Occupational hazard insurance is a crucial component of workplace safety compliance in Saudi Arabia. Employers are legally required to contribute to the Occupational Hazards Branch of the General Organization for Social Insurance (GOSI) to protect employees against workplace injuries and illnesses. This guide provides a detailed breakdown of employer obligations, contribution rates, compliance rules, and penalties—with a focus on corporate taxpayers in Saudi Arabia.
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What is Occupational Hazard Insurance?
Occupational hazard insurance is a social insurance program that compensates employees for work-related injuries, occupational diseases, and death due to workplace accidents. It is mandated under Saudi Arabia’s GOSI system and applies to all employees—Saudi and non-Saudi—working in the Kingdom.
Employers must register their employees with GOSI and make monthly contributions to ensure continuous coverage.
Employer Contribution Rates
The Occupational Hazards Branch is funded solely by employer contributions. The current rate is:
- 2% of the contributory wage for each employee (both Saudi and expatriate).
- This contribution is separate from other GOSI payments such as the Annuities Branch.
Contributory wages include the employee’s basic salary plus any regular allowances, subject to the GOSI wage ceiling.
Employer Obligations Under Saudi Law
- Register all employees with GOSI upon hiring.
- Submit accurate monthly wage details to GOSI for contribution calculation.
- Pay the occupational hazard insurance contributions by the 15th of the following month.
- Maintain health and safety measures in the workplace to minimize occupational risks.
- Report any workplace accident or occupational illness to GOSI within 3 days.
Benefits for Employees
- Medical treatment for work-related injuries and diseases.
- Compensation for temporary or permanent disability.
- Lump sum payments to dependents in case of death due to workplace accidents.
- Rehabilitation services to help injured employees return to work.
Penalties for Non-Compliance
Employers who fail to register employees, submit accurate data, or pay contributions on time may face:
- Fines for late payments.
- Penalties for underreporting wages.
- Suspension of work permits and other administrative actions.
Tax & Compliance Implications for Corporate Taxpayers
While occupational hazard insurance contributions are a statutory cost, they may be treated as a deductible expense when calculating corporate tax liability, provided they are properly documented and paid in accordance with GOSI rules.
Non-compliance not only triggers GOSI penalties but may also affect corporate tax assessments by the Zakat, Tax and Customs Authority (ZATCA).
Best Practices for Employers
- Integrate payroll and compliance systems for timely GOSI submissions.
- Regularly review wage reporting to ensure accuracy.
- Provide safety training to employees to reduce occupational risks.
- Engage with tax and compliance consultants to optimize reporting.
Key Takeaways
- Employer contribution rate for occupational hazard insurance is 2% of contributory wages.
- All employers in Saudi Arabia must comply with GOSI registration and reporting obligations.
- Contributions benefit employees and help mitigate the financial impact of workplace injuries.
- Proper compliance can also optimize corporate tax deductions.
