Payroll Compliance in KSA & What are GOSI, WPS, & Mudad

Payroll compliance in Saudi Arabia is about processing salaries and following strict rules that protect both businesses and employees. Three key pillars: GOSI, WPS, and Mudad,  together, govern everything from social insurance contributions to wage transparency and digital payroll reporting. 

Understanding how these systems work is essential for staying compliant, avoiding costly penalties, and building a workplace where employees feel secure and valued.

1. What Is GOSI?

GOSI is the General Organization for Social Insurance, a mandatory social insurance program for Saudi employees. It covers:

• Retirement pensions
• Work injury compensation
• Disability insurance

Employers must register and contribute to GOSI for all Saudi staff.

Learn more in ZenHR’s Guide to GOSI.

Key Details:

• Contribution rate: 18% of the basic salary (including housing allowance), split equally between employer (9%) and employee (9%).
• Salary range for contributions: SAR 1,500 to SAR 45,000 per month.
• Payment frequency: Monthly via authorized bank accounts.
• Coverage criteria: Only Saudi nationals under 60 (or up to 65 with previous contributions).

2. Understanding the Wage Protection System (WPS)

The Wage Protection System (WPS) ensures that private-sector employees (both Saudi and expatriates) are paid accurately and on time.

WPS Overview:

• Launched: June 2013; by December 2020, it covered all private establishments.
• Employers must use bank-generated payroll files and upload them to the Ministry’s portal (via WPS or Mudad).
• Cutoff: Salary data must be uploaded by the 10th of each month.
• Penalties: Delays may trigger fines (e.g. SAR 3,000 per employee/month).
  
  

3. Meet Mudad: The Digital Payroll Hub

Mudad is the digital platform managing WPS compliance under the Ministry of Human Resources and Social Development (MHRSD).

Key Features of Mudad:

• Integrates with GOSI, local banks, and the Ministry.
• Provides electronic contract verification, e-payments, and compliance dashboards.
• Tracks compliance rate (minimum 80%).
• Introduced Flexible Salary (employees can access part of their earned wages before payday).
  
  

See how ZenHR integrates with Mudad to simplify payroll compliance.

4. GOSI, WPS & Mudad: How They Connect and Differ

5. Common Payroll Mistakes and How to Avoid Them

Even minor errors can trigger compliance issues. Common mistakes include:

1. Delayed WPS uploads → fines and service suspensions.
   
   
2. Incorrect GOSI classifications → inaccurate contributions.
   
   
3. Payroll miscalculations → missed allowances or deductions.
   
   
4. Manual payroll processes → mismatched or incomplete data.
   
   

Learn more with ZenHR’s guide to common payroll mistakes.

6. How ZenHR Simplifies Payroll Compliance

ZenHR offers robust HR tech features that are localized for Saudi labor compliance and include GOSI, WPS, and Mudad.

Key Capabilities:

• Automated Payroll Calculations with salary history, GOSI, and deductions.
• Native Mudad Integration will submit payroll files, track status, and ensure compliance.
• Localized to Saudi labor laws with bilingual interface.
• End-of-Service Calculator and Salary Calculator.
  
  

Stay updated with Saudi Labor Law Updates 2025.

7. Payroll Compliance Checklist

[ ] Register employees with GOSI.

[ ] Process payroll monthly and prepare payroll files.

[ ] Upload files via Mudad by the 10th of each month.

[ ] Monitor compliance dashboards for alerts.

[ ] Submit justifications for discrepancies.

[ ] Track employee responses in Mudad.

[ ] Keep payroll records for at least 5 years.

[ ] Automate payroll using ZenHR.