UAE Mid-Market Firms Face Compliance Challenges

Jul 14, 2026

80 min

Jul 14, 2026 08:31

UAE mid-market firms face rising WPS, gratuity and Emiratisation risks

## Rising Compliance Risks

Mid-market companies in the UAE are encountering increasing challenges related to compliance with the Wage Protection System (WPS), gratuity calculations, and Emiratisation targets. These issues are largely due to weak human resources management, which is failing to keep pace with the rapid growth of these businesses.

## Wage Protection System Queries

The WPS, mandatory for over a decade, ensures timely salary payments. However, many firms face queries from the Ministry of Human Resources and Emiratisation (MOHRE) due to discrepancies in payroll filings. These issues often arise from misclassifications in salary components or undeclared overtime, leading to administrative complications.

## Gratuity Liabilities

Under Federal Decree-Law No. 33 of 2021, gratuity calculations are straightforward, yet many firms struggle to maintain accurate records. Discrepancies between finance and HR departments often result in significant gaps in provisioned versus actual gratuity liabilities, averaging around Dh1.8 million per company.

## Emiratisation Targets

The Nafis program mandates an annual increase in Emirati employment for firms with 50 or more skilled employees. Companies that proactively plan and track their Emiratisation targets benefit from growth opportunities, while those that delay face fines.

## HR Management Gaps

A significant number of mid-market firms lack dedicated HR professionals, relying instead on ad-hoc management by founders or finance teams. This approach is insufficient as companies grow, leading to compounded compliance issues.

## Strategic Recommendations

Experts suggest that firms should invest in structured HR management, whether through hiring dedicated personnel or engaging fractional HR partners. This strategic focus on HR can help firms navigate compliance requirements effectively and position them for future growth.

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