There are some requirements of General Organization for Social Insurance (GOSI) upon the payroll your company is processing for you.
According to these requirements, every company has to deposit a certain sum of money to the GOSI being a contribution to health and Social Security. This contribution is calculated according to a formula which is explained in the below lines.
Contribution to GOSI: Calculations for GOSI are based on earning of an employee (Basic Salary + Housing Allowance) of a particular Organization.
The contribution will be deposited by the employer towards a workers' compensation and disability plan administered by GOSI, which is regulated in some detail in the Social Insurance Regulation, Royal Decree No. M/22 of 3rd Ramadan 1421 Hejra corresponding to 29th November 2000 Gregorian.
We have explained in the below lines how the contribution is calculated.
Worker’s Compensation and Disability Plan (2% of Salary): The employer has to deposit a contribution of 2% of the salary of every employee towards this plan. It is mandatory for the employer and he has to deposit it from his own funds.
He cannot deduct this money from the salary of the employee. Employee means both Saudi and Expatriate employees. All employees (Saudi + Expatriates) working in Saudi Arabia will be getting so many benefits just because of this contribution.
We have explained these benefits in a separate article. “Benefits from GOSI”. If your employer is not paying your GOSI contribution, he is actually eating from your plate. GOSI takes very serious action against the employers who violate their terms.
Unemployment Insurance – GOSI has started taking a contribution from employer and employee for the unemployment insurance. 1% will be deducted from the salary of Saudi Employee and 1% will be contributed by the employer.
In this way, in aggregate there will be total 22% of salary's contribution to the GOSI from each Saudi. 10% is to be paid by the employee and 12% to be paid by the employer.
Retirement Scheme – Retirement scheme is also administered by GOSI but it covers only Saudi Nationals. Every employer has to deposit 18% of the salary of the Saudi employee to the retirement scheme of the GOSI.
The employer is entitled to deduct 9% of this amount from the salary of the Saudi National but remaining 9% is borne by the employer. If an employer is not depositing this money on behalf of Saudi employee, Saudi employee can challenge him in the labor court and bring him to the court.
We have observed the cases when employers deduct 9% from the salaries of the employees but don’t deposit it to the GOSI. In this way, you are deprived in two ways;
- 9% of your salary is deducted and you are not getting it in cash.
- 9+9=18% of your entitled amount is not paid to the GOSI hence you will not be able to get it at the time of retirement.
The salary in the GOSI database can be revised only once in a year and I think it is in the month of Muharram. I am not sure about the month. There is no reconciliation between the increase in salary during the year and the return submitted to the GOSI.
You are insured with the GOSI according to the return submitted to them. Yes, contribution to the government would be less but you are also insured with the lesser amount.