Companies with at least 1,000 workers are allowed four more months to implement the wage protection system introduced by the Labor Ministry last year.
The ministry’s decision to postpone the implementation of the fourth phase of the protection bill for companies with more than 500 workers, originally scheduled for July 1, to Nov. 1 was taken after the Saudi Arabian Monetary Agency ( SAMA ) demanded that pressure be eased on the Kingdom’s banks, which are tasked with salary payment administration under the new system.
The implementation of the fourth phase, will coincide with the payment of Hafiz unemployment benefits to jobless youth, which also has to be accommodated by the banks.
Companies employing 500 workers on average far outnumber establishments .
The wage protection system involves the creation of a database containing updates on wage payment in the private sector. Information includes the amount and date the salary was paid. The new system also stipulates that salary payment should be made solely through banks.
Private companies in the Kingdom were categorized according to the number of workers they employ.
The first phase involved companies with more than 3,000 workers. A total of 119 companies fulfilled conditions out of 184 companies in that category, while 48 companies pledged to submit their updated data soon after the deadline and 17 had services halted by the ministry for failure to comply with the new system.
The second phase, which was implemented on companies with more than 2,000 workers, saw 81 companies fulfill the ministry’s demands and 13 penalized for failure to comply, while 17 companies had services resumed after complying past the deadline.
Only 445 private schools out of a total of 1,183 schools fulfilled the criteria and services to 713 have been suspended, while 25 schools had services resumed after updating their information.
Companies that fail to comply with the regulations within two months of the deadline have their services suspended. Renewal of work permits, however, is not affected by these suspensions.
Employees working with companies that fail to comply three months past the deadline can transfer to other companies without the permission of their sponsors.
Need help with a WPS system? Synergy Software Systems ahs implemented this in both Dubai and IN KSA. We offer solutions in the cloud or on premise with or without employee self service.
We also offer our own Payroll module for Dynamics Ax 2012 which can be implemented module stand alone with HR, or as a full erp system.
