9 Salient Features of Wage Protection System (WPS) in Saudi Arabia

Ministry of Labor and SAMA (Saudi Arabian Monetary Authority) is functioning cooperatively on Wage Protection System in Saudi Arabia. The purpose of Wage Protection System is to make it certain that people working in the private sector are paid suitably and correctly according to terms and conditions agreed by both parties in contract acknowledged in Saudi Arabia Social Security and to track the incomes of expatriates and citizens.[irp]

1-Salary Delays in Wage Protection System: Saudi Arabia Labor Ministry applies Wage Protection System to guard or secure the rights of their nationals and expatriates workers and also to check that the salary payment will not be delayed. According to Ministry of Labor in Saudi Arabia, the employers or companies will be punished with fine of SR 3,000 per employee if they delay the salary payment of their citizens and expatriate staffs. This fine will be levied, if the ministry found salary delays as per wage protection system Saudi Arabia or if somebody complains about the delay of salary in Labor ministry office. Recommended: SR 3,000 fine per Employee, if salary is not paid on time

2-If the company fails to pay the salary for 2 or more months, their services will be terminated by Labor Ministry. The company will lose its workforce. The workers of such company are permitted to transfer to any other company without the consent of the present Kafeel.  The exception to this is work permit renewals; in this case, salary can be delayed for 2 months.

3-If the company did not register its workers, then it will also be fine with 10,000 Saudi riyals.

4-Companies should act in accordance with Wage Protection System within 2 months of it made Obligatory. The companies have to submit all the data to Labor Ministry through e-service program. In case, if the companies failed to submit the data to Saudi Arabian Monetary Authority, these are the options available to the Ministry of labor;

  • The Ministry of Labor will reject and suspend all the amenities to the company but Issue and renewal of work permits is an exception to this. These work permits are also known as Muqeem Card previously called iqama. The term iqama is not in use now. These Muqeem cards having Picture, Name, Birthdate, Contact Number, Job, Nationality, Belief, Company name and also Work permit number are available online and there is no need to go to the office for making or renewal of these cards. The duration or validity of these cards is five years
  • Ministry of labor allows the workers to go to any other company without the approval of present Sponsor. Sponsorship transfer is also known as Naqal Kafala in Saudi Arabia. Labor Ministry made it possible for employees to change their sponsor lawfully without the consent or approval of current Kafeel in Saudi Arabia. Recommended: Transfer of Sponsorship (Naqal Kafala) without Approval of Kafeel

5-It is obligatory for private companies to register under Wage protection system. To regulate the relationships of the employer and employee and also to protect their rights, the Ministry of Labor launches a statutory structure. This legal framework will improve the working situations and preserve the rights of employer and employee.

6-It is a good news for the expatriates especially those who work in the private sector. Every employee has a right to know what his rights are. But many expatriates are facing issue because of lack of proper legal knowledge. Ministry of labor launches a website in Arabic and English as well, having content in the simplest format so anyone can understand and get useful information about different issues such as Contract, working hours, prerequisites, salaries, benefits at the end of services etc.  Recommended: Rights of Employees under Saudi Labor Law

7-The private companies have to submit all the wage records to Labor Ministry and the salaries of staff members who are using e-service program.  The companies should open a payroll file with the authentic local bank.  It is necessary for the company to open the total amount of payments paid by a company with an authorized bank.

8-It is mandatory for the private companies to give salaries to its employees in bank accounts. So the company should open local bank accounts in the name of its workers and pay the salaries through local banks.[irp]

9-Wage Protection System for companies became obligatory in Saudi Arabia; it was initially started in June of 2013 for the large companies having more than 3000 labor force.  It made compulsory for firms also having less than 3000 but above 2000 workers in September 2013.  In December 2013, the wage protection system extends further to the organizations with 1000 employees. It also covered those companies with above 500 workers in November 2014. In April 2015 it made compulsory with above 240 workers.  In June 2015 above 170 employees, In August 2015, it was implemented for firms having 130 employees or more. In November 2015 Wage Protection System made compulsory for the companies having 100 and above employees. In Feb 2016, Wage Protection System has been implemented to those businesses that have more than 10 employees.

For the latest updates, you can join our WhatsApp group.

Steve has been living in Saudi Arabia since 2013 and writing about Saudi rules, regulations, guides, and procedures since then.