What is Housing Allowance?
A housing allowance is a fixed payment added to a Saudi employee’s salary to cover the cost of accommodation. It is one of the most common allowances in the Saudi labour market and forms part of the GOSI contributory wage.
How It Works
- Set the allowance as a percentage of the basic wage — most companies use 25% to align with market practice.
- Document it in the employment contract.
- Include it in the contributory wage for GOSI per the social insurance rules.
- Pay it monthly via the WPS payroll file.
- Recognise the expense in the period of service.
Saudi Context
Housing allowance is generally included in the GOSI contributory wage and counts toward the end-of-service benefit base if it is paid as a fixed monthly amount. Some employers provide housing in kind, in which case the imputed value must still be considered for labour-law compliance.
Example
An employee with a basic wage of SAR 16,000 receives a housing allowance of SAR 4,000 (25% of basic). GOSI is calculated on the combined wage of SAR 20,000.