Many employees receive their payslip every month without understanding the detail. Knowing how to read it helps you confirm your salary is correct and spot any error in the deductions. This guide explains every line: the earnings, the deductions, and how net pay is calculated.
In this guide
1. What is a payslip?
A payslip is a monthly document issued by your employer that sets out the detail of your salary: what you have earned (earnings), what is deducted from it (deductions), and the final amount deposited (net pay). It is an important reference for proving income when applying for a loan or a visa, or in any labor dispute.
2. Earnings (gross components)
These are everything added to your salary before any deduction. The table below shows the main lines on a payslip:
| Line | Type | Description |
|---|---|---|
| Basic salary | Earning | The core amount stated in the contract |
| Housing allowance | Earning | A percentage of basic (commonly 25%) |
| Transport allowance | Earning | A fixed amount (commonly SAR 500) |
| Overtime | Earning | Pay for hours worked outside the schedule |
| GOSI deduction | Deduction | 9.75% for a Saudi (not deducted for an expat) |
| Loans / absence | Deduction | If any apply |
3. Deductions
- GOSI social insurance: 9.75% for a Saudi employee on (basic + housing). Not deducted for an expat.
- Loans and advances: installments on any advance you agreed with your employer.
- Absence deduction: for days of unjustified absence.
- Penalties: under the approved work regulations (within legal limits).
There is no income tax deducted from salaries in Saudi Arabia.
4. How net pay is calculated
Net pay = total earnings − total deductions
Example (Saudi): basic 10,000 + housing 2,500 + transport 500 = 13,000 gross. Deduction = (10,000 + 2,500) × 9.75% = 1,218.75. Net = SAR 11,781.25.
Check your own figure directly with the Saudi salary calculator.
5. Check that your payslip is correct
- Match the basic and allowances against what is in your contract.
- Confirm the GOSI deduction = (basic + housing) × 9.75% (for a Saudi).
- Review any loans or absence deductions and confirm they are correct.
- Compare the net with the amount actually deposited in your bank account.
If you find an error, raise it with HR at your employer; you have the right to file a complaint if there is an unlawful deduction.
Frequently Asked Questions
How is net pay calculated on a payslip?
Net pay = total earnings − total deductions. Earnings include the basic salary, allowances, and overtime, while deductions include GOSI (for a Saudi) and any loans or absence deductions.
Why doesn't a GOSI deduction appear on an expat's payslip?
Because a non-Saudi employee is not subject to pension or SANED contributions. So no GOSI deduction appears on their payslip, and their net pay equals their total earnings.
What is the difference between basic and gross on a payslip?
The basic salary is the core amount on its own, while the gross is the basic + all allowances (housing, transport, etc.). GOSI and end-of-service are calculated on basic and some allowances, not on the full gross.
How do I confirm the GOSI deduction on my payslip is correct?
Multiply (basic salary + housing allowance) by 9.75% for a Saudi employee. If the result matches the deduction on the payslip, it is correct. Use the Ratiby calculator for a quick check.
Official sources
The figures and rules on this page are based on the following official references:
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