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Saudi Arabia to begin the final phase of the Wage Protection System

On November 3, 2020

Saudi Arabia’s Ministry of Human Resources and Social Development (MHRSD) announced yesterday that it will begin implementing the final phase (17th) of the Wage Protection System (WPS) starting from 1 December 2020. All businesses, regardless of their size, must now register with WPS. Previously, only businesses with five or more workers were required to register with the WPS. The MHRSD has also directed all businesses to register with the “Mudad” platform starting from 1 November 2020.

Non-payment of wages in the Kingdom has risen steadily for several years now, and neither the WPS (for those covered by it) nor other justice mechanisms have been able to provide reprieve for affected workers or to hold violators accountable. 

Earlier this year, the MHRSD launched the “Mudad” platform to enable businesses to better adhere to the WPS. Businesses can subscribe to the platform and obtain assistance on updating and reviewing employees’ salary data and other related issues. 

Businesses must upload their monthly payroll to the MHRSD site. However, according to Professor Ray Jureidini, “what is not clear is whether the Ministry keeps the information on wage levels and allowances according to the employment contract that can be independently verified with the information provided through the WPS.” Additionally, workers have limited ways to challenge any unfair deductions.

According to the latest regulations, businesses that fail to pay workers' wages for two months will be penalised with a fine of SR10,000 (USD 2,666) each month until due wages are paid. MHRSD also will block the business from all government services except issuing and renewing work permits. 

If the WPS detects three months of non-payment, the MHRSD will block the business from all services and allow employees to transfer jobs without the consent of the employer, even if their work permit has not expired. 

In any case, the key is in implementation and enforcement and as covered previously by, the WPS has failed to protect workers from wage-theft in Saudi and elsewhere in the Gulf.  In 2015, Arab News reported that the MHRSD (the then Labour Ministry) had shut down 1,441 companies for failing to comply with the WPS and had also shut down the computer systems of 89 companies that failed to respond to workers’ complaints. However,  alerting authorities of non-payment is one thing and workers' access to legal redress is another, and obstacles to justice persist for many migrant workers regardless of WPS.

It is also worth noting that the WPS does not cover Saudi's  3.7 million migrant domestic workers.

If implemented properly, a WPS system has the potential to improve complaint mechanisms and alert authorities of wage-theft cases, but cases of non-payment in Saudi and rest of the Gulf reveals the WPS is merely an electronic payment system and doesn’t really protect wages.