Communication Allowance

What a communication allowance is

A communication allowance, also called a phone or mobile allowance (بدل الاتصالات), is a periodic cash amount that an establishment pays an employee for the communication services they use in performing their work, whether it is paid as a fixed sum with the wage or as reimbursement of the bill for a line.

In the Saudi Labor Law (نظام العمل) we found no article that names a communication allowance. We searched the text of the Labor Law for the allowance and for the words for telephone and mobile, and found no provision that requires it, sets its amount or describes it. Where it is paid, it is a contractual obligation, and its source is the employment contract or the work regulation (لائحة تنظيم العمل). Article 52 of the Labor Law lists the minimum particulars of the unified model employment contract, and the agreed wage, including benefits and allowances, is one of them. So the contract states the agreed wage together with its allowances, but Article 52 of the Labor Law does not create an allowance.

The question worth asking about a communication allowance is therefore not whether it is compulsory, but which of the two wages defined in the Labor Law it enters. That question has a direct financial effect, and it is not settled.

The two wages in Article 2 of the Labor Law and the communication allowance

Article 2 of the Labor Law defines two wages, and later provisions are built on them:

• The basic wage (الأجر الأساسي). It is everything given to the worker in return for their work, under a written or unwritten contract, whatever the kind of wage or the method of payment, plus periodic increments. The definition contains no list of exclusions and names no allowance, in either direction.
• The actual wage (الأجر الفعلي). It is the basic wage plus the other due increases set for the worker in return for effort expended in the work, for risks they are exposed to in performing it, or for the work under the employment contract or the work regulation. Article 2 of the Labor Law then lists five such increases, introduced by «ومن ذلك», which means among them.

The same Article of the Labor Law carries a reading rule that governs the whole of the Labor Law: where the Labor Law says the wage without a qualifier, it means the actual wage. For that reason the end of service award, which Article 84 of the Labor Law computes on the last wage without a qualifier, is computed on the actual wage and not on the basic wage. The calculation is set out under end of service calculation.

The placement of a communication allowance therefore matters in money terms. If the allowance enters the actual wage, it enters the base of the end of service award and of every ceiling that the Labor Law states in terms of the wage without a qualifier. If it does not, it enters neither.

How the allowances item in Article 2 of the Labor Law tests a communication allowance

The second of the five items is allowances, and the text does not say all allowances. It limits the item to allowances due in return for energy the worker expends, or for risks they are exposed to in performing their work. The wording carries the point, so the second item of Article 2 of the Labor Law is given in Arabic:

«البدلات التي يستحقها العامل لقاء طاقة يبذلها، أو مخاطر يتعرض لها في أداء عمله.»

In our own rendering, which is not an official translation, the item covers allowances due to the worker in return for energy they expend, or for risks they are exposed to, in performing their work.

The qualifier is descriptive, not nominal. What counts is the ground on which an allowance is due, not the name it carries on the payroll statement. Calling an amount an allowance does not bring it into the item, and calling it something else does not take it out. Hazard pay shows the item at work, because risk is the very word the item uses. A communication allowance, on its face, rests on neither ground.

The third item covers increases that may be granted according to the standard of living, or to meet the burdens of a family. In the Arabic the item says «التي قد تمنح», which means that may be granted, and not «الممنوحة», which means that are granted, so a quotation of the item in the second form attributes to Article 2 of the Labor Law words that are not in it. That item is where a cost of living allowance sits, and it names no communication allowance.

Does a communication allowance enter the basic wage or the actual wage?

In the sources we reviewed, we found nothing that settles where a communication allowance, or any similar allowance, falls between the basic wage and the actual wage. Article 2 of the Labor Law names no communication allowance, and it names no housing allowance or transport allowance either. The allowances item is limited to energy and risk, and a communication allowance is neither on its face. The general wording of the actual wage, however, also covers increases set for the work under the employment contract or the work regulation, so failing the allowances item does not by itself place an allowance outside the actual wage. On the other side, the definition of the basic wage, everything given to the worker in return for their work, uses wording that the Labor Law does not explain further.

Settling the question would need a decision or an interpretation from the competent authority, or settled practice in the labour courts, and we found none of these. The question is therefore not settled by analogy with the neighbouring item. Nor is it settled by importing the social insurance contribution base.

Under the existing system, the base on which contributions to social insurance are calculated consists of the basic salary plus housing, and the guidance published by GOSI lists transport, food and bonuses as excluded from it. That base is set by the Social Insurance Law for a different purpose, and the entry on GOSI contributions covers it. A shared label does not make two bases one base, so the GOSI base answers a GOSI question and leaves the Labor Law question where it was.

The practical way out is not to choose a reading but to write the answer down. A contract or work regulation that states the ground of the allowance in terms, and records how the parties have agreed to treat it in the base of the end of service award, is clearer for both parties than a preference built on a reading of the text. Where a particular case needs a firm answer, that answer is for a specialist or for the competent authority to give.

A worked example of where a communication allowance could sit

Take an employee whose basic wage is SAR 9,000, with a fixed communication allowance of SAR 300 a month and no other increases. The employee receives SAR 9,300 each month whatever the answer to the open question. What changes is the base on which later amounts are computed, and the table sets out the three possible placements without choosing between them:

The first row follows from the structure of the definitions: the actual wage is built on the basic wage, so whatever enters the basic wage enters the actual wage with it. The end of service award under Article 84 of the Labor Law is computed on the actual wage, so its monthly base is SAR 9,300 in the first two rows and SAR 9,000 in the third. The difference of SAR 300 lies in the base, and the award is then computed on that base for each year of service.

Anyone who looks only at the monthly pay will see no difference at all between the three rows. The difference appears only when an amount is computed on one of the two bases.

Overtime and the communication allowance

Article 107 of the Labor Law prices an overtime hour as two parts on two bases. The first part is the hourly wage, without a qualifier, which runs on the actual wage under the reading rule in Article 2 of the Labor Law. The second is 50% of the worker’s basic wage, qualified, which runs on the basic wage alone. How the two parts combine is covered in our guide to compensatory rest and overtime.

The formula has two components, not one, and two bases, not one. Computing all of the overtime on the basic wage understates it, and computing all of it on the actual wage overstates it; the two results coincide only where the worker has no other due increases.

For a communication allowance, both parts depend on the open question. In the example, the base of the hourly wage part is SAR 9,300 in the first two rows and SAR 9,000 in the third, and the base of the 50% uplift is SAR 9,300 in the first row and SAR 9,000 in the other two. The allowance reaches the uplift only if it falls inside the basic wage, which is the very point that the sources we reviewed leave unsettled.

How a communication allowance differs from an annual air ticket

A communication allowance is a cash amount, so the test it meets in Article 2 of the Labor Law is the allowances item, with its qualifier of energy or risk. An annual air ticket provided in kind is a benefit in kind, and its test is the fifth item of the actual wage, on in kind benefits. That item carries two conditions. A benefit counts only where the employer is bound to provide it under the employment contract or the work regulation, and it is valued at a maximum equal to two months’ basic wage for each year, unless the contract or the work regulation values it higher.

The items differ and so do the tests, although the question in both cases is the same: whether the amount enters the actual wage.

Keeping a communication allowance traceable on the payroll statement

Three points make the allowance checkable in the records. It appears as a separate line on the payroll statement rather than merged into the wage. Its source is written in the contract or the work regulation rather than left to an oral understanding. And it is recorded in the base the parties have expressly agreed, so that the question is not reopened when final entitlements are settled.

The statutory provisions behind a communication allowance

The provisions relied on are those of the Saudi Labor Law as published by the Ministry of Human Resources and Social Development: Article 2 (the definitions of the basic wage and the actual wage, the allowances item, the third item on standard of living and family burden increases, the fifth item on in kind benefits, and the reading rule for the wage), Article 52 (the particulars of the unified model contract, including the agreed wage with its benefits and allowances), Article 84 (the end of service award on the last wage) and Article 107 (overtime). Royal Decree M/44 of 1446H, in force since 19 February 2025, amended Article 2 of the Labor Law by adding definitions, and amended Articles 52 and 107 of the Labor Law. That decree did not change the definitions of the basic wage and the actual wage in Article 2 of the Labor Law, and did not amend Article 84 of the Labor Law.

This is an explanation of the concept and of the statutory provisions cited, not legal advice.