Understanding Payroll in Saudi Arabia
Payroll processing in the Kingdom of Saudi Arabia should be in accordance with the Saudi Labour Law and GOSI requirements. This includes calculating salary, allowances, deductions, and end-of-service benefits. Proper payroll management ensures that a firm acts within the rule of law and also avoids penalties while keeping the employees satisfied.
Key components of payroll include:
- Basic Salary
- Allowances such as housing, transportation, and food
- Overtime Pay
- Deductions: social insurance, leave without pay, fines
- End-of-Service Benefits (Gratuity)
All payments are to be accurately processed through the WPS, which guarantees that employees will receive their salaries safely and on time.
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Wage Protection System (WPS) in Saudi Arabia
The WPS is a government system designed to protect employees’ salaries. Companies are obliged to:
Transfer salaries through approved Saudi banks.
Upload monthly payroll files to the MHRSD WPS portal.
Keep correct records that prove the payment of full salaries on time.
Non-compliance with WPS will have result in the form of fines, warnings, or even restrictions on company services by the MHRSD.
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Outsourcing to GOSI Contributions
Both employers and employees have to make a monthly contribution to GOSI. Here’s a brief overview:
| Contribution Type | Employer Share | Employee Share | Total Contribution |
|---|---|---|---|
| Saudi Nationals (Social Insurance + Occupational Hazards) | 12% | 10% | 22% |
| Non-Saudi Employees (Occupational Hazards Only) | 2% | 0% | 2% |
This is relevant because employers are liable for correct deductions from the employees’ salaries and their timely submission to GOSI.
End-of-Service Benefits (Gratuity)
Those employees who complete their contract in Saudi Arabia have a right to gratuity based on the Labour Law:
- First five years: half a month’s salary per year of service
- After five years: One month’s salary per year of service
This calculation is applicable for Saudi and non-Saudi employees and must form part of the final settlement at the time the employee leaves the company.
Why Outsource Payroll in Saudi Arabia
Outsourcing payroll can ensure accuracy, save time, and reduce compliance risk. Through a collaboration with Payroll Middle East, your company benefits from:
- Accurate salary calculation and timely payments
- Full compliance with GOSI and WPS requirements
- Security and confidentiality of employee information
- Correct calculation of leave, allowances, and end-of-service benefits
- Monthly and yearly reports for management and audit purposes
Industries We Serve
We offer payroll services to a wide array of industries, including:
- Construction and Real Estate
- Healthcare and Education
- Retail and Hospitality
- IT and Professional Services
- Manufacturing and Logistics
No matter the size of your business, we ensure payroll accuracy and legal compliance.
How We Work
- Monthly payroll processing: Calculation of salaries, allowances, deductions, and overtime.
- WPS Filing: Upload the salary files to the MHRSD portal.
- GOSI Management: Deduct and remit the contributions correctly.
- End-of-Service & Gratuity: Calculate final settlements as per Saudi Labour Law.
- Recordkeeping: Maintain records securely, audit-ready for all employees in the service.
Frequently Asked Questions
Stay Compliant with Payroll Regulations Don’t let payroll take away from your business focus.
Allow Payroll Middle East to take care of all your payroll needs in Saudi Arabia, including WPS filings, GOSI contributions, and end-of-service settlements. Focus on growing your business while we ensure your payroll is correct, secure, and fully compliant under Saudi Arabian law.
Contact us today for more information and to get started with professional payroll solutions.
