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Saudi Arabia Payroll: Type of Wage and its Payment

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Saudi Arabia Payroll: Type of Wage and its Payment

Wages are an important part of any organization, whether it is a small business or a large corporation.

The wages that are paid out can vary greatly, depending on the type of wage and how it is paid.

In Saudi Arabia, there are three different types of wage: basic wage, fixed allowance, and variable allowance. Each one has its own unique payment method.

In this blog post, we will take a closer look at each type of wage and how it is paid in Saudi Arabia. For more info click here.

What is the Saudi Arabia payroll system like and how are wages paid out there?

In Saudi Arabia, the government is responsible for payroll taxes and employee benefits.

The Ministry of Labor and Social Development handles the administration of these programs.

Wages are paid out every two weeks, and employees can choose to have their pay deposited directly into their bank account or receive a physical paycheck.

Overtime pay is also required by law, and employees must be paid time-and-a-half for any hours worked over 48 in a week.

In addition, there is a Value Added Tax (VAT) that is applied to all goods and services in Saudi Arabia.

The VAT is currently set at 5%, and it is also deducted from employees’ wages before they are paid.

What type of wage is common in Saudi Arabia and how is it calculated/paid out?

In Saudi Arabia, the most common type of wage is the piece rate. This is where workers are paid a set amount for each task that they complete.

The amount can vary depending on the difficulty of the task and the worker’s level of experience.

For example, an experienced construction worker may be paid more per task than a beginner.

Payment is usually made at the end of each day or week, although some employers may offer a bonus for workers who meet certain targets.

There is no minimum wage in Saudi Arabia, so piece rates can be very low.

This can make it hard for workers to earn a decent income, especially if they have a family to support.

However, some employers do offer benefits such as housing and healthcare, which can help to offset the low wages.

Overtime and its Payment in Saudi Arabia

Overtime is the extra time worked by an employee over and above their normal contracted hours.

In Saudi Arabia, the overtime rate is usually 50% above the normal hourly wage rate. overtime must be authorized by the employer in advance, and employees are not required to work more than 48 hours per week, including overtime.

Overtime must be paid at the agreed rate no later than the next payday following the work being carried out.

If an employee works on a public holiday, they must be paid double their hourly wage rate for that day.

Saudi Arabia has some of the highest levels of overtime in the world, with many workers putting in 60-hour weeks on a regular basis.

Bonus and its Payment in Saudi Arabia

In Saudi Arabia, bonus payments are often made in addition to an employee’s regular salary. Unlike many other countries, there is no legal requirement for employers to pay bonuses in Saudi Arabia.

However, bonus payments are commonly used as a way to reward employees for their hard work and dedication.

Bonus payments are typically paid out once a year, and they can be based on either an individual’s performance or the company’s overall performance.

While bonus payments are not required by law, they can be a great way to motivate employees and show appreciation for their work

Allowances and their payment in saudi arabia

In Saudi Arabia, allowances are typically paid in cash. This is because most Saudis do not have bank accounts, and those who do often keep their money in cash.

There are a few exceptions to this rule: allowances for government employees and military personnel are paid directly into their accounts, and some companies will pay allowances into employees’ accounts if they request it.

However, the vast majority of Saudis receive their allowances in cash.

There are two main reasons for this. Firstly, it is more convenient for both the payer and the recipient.

There is no need to go through the hassle of opening and maintaining a bank account, and the money can be spent immediately without having to worry about exchanging it for local currency.

Secondly, it is generally cheaper to pay allowances in cash than by bank transfer. Banks typically charge fees for transferring money, which can eat into the allowance itself.

For these reasons, cash remains the preferred method of payment for allowances in Saudi Arabia.


In order to ensure the best possible outcome for your business, it is important to understand all of the different types of wages and how they are paid.

This will allow you to make informed decisions about what is best for your company and employees. The Saudi Arabia payroll system is a great example of this and by understanding it, you can help improve your own business.

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Salman Ahmad is a seasoned writer for CTN News, bringing a wealth of experience and expertise to the platform. With a knack for concise yet impactful storytelling, he crafts articles that captivate readers and provide valuable insights. Ahmad's writing style strikes a balance between casual and professional, making complex topics accessible without compromising depth.

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