, it is a violation every single month.
Getting salary into accounts by the 1st means working backwards. Banks typically need one to two working days to process a WPS file, internal approvals take time, and weekends and public holidays quietly eat days you thought you had. If the 1st falls on a non-working day, the safe move is to pay before it, not after — confirm your bank's cut-off times and how MoHRE treats weekends rather than assuming grace days exist.
Trap 2: The 85% threshold is tighter than the number suggests
Run the math for your own headcount, because the margin disappears fast:
- 20 employees: 17 paid on time is exactly 85% — compliant, with zero margin. 16 paid on time is 80% — below the threshold, and you are in MoHRE block territory.
- 10 employees: 9 on time (90%) passes. 8 on time (80%) fails. You can absorb exactly one late salary.
- 6 employees or fewer: 5 out of 6 is 83.3% — below 85%. One late salary puts the whole company under. There is no buffer at all.
And "late" is broader than you think. A wrong IBAN, a closed account, a new joiner whose bank details were never collected, a disputed final settlement — each one can count against your percentage. How documented exceptions are treated depends on the case, so keep evidence for every salary you genuinely could not pay, and confirm the handling with MoHRE or a licensed PRO before you rely on it.
Trap 3: Banks are bouncing old SIF files
The new WPS 2.0 SIF format requires amounts at fils precision, a Payment Month field, employee bank routing codes, and updated remark codes for exceptions. The Excel template your accountant built in 2023 does not produce any of that, and banks are rejecting the files it generates.
This is where the traps compound. A SIF file rejected on the 28th means a scramble to fix and resubmit. Miss the window and salaries land after the 1st — now you have a timing breach under trap 1, and every affected employee drags your percentage down under trap 2. One bad file can take an otherwise healthy company below 85% in a single cycle.
A five-step WPS compliance checklist for this week
- 1. Rebuild your payroll calendar backwards from the 1st. Fix hard internal dates: variable pay and overtime closed by the 23rd, approvals done by the 25th, SIF file at the bank by the 27th or 28th. Put the deadlines in writing and assign an owner for each.
- 2. Audit every employee's bank data. IBANs, account status, and bank routing codes. A missing routing code means a blocked row in your WPS 2.0 SIF file — find the gaps now, not on payroll day.
- 3. Test a WPS 2.0 file with your bank before you need it. Generate a file in the new format and confirm your bank accepts it. Do this mid-month, when a rejection costs you nothing.
- 4. Know your threshold number. Multiply headcount by 0.85 and round up — that is the minimum number of staff who must be paid on time. Then count how many late salaries you can absorb. For most SMEs the honest answer is zero or one.
- 5. Document every exception. Resignations mid-month, unpaid leave, disputes, absconding cases — file the evidence as it happens, so you can show MoHRE why a salary was legitimately not paid.
Where payroll automation actually helps
Software cannot move money or argue with your bank. What it can do is remove the failure points behind most WPS compliance breaches: generate the SIF file in the format banks accept, validate routing codes and amounts before submission, run the deadline calendar for you, and flag missing employee data weeks before it becomes a blocked salary. Manually built spreadsheet files are a common reason WPS runs fail under the new format in 2026.
This is exactly what Xrero's UAE payroll module was built for. It auto-generates WPS 2.0 SIF files in the bank-accepted format — fils precision, Payment Month field, routing codes, and the updated remark codes — and it calculates end-of-service gratuity under Article 51 automatically, tracks ILOE status per employee, and produces bilingual English and Arabic payslips your staff can actually read. It costs AED 99 per user per month (AED 83 on annual billing) with a 15-day free trial, so you can see your real numbers in it before you commit. Compare plans on our pricing page.
To be straight about the limits: Xrero prepares the file and the calculations; you still review, approve, and submit through your bank. No software can make your bank process a file faster — one more reason to move your cut-off dates earlier this month.
Founding 10: free setup for the first ten UAE SMEs
We are giving the first 10 UAE SMEs free implementation — worth up to AED 4,990 — in exchange for a short case study in month three. If Resolution 340 has exposed gaps in your payroll process, start with our WPS deadline guide, then book a demo or message us on WhatsApp at +971 55 776 9320. We will walk through your current payroll cycle and show you what compliant looks like with your own data.
Disclosure: Xrero is business software, not a licensed tax or legal advisor. Resolution 340 enforcement details may evolve, and your company's situation may differ — confirm any compliance decision with MoHRE or a licensed advisor before acting on it.