UPDATE (2019): Companies with a minimum of 10 employees are now subject to WPS guidelines.
The wage protection system ensures that wages are paid out fairly to all employees of private sector organizations. The system is in place to safeguard both Saudi and expat employees. A database pertaining to the payment of wages is established for private sector employees based on the information provided regarding salaries in the GOSI system. WPS ensures that private sector organizations abide by labor laws and pay private sector employees in a timely manner in accordance with salaries established in their contracts and subsequently registered with GOSI.
The Wage Protection System was implemented by the Ministry of Labor of Social Development and became mandatory for all Saudi companies with over 3,000 employees on 1 September 2013. A number of announced phases which were dependent on the number of employees at the organization. The current WPS applies to organizations with over 40 30 10 employees. WPS will gradually be rolled out for organizations with fewer number of employees based on the schedule provided below. The aim here is to allow organizations to develop their capacity and processes for adherence to WPS and protect private sector employees at all sizes of organizations.
|Phases Number||Employees Number||Applied to|
|12||40 Employee and above||Already applied|
|13||30 Employee and above||Already applied|
|14||20 Employee and above||Already applied|
|15||15 Employee and above||Already applied|
|16||11 Employee and above||Already applied|
|17||Less than 10||Will be determined later|
There are a number of regulatory compliance processes which companies should be aware of with respect to WPS. The submission file should be compliant with the structure outline. The data regarding deductions, increments and salaries should be accurate and match all other sources linked with the Ministry. There are significant fines and repercussions associated with non-compliance such as suspension of MOL file.
The outlined process for completing the electronic submission process is not very complicated. However, companies should be mindful of the various nuances within the data required and related explanations for any exceptions. Human resource professionals with significant experience with WPS will know specific issues applicable based on a company’s payroll structure and activities. This becomes especially pertinent with more stringent WPS exception rules which are now applicable. The basic WPS process is outlined below:
Each organization operating in Saudi private sector must be registered with General Organization for Social Insurance regardless of whether WPS applies to them. The organizations subject to WPS should pay their employees according to registered wages in GOSI. It is important to note that MLSD will match the wages data in WPS files with GOSI’s data.
The importance of effective WPS management cannot be emphasized enough. Non-compliance can have serious impacts on business operations through penalties, suspension of service from Labor Office which might include critical operational elements such as work permit renewals, sponsorship transfers, Saudization certificates, new work visa requests, etc.
Companies can adopt the following best practices to better manage their WPS process: