HCM, HR and payroll software for Saudi Arabia.

How GOSI works in practice.

GOSI is calculated on the contributory wage, which is basic salary plus housing allowance. Other allowances - transport, mobile, schooling - are excluded, and contributions are capped at a monthly ceiling, so a very high salary contributes the same as one at the ceiling.

The split differs by nationality, and this is where most payroll errors start. Saudi and GCC nationals are enrolled in three branches: pensions, unemployment insurance (SANED) and occupational hazards. Non-Saudi employees are covered for occupational hazards only, and that contribution is paid entirely by the employer, with nothing deducted from the employee.

Nationality is not the only split. The New Social Insurance Law, in force from 3 July 2024, did not replace the older scheme - it runs alongside it. Saudis already registered before that date stay on the established pension rate, while those first registered on or after it are on a rate that rises half a point on each side every July until it reaches 11 per cent in July 2028. Two colleagues on identical salaries, hired weeks apart, therefore contribute different amounts.

The practical consequence is that two employees on identical salaries produce different net pay and different employer cost depending on nationality. A payroll run that applies one rate to everyone will be wrong for part of the workforce every month, and the error compounds quietly until an audit or a GOSI reconciliation surfaces it.

Magnar applies the branch rules per employee on every run, so the nationality distinction is handled by the system rather than by whoever maintains the spreadsheet.

Payroll that posts straight into SAP Business One.

Most HR systems in this market end at the payslip. The payroll is calculated, the file goes to the bank, and then somebody re-enters the totals into the accounting system as a journal. That re-keying step is where the finance close loses days and where the numbers in HR and the numbers in finance start to disagree.

Magnar integrates natively with SAP Business One, and posts to SAP, Oracle, Microsoft Dynamics and Odoo through the Integration Hub. Pay elements map to GL accounts, journal entries are generated per period, and costs allocate across department, project and branch, so the payroll run produces the accounting entry rather than a report someone must transcribe.

For a group running several legal entities in Saudi Arabia, that mapping is the difference between a close that takes an afternoon and one that takes a week. Each entity posts to its own accounts with its own statutory rules applied, and the group consolidates without anyone reconciling spreadsheets between them.

End-of-service provisions accrue into the same ledger, multi-currency postings convert automatically, and periods lock once posted - so the figure finance sees is the figure payroll produced, not an approximation of it.

This is the part of the stack most Saudi HR vendors do not cover. A system that calculates GOSI correctly but hands finance a spreadsheet has solved half the problem.

WPS, Mudad and what the file must match.

The Wage Protection System requires employers to file salary payment records each pay period so the Ministry can confirm staff were paid in full and on time. In Saudi Arabia those filings run through the Mudad platform and the employer's bank, which reconciles the file against the transfers actually made.

A file is rejected when the establishment identifier, employee identifiers, salary components or payment dates do not match what the Ministry and the bank already hold. In practice most rejections are data problems rather than payment problems: an iqama number renewed mid-period, a bank account changed after the file was assembled, or a basic-versus-total salary mismatch introduced while building the file by hand.

Every one of those traces back to the same root cause - the file was assembled separately from the pay run. Each export-to-Excel step between calculating pay and filing it is an opportunity for the two to disagree.

Repeated mismatches matter beyond the inconvenience. WPS compliance feeds an establishment's standing, and that standing governs operational permissions including visa issuance and employee transfers. A payroll department treating WPS as a monthly formatting exercise is carrying a business risk, not a clerical one.

Magnar generates the WPS file from the same run that produced the payslips, so the filing and the payments cannot describe different numbers.

End-of-service gratuity, and why it should be accrued.

End-of-service is earned continuously across the whole employment period, not at the moment someone leaves. Saudi labour law grants half a month's wage for each of the first five years of service and a full month for each year after that, with the entitlement reduced on resignation according to length of service and paid in full on termination.

Because it accrues, treating it as a leaving cost is an accounting error rather than a timing preference. An organisation with several hundred staff carries a substantial liability that belongs on the balance sheet long before anyone resigns, and finance teams that recognise it only at settlement get an unpleasant surprise in any month with several departures.

The resignation scale is also the part most often applied incorrectly, because it depends on completed years of service at the moment of leaving and changes at defined thresholds. Getting it wrong in the employee's favour is expensive; getting it wrong in the other direction is a labour dispute.

Magnar accrues the liability every period and applies the correct scale automatically at settlement, so the figure in the accounts and the figure on the final payslip are the same number.

Saudization and Nitaqat as a live number.

Saudization is the proportion of Saudi nationals in an establishment's workforce, assessed under Nitaqat against a target that varies by sector and company size. The resulting band governs what the establishment may do: hiring, visa issuance and employee transfers all depend on staying at or above the threshold.

The operational difficulty is that the ratio moves every time anyone joins or leaves, while most organisations only calculate it when they need to report it. By then a hiring decision made two months earlier has already pushed the establishment into a lower band, and the cost surfaces as a refused visa application rather than as a number in a report.

Contractor conversions, seasonal hiring and a cluster of resignations in one department all shift the figure, and none of them announce themselves as Saudization events at the time they happen.

This is a case where the reporting requirement and the management decision are the same number. Magnar shows the nationality ratio as a live figure across every legal entity, derived from the same employee records that run payroll, so recruitment is planned against the real figure rather than a spreadsheet that was accurate last quarter.

Hijri and Gregorian in the same payroll.

Organisations in Saudi Arabia routinely run on both calendars at once: contracts and leave entitlements expressed in Hijri years, payroll periods and financial reporting in Gregorian months. The two do not align, because a Hijri year is roughly eleven days shorter.

That difference is not cosmetic. Annual leave accrued on a Hijri basis and paid on a Gregorian payroll produces a discrepancy every year, and end-of-service calculated against the wrong calendar gets the completed-years count wrong at exactly the thresholds where the entitlement changes.

Most systems handle one calendar and leave the other to manual adjustment, which is where a second set of records begins - and once two sets exist they diverge. Magnar supports both across payroll periods, leave accrual and contract dates, so an organisation running on the Hijri year does not keep parallel books to reconcile at year end.