Every private establishment with 10 or more employees is required to pay salaries through the Wage Protection System (WPS) in Saudi Arabia. WPS ensures that private companies comply with the Saudi Labor Law to pay wages to their employees on time.
How does the Wage Protection System work?
- All private companies with 10 or more employees need to register with the payroll program provided by their banks.
- The establishment will fill the payroll file and upload it to the bank system to pay the salaries.
- The bank will generate a WPS file and send it back to the company.
- The company will upload the WPS file received from the bank to the portal of the Ministry of Labor before the 10th of each month.
- Saudi Salary Date: 10th of the following month.
- The MOL will reply back to the employer with the names of the employees to whom the salary is not paid.
- The company will have to justify the Non-Compliance to the Ministry of Labor. Otherwise, there are heavy fines imposed on employers.
Are GOSI and WPS linked?
Every private organization needs to register with the GOSI while WPS is only required for those establishments which have 10 or more employees in Saudi Arabia.
There is no direct link between the GOSI and Wage Protection System. However, when the WPS file is sent to the Ministry of Labor, they cross-check it with the data uploaded in the GOSI.
Benefits of the Wage Protection System
There are a number of benefits of the wage protection system for employees in Saudi Arabia such as;
- The employee receives his salary and wages on time.
- The company is hesitant to make any salary deduction as they will have to justify it to the MOL.
- If the salary for a period of 3 months is not paid on time, the employee can contact the labor office for the transfer of sponsorship without Kafeel’s approval.
- Article 90 of the Saudi Labor Law requires the payment of salaries in Saudi Riyals only and the WPS ensures that.
Salary delays in the WPS
If a company does not register with the wage protection system (WPS) in Saudi Arabia, it will be fined SR 10,000 per month.
- In the case of failure to pay salaries through the WPS by the 10th of each month, a fine of SR 3,000 is imposed for each employee.
- If the salary payment is delayed for a period of 2 months in a row, the MOL will terminate the online services.