It is widely accepted that HR and payroll are two of an organisation’s most crucial functions. Considering they involve inevitable legal compliance, ensuring the seamless and efficient operation of these organizational functions is compulsory.
Especially in Middle Eastern countries, where payroll is strictly regulated to ensure fair, transparent, and efficient payment to employees, employers and accounting managers are compelled to avoid errors or delays in managing their company’s payroll accounting.
It is also evident that payroll management in the Middle East features different distinctive counterparts like end-of-service benefits, gratuity payments, and other allowed allowances. One of the most commonly asked questions we get from our clients is whether our payroll solutions offer GOSI compliance.
This article will try to give a clear understanding of GOSI and how our payroll services cater to its compliance, further alleviating the challenges of handling payroll tasks in an organisation.
What Exactly Is GOSI Compliance?
GOSI, or the General Organization for Social Insurance, is a regulatory body established in Saudi Arabia to oversee social insurance programs for a wide range of individuals, including workers, employers, retired employees, healthcare professionals, and others.
The key objective behind this initiative is to ensure both employers and employees comply with regulatory frameworks covering social security contributions and related benefits.
While GOSI is specific to Saudi Arabia, other Middle-Eastern countries, especially those having similar rulings in protecting the rights of employees, have their own take and HR system overseeing social security policies and regulations by different entities as follows:
- Saudi Arabia – General Organization for Social Insurance (GOSI)
- United Arab Emirates – General Pension and Social Security Authority (GPSSA)
- Qatar – General Retirement and Social Insurance Authority (GRSIA)
- Kuwait – Public Institution for Social Security (PIFSS)
- Oman – Public Authority for Social Insurance (PASI)
- Bahrain – Social Insurance Organization (SIO)
How Is GOSI Calculated?
The GOSI calculation in KSA is based on an employee’s salary or earnings. This calculation is divided into two categories: Saudi citizens and non-Saudi citizens (or Saudi expats).
Base pay and housing allowances are two key components of an employee’s earnings used in the calculation. Below is a simple explanation of GOSI Calculation in Saudi Arabia and related techniques.
GOSI Calculation for Saudi Nationals Employed in the Public or Commercial Sectors
For this category of employees, 22% of the maximum monthly applicable earnings are covered by the contribution made on the person’s behalf.
The breakdown of the employer’s contribution is as follows:
- An annuity (pension) = 9%
- Unemployment benefits = 1%
- Occupational hazards = 2%
GOSI Calculation in Saudi Arabia for Non-citizens
For this category, the employer contribution to unemployment benefits is equal to 2% of the maximum monthly eligible earnings. This ranges anywhere from SAR 400 to SAR 45,000.
Employer’s Contribution
- Unemployment = 0.75%.
- Retirement = 9%.
- Disability and Compensation Plans = 2%
Total Employer’s Contribution = 11.75%
Employee’s Contribution
- Unemployment = 1%.
- Retirement = 9%.
Total Employee’s Contribution = 9.75%
For Saudi nationals, the GOSI proportion equals 22% of gross pay (basic + housing).
The Importance of GOSI Compliance
As with any HR or payroll regulations, compliance with GOSI is non-negotiable for businesses operating in the region where it is mandated. Organisations that fail to adhere to these requirements in their payroll and HR systems can face legal consequences that harm the company’s financial stability and reputation.
Social protection, health insurance, economic stability, retirement planning & disability and work injury benefits are some of the key reasons why GOSI compliance is seen as important and a strong source of future security for employees working in the country.
Having this legal structure in place also helps maintain order and fairness in the labour market. The data resulting from this regulation especially helps the government with policy-making and planning so it can make informed decisions about labour and related social policies.
GOSI Compliance By BSH: How We Help You?
At BSH, as one of the pioneer providers of HR and payroll solutions in the Middle East, we make sure our services reflect all aspects of regulations in a given country. This includes GOSI compliance in Saudi Arabia.
Here is how we handle your company’s GOSI compliance:
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Employee Registration
We take care of the entire process of registering employees with GOSI. This includes handling all steps involved, from collecting necessary information and required documents, completing registration forms, and assuring that all new hires to the company are duly registered with GOSI with no room for error or legal loopholes.
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Declaration
Following registration, we also take complete control over the declaration stages involved with GOSI compliance. Here, we will make sure all relevant employee data and changes, such as job title changes, salary adjustments, or any other employment earning status updates, are thoroughly and accurately reported to GOSI. This ensures that your company’s GOSI data remains updated with the latest information regarding the company’s employees.
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Payment to GOSI
BSH ensures timely and accurate payment of GOSI contributions. Our platform automates the calculation of contributions, generates payment schedules, and facilitates the electronic transfer of funds to GOSI. This helps prevent delays and penalties associated with late or incorrect payments.
End-To-End GOSI Compliance Services
Our GOSI compliance and all other HR & payroll solutions designed to cater to your company’s unique needs provide the following end-to-end services:
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Comprehensive Solutions
After analysing your company’s nature, type, and size, we design an HR system that seamlessly incorporates GOSI calculations, reporting, and payment, along with the phase of your company’s growth, recruitment, and retention decisions. This ensures that we try to keep your HR system as compliant as possible alongside your HRM pathway, reducing any possible risk for errors, inefficiencies, and sensitive legal breaches.
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Expertise and Experience
All our team members and professionals, including our legal & IT team, are hand-picked to make sure we are meeting the highest standards of quality, customer satisfaction, credibility, and reliability in our range of services. This expertise helps us to confidently guarantee accuracy and efficiency in complying with your company’s GOSI schemes and other regulatory frameworks.
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Personalized Support
We have a dedicated support team to offer your company or its HR professionals a personalised guide to address any GOSI compliance-related queries or concerns. Whether it is to help you navigate the HR system, make any changes, or retrieve reports or data, our team is ready to assist you all the way through. We give you the peace of mind and confidence you need to focus on other key areas of your business, leaving us to do what we are good at on your behalf.
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Continuous Improvement
We have professionals working in all parts of the Middle East to keep us updated on the latest regulatory changes and industry best practices in a given country. Besides that, we also have a dedicated team of research and development to ensure our solutions are integrated with the latest and sought-after payroll or HR technology in the market, keeping our clients ahead of the curve with performance, compliance, accuracy, and efficiency.
Simplify GOSI Compliance With BSH
Assuring GOSI compliance is a crucial HR and payroll function that cannot be overlooked in Saudi Arabia. It is a crucial component that outlines labour rights and related social policies.
However, doing this alone or using an in-house team needs more than what it seems. It requires accuracy, efficiency, expertise, and the ability to stay duly updated with regulatory changes concerning this mandate.
This is where professional HR solution providers, like BSH, can relieve your company’s HR team from the burden of managing it and instead use that valuable time, energy, and focus for other key areas of workforce management and business growth.
