Monthly payroll is the sheet that shows, for each employee, what is due, what is deducted and the net amount paid. It does not start in the payroll spreadsheet but in the attendance record: every day of absence, overtime hour or day of unpaid leave changes the figure. This guide walks through the payroll process in Saudi Arabia in order, with a worked salary calculation and the mistakes that come back every month, whether you use a spreadsheet or payroll software.
What a payroll sheet contains
For each employee, the payroll sheet usually holds:
- Basic wage and allowances: the basic wage agreed in the contract, plus the housing allowance, the transport allowance and any other fixed allowance.
- Variable additions: pay for approved overtime hours, and rewards.
- Deductions: unexcused absence, lateness, fines, unpaid leave, and the employee’s share of the GOSI contribution where the employee is covered.
- Net salary: the amount actually transferred to the employee’s account.
The accountant also needs the actual worked days, so every figure can be traced to its source.
The payroll process, step by step
- Close attendance. Set a fixed monthly cut-off and, before it, review missing punches and days showing as absence. Corrections after the cut-off mean recalculating.
- Approve leave, excuses and overtime. Unapproved leave is not treated as leave, and unapproved overtime is not paid. Clear pending requests first, so disputes are not carried into next month.
- Calculate additions and deductions. Overtime under Article 107 of the Labour Law; absence and lateness under the company’s work regulations and written policy; then the fines and rewards recorded in the month.
- GOSI contributions. The Saudi employee’s share is deducted from salary and the employer pays its own share. Contributions are calculated on the contributory wage, which is usually the basic wage plus the housing allowance. For non-Saudi employees, the employer pays the occupational hazards contribution. Contribution rates for new entrants changed when the new Social Insurance Law took effect in 2024, so do not copy a rate from an old payroll; check the rate that applies to each employee on the GOSI website.
- Review. Compare with last month: whose net salary changed a lot, and why? Check joiners, leavers and anyone paid for part of the month.
- Payment and the wage protection file. The net amount is transferred through the bank, and the wage file is uploaded to the Mudad platform under the Wage Protection System. Make sure amounts paid match each employee’s registered wage, and that every difference has a documented reason.
Worked example: one employee’s salary calculation
An employee has a basic wage of SAR 6,000, a housing allowance of SAR 1,500 and a transport allowance of SAR 600, a total of SAR 8,100 a month. This month they worked two approved overtime hours, missed one day without an excuse, and were late 60 minutes in total.
Assumptions: we divide the monthly wage by 30 days and each day by 8 hours, giving 240 hours a month, and we deduct absence and lateness from the full wage including allowances. This is a common policy, not a binding rule: companies vary in the divisor they use and whether they deduct from the basic wage only.
Overtime (Article 107):
- Hourly wage: 8,100 ÷ 30 ÷ 8 = SAR 33.75
- 50% of the basic hourly wage: 6,000 ÷ 30 ÷ 8 × 0.5 = SAR 12.50
- Overtime hour: 33.75 + 12.50 = SAR 46.25
- Two hours: 2 × 46.25 = SAR 92.50
Absence and lateness deductions:
- One day of absence: 8,100 ÷ 30 = SAR 270
- Lateness (one hour at the hourly wage): SAR 33.75
- Total deductions: 270 + 33.75 = SAR 303.75
Result:
- Gross with overtime: 8,100 + 92.50 = SAR 8,192.50
- After deductions: 8,192.50 − 303.75 = SAR 7,888.75
The employee’s GOSI share is then deducted, if the employee is Saudi, at the rate that applies to them, which gives the net salary. For more on working hours and overtime pay, read Working Hours and Overtime under the Saudi Labour Law.
Common payroll mistakes
- Calculating from open attendance. A missing punch becomes a deducted absence, corrected after payment.
- Leave not approved in time. The day shows as absence, or paid leave is counted that nobody approved.
- A different divisor every month. Dividing by 30 one month and by the calendar days the next changes the daily and hourly wage for no clear reason.
- Overtime on the basic wage alone. Article 107 combines the full hourly wage with 50% of the basic hourly wage.
- A copied GOSI rate. An employee who joined after the rates changed may not be on the same rate as longer-serving colleagues.
- Deductions without a record. Every fine or deduction needs a recorded date and reason, or it is hard to defend.
- Forgetting leavers. An employee who leaves during the month is paid for part of it, and the end-of-service settlement is added. For a quick check, use the end-of-service calculator.
How IdaraSuite prepares payroll
In payroll software for Saudi Arabia, what matters most is where the numbers come from. In IdaraSuite payroll, the salary is calculated inside the system from actual attendance, not from an exported spreadsheet:
- Punches arrive from the branch devices, and attendance, lateness and absence are evaluated against each employee’s shift. See the time attendance feature.
- Approved overtime hours are added, an approved excuse is not deducted, and only approved leave reaches payroll.
- Absence and lateness are calculated under the rules you define, and fines, rewards and fees are recorded by type with date and reason.
- One salary report shows what is due, what is deducted and the net for each employee, with figures that trace back to their source, alongside the monthly attendance, overtime and excuse reports the accountant needs. See the reports feature.
To be clear: there is currently no direct integration with GOSI, Mudad or the Wage Protection System, and the system does not transfer salaries to the bank. It calculates the salary and produces its report; you upload the files and make the payment through your usual channels.
To see payroll run on data like your company’s, book a demo.
This article is general information, not legal advice. Laws and regulations change; refer to the official text in force or to a legal adviser before making a decision.