SKILL.md
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name: payroll-compliance-fundamentals
description: "Design payroll structures and compliance checklists: salary components, statutory deductions, social insurance (e.g. GOSI), end-of-service benefits, WPS wage protection, and payroll calendars. Use when the user asks to build a salary structure, understand payroll deductions, set up payroll in an HRMS, or check payroll compliance (especially Saudi/GCC contexts)."
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# Payroll & Compliance Fundamentals
## Purpose
Payroll is the highest-risk HR operation — errors break trust and invite penalties. Framework aligns with payroll modules in Frappe HRMS (salary structure, payroll entry, statutory components) and KSA/GCC practice. ALWAYS verify current rates/thresholds with official sources before filing — rates change.
## Salary structure design
- Components: basic salary + fixed allowances (housing ~25%, transport ~10% in KSA convention) + variable (commissions, bonuses) + benefits in kind.
- Rule: basic salary drives statutory calculations (GOSI, EOS, overtime) — keep the basic/allowance split defensible, not engineered to dodge statutory costs.
- Salary structure → salary slip mapping; taxable vs non-taxable per jurisdiction.
## KSA statutory checklist (verify current rates — SAGO/GOSI, Mudad, HRSD)
- **GOSI social insurance**: employee + employer contribution percentages (differ for Saudi vs non-Saudi nationals; occupational-hazard component employer-paid). Register all employees; monthly filing.
- **WPS / Mudad**: wage protection — salaries paid on time through approved channels; delays trigger violations.
- **End of Service (EOS)**: accrual per Saudi Labor Law (half-month per year for first 5 years, one month thereafter, on basic-linked wage; resignation scale by tenure) — accrue monthly in accounting.
- **Overtime**: Labor Law rates for extra hours, rest days, holidays.
- **Leave entitlements**: annual leave minimums, sick leave tiers, maternity/paternity, Hajj leave — per current Labor Law.
- **Saudization (Nitaqat)**: track band status and quota impact on hiring plans.
- Qiwa platform for contracts/documentation compliance.
## Payroll operations
- Monthly calendar: cutoff (attendance/changes) → input validation → draft run → variance check (MoM differences >5% explained) → approval → payment → filings → payslip distribution → GL posting.
- Controls: maker-checker on master data changes; bank-file validation; reconciliation report; audit trail.
- Year-end: annual reconciliation, tax/zakat interfaces (per entity type), EOS liability review.
## Deliverables
- Salary structure template (component, % / amount, statutory flags)
- Payroll compliance checklist per jurisdiction (with "verify current rate" markers)
- Monthly payroll calendar + variance report template
- Payroll control matrix