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GCC payroll compliance: WPS, GOSI and end-of-service gratuity in 2026

A guide to payroll compliance in the UAE and Saudi Arabia: the Wage Protection System and its 1 June 2026 deadline, GOSI contribution rates and ceilings, end-of-service calculations in both countries, and what to automate.

Payroll in the GCC looks simple on the surface: pay your employees on time, withhold the right contributions, pay gratuity when someone leaves. In practice, the combination of wage protection systems, mandatory social insurance schemes, multi-currency payments for workforces spread across several GCC countries, and differing rules for nationals and expatriates creates a compliance matrix that trips up experienced finance teams. This guide breaks down the key obligations in the UAE and Saudi Arabia, the two largest GCC economies, and explains what to automate. Figures were checked on 4 September 2026 against the linked sources. It is a guide, not legal advice.

UAE: Wage Protection System (WPS)

The UAE's Wage Protection System (WPS) is administered by the Ministry of Human Resources and Emiratisation (MOHRE). Every establishment registered with the Ministry must pay its workers' wages on the due date through WPS, or another system the Ministry adopts, and must submit proof of payment (MOHRE, Resolution 340 of 2026). The transfer goes through an approved agent, a bank or exchange house, which uploads the Salary Information File (SIF) to the system.

Key WPS rules

Payment deadline (updated 4 September 2026): Since 1 June 2026, Ministerial Resolution 340 of 2026 makes the first day of each Gregorian month the unified due date for the previous month's wages, with no grace period; it repeals Resolution 598 of 2022 and its 15 day window. An establishment counts as compliant if at least 85% of total wages due are transferred by the due date, and MOHRE's measures start with notifications from the second day. Our guide to the WPS salary deadline under Resolution 340 has the full escalation table and a payroll calendar.

SIF format: The SIF is a comma separated text file. Each employee has an EDR record carrying the employee's unique ID issued by the labour authority, the agent's nine digit routing code, the employee's 23 character account, the pay period start and end dates, days in period, fixed income, variable income and unpaid leave days. An EVP record itemises variable pay, and one SCR record closes the file with the employer ID, salary month, EDR count and total, which is validated against the sum of the EDR amounts (DIB SIF guidelines). Negative amounts are rejected, so deductions are netted before the file is cut. Your payroll system must generate a valid SIF every cycle.

Who is covered: All establishments registered with MOHRE. Article 4 of Resolution 340 excludes specific cases, among them workers on approved unpaid leave notified to the Ministry, seafarers, foreign workers of foreign establishments paid outside the UAE, mission permits of three months or less, banks and financial institutions, and places of worship (MOHRE, Resolution 340 of 2026). Domestic workers fall under Resolution 675 of 2022, which makes WPS mandatory for specific domestic jobs and optional for the rest (MOHRE WPS guidance). Employers in the DIFC and ADGM follow those financial centres' own employment regulations, including their own end-of-service rules: DIFC replaced gratuity with monthly workplace savings contributions from 1 February 2020 (DEWS employer page), while ADGM keeps a 21 and 30 day gratuity under its Employment Regulations 2024 (ADGM Employment Affairs Office FAQs).

Measures for late payment: Annex 1 of Resolution 340 of 2026 runs by day after the due date: electronic monitoring from day 1, notifications from day 2, suspension of new work permits on day 5, administrative fines and reclassification for repeat violations within six months on day 11, automatic labour disputes and permit suspension for establishments with 25 or more workers on day 16, and precautionary attachment, travel bans and referral to the Public Prosecution on day 21 (MOHRE, Resolution 340 of 2026).

Because the suspension of new work permits arrives on the fifth day, a late payroll run stops hiring before it costs a fine, and a finance problem becomes an HR problem within a week.

Salary components and WPS

The SIF reports fixed income and variable income separately, and the EVP record breaks the variable component into housing, conveyance, medical, annual passage, overtime, other allowances and leave encashment (DIB SIF guidelines). Article 2 of Resolution 340 measures compliance against the total wages due to workers, so map every payroll element to the right field and reconcile the file total to the payroll register before it goes to the agent.

UAE: end-of-service gratuity

Under Article 51 of Federal Decree-Law 33 of 2021, a foreign worker who completes at least one year of continuous service is entitled to an end-of-service gratuity on termination (u.ae, end of service benefits in the private sector).

Calculation formula

The gratuity is calculated on the last basic wage only. Housing, transport, utilities and other allowances are excluded (u.ae).

• First five years of service: 21 days' basic wage per year.
• After five years: 30 days' basic wage for each further year.
• Cap: the total gratuity cannot exceed two years' wage.
• Fractions of a year: paid pro rata once the first year is complete; days of unpaid absence are not counted in the service period.

Example: an employee with 7 years of service on a basic salary of AED 15,000 a month, using the 30 day month convention for the daily wage (the law states days of wage, not a divisor).

• Daily basic wage: AED 15,000 / 30 = AED 500
• First 5 years: 5 x 21 x AED 500 = AED 52,500
• Years 6 and 7: 2 x 30 x AED 500 = AED 30,000
• Total gratuity: AED 82,500, well under the two year cap of AED 360,000

Run your own figures in our UAE gratuity calculator.

Resignation and termination attract the same gratuity. Federal Decree-Law 33 of 2021 removed the old reduction for employees who resigned, and gratuity can no longer be withheld on dismissal for cause (Morgan Lewis, December 2021). All end-of-service entitlements, including gratuity, are due within 14 days of the contract end date (u.ae).

UAE nationals: GPSSA

UAE nationals in the private sector are not on the Article 51 gratuity scheme; their end-of-service benefits follow the pension legislation administered by the General Pension and Social Security Authority (GPSSA). For nationals hired on or after 31 October 2023, Federal Decree-Law 57 of 2023 sets contributions at 11% from the employee and 15% from the employer, with the government paying a further 2.5% on the employer's behalf where the pensionable salary is under AED 20,000; nationals registered before that date remain under Federal Law 7 of 1999 (u.ae, pensions and social security for UAE citizens).

Saudi Arabia: GOSI (General Organization for Social Insurance)

In KSA, social insurance is administered by the General Organization for Social Insurance (GOSI), which runs three branches. The annuities branch (the pension) and SANED unemployment insurance cover Saudi nationals; the occupational hazards branch covers Saudi and non-Saudi employees (GOSI employer FAQs).

Sources: annuities at 18% split equally and occupational hazards at 2% from the GOSI employer FAQs; SANED at 1.5% split equally since 1 January 2022 from GOSI news.

For a non-Saudi employee the employer pays 2% and nothing is deducted from the employee. Expatriates are outside the annuities branch, so their main statutory leaving benefit is the end-of-service award under Article 84 of the Labour Law, covered below.

New-law contributors. Saudis with no contribution history before 3 July 2024 fall under the Social Insurance Law of 2 July 2024, whose annuities rate rises in steps: 20% of the contributory wage (10% per side) from July 2026, 21% from July 2027 and 22% from July 2028. SANED and occupational hazards are unchanged, so the July 2026 rates for these contributors are 10.75% for the employee and 12.75% for the employer (Social Insurance Law, Royal Decree M/273). Our GOSI calculator applies both schedules.

GOSI wage ceiling

The contributory wage is the basic wage plus the housing allowance, paid in cash or as in-kind housing valued at two months' basic wage. It has a floor of SAR 1,500 for annuities and SAR 400 for occupational hazards, and a ceiling of SAR 45,000 per month (GOSI employer FAQs). Pay above the ceiling attracts no further contribution.

GOSI registration and filing

Employers must register a new employee within the first fifteen days of the month following the month in which the employee joined, and each month's contributions are payable within the first fifteen days of the following month (GOSI employer FAQs). Late payment attracts a monthly delay fine that stops accruing once it reaches 100% of the contributions due; where an employer has deducted the employee's share but not paid it over, the fine is 2% for each month of delay with no cap (GOSI employer FAQs).

Saudi Arabia: wage payment and Mudad

Article 90 of the Saudi Labour Law requires wages to be paid in local currency, at least once a month for monthly paid workers, and deposited into workers' bank accounts through approved banks in the Kingdom (HRSD, Labour Law, English text). The Ministry of Human Resources and Social Development runs its wage protection programme through the Mudad platform, where establishments upload their monthly wage files. Deadlines, compliance percentages and penalties are set by the Ministry and change over time, so confirm the current cycle in your Mudad account rather than relying on a summary.

Saudi Arabia: end-of-service award

Article 84 applies to workers generally, not only to expatriates. When the employment relationship ends, the employer pays an award of half a month's wage for each of the first five years and one month's wage for each following year, calculated on the last wage, with fractions of a year paid pro rata (HRSD, Labour Law).

"Wage" here means the actual wage: the basic wage plus the increments due to the worker, including commissions, allowances for effort or risk and cost-of-living increments. Unlike the UAE, the Saudi award is therefore not limited to basic salary. Article 86 allows the parties to agree that commissions, sales percentages and similar variable components are left out of the base (HRSD, Labour Law).

On resignation the award is reduced under Article 85: nothing under two years of service, one third from two to five years, two thirds from more than five to under ten years, and the full award at ten years or more. Article 87 restores the full award where the worker leaves through force majeure, or where a woman ends her contract within six months of marriage or three months of giving birth (HRSD, Labour Law). Our Saudi end-of-service calculator applies these rules.

What to automate in your payroll system

Given the rules above, the highest-value automations for GCC payroll are:

WPS file generation: Generate the SIF from the approved payroll register at every pay run, mapped to each employee's agent, account and amounts, and validate it (IBAN length, dates within the salary month, SCR total) before it goes to the agent. Under the first-of-the-month deadline a rejected file costs a day you no longer have.

GOSI contributions: Calculate the employee deduction and the employer share on the capped contributory wage, on the right schedule for each contributor, so the monthly payment matches the register. Discrepancies between what you pay employees and what you report to GOSI trigger queries.

Gratuity accrual every month: Rather than calculating gratuity as a one-off exit exercise, provision it monthly against each employee. This gives finance an accurate liability on the balance sheet and removes the scramble when someone resigns unexpectedly.

Leave balance tracking: Leave encashment on termination must be calculated accurately. Annual leave accruals, carryover rules and encashment rates differ by country and contract type.

Multi-currency payroll: Teams spread across the UAE, KSA and other GCC states may be paid in AED, SAR and other currencies. Your system must handle multi-currency payroll with correct exchange rate application and reporting in each entity's functional currency.

Key takeaways

• UAE WPS requires the previous month's wages to be transferred by the first of the following month through an approved agent using a valid SIF; there is no grace period, the compliance threshold is 85%, and new work permits are suspended from the fifth day.
• UAE gratuity is calculated on basic salary at 21 days a year for the first five years and 30 days a year after that, capped at two years' wage; UAE nationals are on GPSSA instead.
• KSA GOSI for Saudi nationals is 9.75% employee and 11.75% employer on the existing schedule, or 10.75% and 12.75% from July 2026 for new-law contributors, on a contributory wage capped at SAR 45,000; non-Saudis carry only the 2% occupational hazards contribution, paid by the employer.
• KSA wages must be paid in local currency, monthly, through approved banks; confirm the current Mudad deadline in the platform.
• The KSA end-of-service award is half a month's wage a year for the first five years and a month a year after that, on the actual wage, reduced on resignation before ten years of service.
• The SIF and the GOSI payment are where errors surface. Generate both from the approved register rather than by hand.

Sources

• MOHRE, Ministerial Resolution 340 of 2026 concerning the Wage Protection System (PDF)
• MOHRE, Wage Protection System guidance page
• Dubai Islamic Bank, SIF creation guidelines (PDF)
• u.ae, End of service benefits for workers in the private sector
• u.ae, Pensions and social security for UAE citizens
• Morgan Lewis, United Arab Emirates updates federal labour law (December 2021)
• Zurich Workplace Solutions, DEWS employer page
• ADGM Employment Affairs Office, FAQs on the Employment Regulations 2024 (PDF)
• GOSI, Employer FAQs
• GOSI news, SANED contribution set at 1.5% from 1 January 2022
• Social Insurance Law, Royal Decree M/273 of 2 July 2024, official translation (PDF)
• HRSD, Saudi Labour Law, English text (PDF)

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Payroll compliance in the GCC is a data accuracy problem as much as a regulatory one. The Axion People box runs payroll across the GCC, generates the UAE WPS wage file from the approved register, gives a live GOSI estimate on the capped wage for Saudi staff, and calculates end of service gratuity to each country's rules, in Arabic and English. It is priced per box with unlimited users.