Payroll in Saudi Arabia: wage protection, the Mudad platform and social insurance

What are the Wage Protection System and Mudad?

The Wage Protection System was launched by the Ministry of Human Resources and Social Development to make sure private-sector wages are paid on time and in the agreed amount. Mudad is the channel through which an entity uploads monthly payroll data; it is linked to banks and to the General Organization for Social Insurance (GOSI).

The platform calculates a compliance rate for the entity, and a low rate or late uploads can lead to fines and suspended services. So any error in the payroll file — a name, an account number, or a wage that does not match the registered one — has a direct cost.

What must a Saudi company’s payroll system do?

First, it calculates pay from its components — basic, housing allowance, other allowances, deductions and overtime — and keeps each month’s record. Second, it produces the wage file in the format the bank and Mudad accept. Third, it warns you when an employee’s wage differs from the wage registered with social insurance.

It also needs leave, advances and attendance, the distinction between Saudi and non-Saudi employees for contributions, a Saudization report for the Nitaqat programme, and record keeping for years. The basics are in payroll calculation and biometric attendance.

How is the end-of-service benefit calculated?

Under the Saudi Labour Law (Article 84), a worker is entitled at the end of employment to half a month’s wage for each of the first five years and a full month’s wage for each year after that, based on the last wage. The share differs on resignation depending on length of service. The system calculates it automatically and shows each employee’s accumulated balance, so it never surprises you when a contract ends.

How does Al-Arjan build payroll for a Saudi company?

We start from your current salary scale and employment contracts, write the wage-file format your bank and Mudad need into the analysis, then build an Arabic HR and payroll system with attendance, leave and advances. More in Al-Arjan in Saudi Arabia.