What is Salary Structure?
A salary structure is the framework that defines how a company’s total compensation for each role is split into fixed and variable components such as basic wage, allowances, benefits, and bonuses.
How It Works
- Define the basic wage — the anchor for GOSI, ESB, and most labour entitlements in Saudi Arabia.
- Add fixed allowances — housing, transport, communication.
- Add variable components — performance bonus, commission, overtime.
- Layer in non-cash benefits — medical insurance, schooling, flights.
- Document the structure in the offer letter and HR policy and update it during annual reviews.
Saudi Context
Saudi employers register the basic wage and certain allowances with the General Organization for Social Insurance (GOSI). Only specific components count toward GOSI contributions and end-of-service benefit calculations, so structuring matters for both cost and statutory entitlements.
Example
An employee earns SAR 20,000 total: SAR 12,000 basic, SAR 3,000 housing, SAR 1,000 transport, SAR 4,000 performance allowance. GOSI is computed on the basic wage plus housing allowance (SAR 15,000) per the GOSI rules.
To try a split for one salary and see its effect on the GOSI deduction and the employer’s cost, use the salary structure calculator.