May 10, 2020 6 min read

Saudi Arabia Payroll Outsourcing Alert

Saudi Arabia – The Government Rolls Out the Next Phase of Wage Protection System (WPS)
Mercans, a leading KSA payroll outsourcingPEO/GEOemployee leasingrecruitment and BPO services provider, has published KSA payroll outsourcing alert. Subscribe to Mercans’ KSA payroll outsourcing alerts to ensure that you are always up-to-date with the lasted regulatory changes in KSA labor and payroll compliance requirements.

The Ministry of Human Resource and Social Development has introduced the next (15th) phase of the Wage Protection System (WPS), effective from 1 May 2020.

In accordance with the new phase, all entities with more than 10 employees must comply with the WPS requirements.

The new phase was announced by the Ministry on 8 May 2020 on Twitter. However, the Ministry has not clarified whether the new WPS phase will be effective immediately or will be subject to the COVID-19 related exception period.

For additional information, please see: https://twitter.com/mhrsd_sa/status/1258812078191763458?s=21.

What is the Wage Protection System (WPS)?

The WPS regulations were introduced to ensure, that all employers pay their employees on-time and fully. The WPS process allows the MOL to centrally and electronically monitor in real time the salary payments of the participating employers and take enforcement actions if the salary payments are not made in accordance with the Labor Law and employment agreements.

What is required for the WPS registration?

Employers with more than 10 employees are required to process all of their salary payments through the WPS system. For this, the employer has to complete the following actions:

How does the WPS process work?

The objective of the WPS process is to monitor the salary payments by the employers and ensure, that all employees receive their full salaries. In order to accomplish this objective, the employers are required to comply with the following WPS processing steps on a monthly basis:

How is the WPS information used by the Ministry of Human Resource and Social Development?

The Ministry records all salary payments made by employers and compares these amounts with the information provided by the employers when registering their employees with GOSI. During this process the Ministry completes the following verifications:

What are the common issues with the WPS payments?

There are a number of common issues experienced by the employers, which may lead to inadvertent non-compliance with the WPS process requirements. For example, not all the employees registered in GOSI are included in the WPS files. This may include the following scenarios:

Employers should ensure that they avoid these common pitfalls when processing salaries through the WPS process.

What are the consequences of the non-compliance with the WPS procedures?

The MOL is actively monitoring and enforcing the compliance with the WPS processes. In case of non-compliance, the MOL services will be suspended until the company processes all salary payments in conformity with the WPS requirements. This means, that the employers need to ensure their full compliance with the WPS regulations to avoid any unexpected gaps in their MOL services, including Iqama transfers, renewals, etc.

Mercans’ Saudi Arabia Payroll Outsourcing Solutions

While Mercans’ KSA Payroll Outsourcing alerts will allow you to stay on top the latest development in KSA’s payroll regulations, you should still get in touch with Mercans’ KSA payroll outsourcing, compliance, PEO/GEO and BPO specialists for a free consultation on setting up fully compliant payroll and HR functions. Better yet, outsource your payroll and HR activities in KSA to Mercans and our KSA payroll outsourcing experts will ensure that your employees will always be paid on time and in accordance with the KSA regulations.

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