Executive Regulations for Disbursing State Employees' Salaries

No: 211000000091

Date(g): 28/8/2000 | Date(h): 28/5/1421

Translated Document

Further to SAMA Circular No. 17693/BCT/896 dated 7/12/1418H regarding the rules for salary transfers through the Saudi Instant Payments System (SARIE) and the implementation procedures.

We would like to inform you that there are some amendments to the rules regarding salary transfers via the (SARIE) system, as well as to the standard agreement with banks for salary transfers through the Saudi Instant Payments System (SARIE). The amendments are as follows:

Introduction:

Based on the Ministry of Finance and National Economy Circular No. 12/1936 dated 16/6/1405H, which outlines the implementing rules for disbursing government employees' salaries through national banks, most government agencies and public institutions have adopted the practice of paying employee salaries via cheques drawn on these banks.

Due to the steady increase in the number of government employees and the substantial burdens associated with issuing salary payments via cheques drawn on national banks such as the significant time and effort required, direct costs of cheque printing, and the congestion experienced by local banks during salary disbursement periods SAMA has developed and adopted the Saudi Instant Payments System (SARIE). This advanced automated system facilitates electronic transfers and payments between banks and customers, making it ideal for transferring employee salaries directly to their accounts at the banks they use. Additionally, the benefits provided by the Saudi Payments Network include easy access to cash, balance inquiries via ATMs, and the ability to obtain goods and services through widespread point-of-sale terminals across the Kingdom. Following consultations with the General Auditing Bureau and SAMA, it has been decided to utilize (SARIE) system for the automated transfer of employee salaries to their accounts at various local banks. This decision aims to streamline the salary disbursement process while maintaining adherence to general rules and documentation procedures to ensure proper salary transfer and verification of receipt by employees.

The following are the rules and executive procedures for transferring salaries via (SARIE) system that must be adhered to. SAMA hopes that the implementation of this method will facilitate the salary disbursement process for government employees, allow employees to benefit from the technical services provided by the Saudi Payments Network, support the banking sector, and enhance both banking awareness and savings habits among employees.

First: Rules for Transferring Employee Salaries via the Saudi Instant Payments System (SARIE).

1-	Each government ministry or agency is required to open two current accounts with a local bank operating within the Kingdom as follows:
		The first account should be titled "Salaries of Employees of (Name of the Entity/City).
		The second account should be titled "Other Entitlements of Employees of (Name of the Entity/City).
		These accounts are to be used for disbursing salaries and entitlements of their employees, which will be processed by the corresponding bank through the transfer of net salaries and entitlements to the employees' accounts held with the same bank or other local banks.
2-	The current bank will continue to be used for disbursing employee salaries via cheques during the implementation of these rules. For entities that are not currently dealing with banks, SAMA will coordinate with the Ministry of Finance and National Economy to either change or appoint a bank.
3-	Each employee must specify the bank to which they wish their salary to be transferred and sign a declaration to this effect with the Human Resources Department of their respective entity, according to the attached proposed forms. This declaration serves as acknowledgment that their salary or any other entitlements will be automatically transferred to their account with the specified bank. Employees are free to choose the bank they wish to deal with for transferring their entitlements, and it is not necessary for this bank to be the same as the one used by the government entity.
4-	Banks are required to accept the opening of current accounts for employees of government entities and public institutions for the purpose of transferring their salaries to these accounts without imposing a minimum balance requirement. Employees whose salaries are transferred to their current accounts at the bank will have access to all banking services available for current account holders, including the use of the Saudi Payments Network services such as ATMs and point of sale terminals. Banks may send representatives to government entities and public institutions to open current accounts for employees at the entities’ premises and branches, in coordination with the Human Resources Departments.
5-	Banks are required to perform the salary transfer process without charging any banking service fees, either from government entities or from employees.
6-	Human Resources Departments shall issue notifications to employees who have had deductions made from their salaries, detailing the amounts of the deductions and the reasons for them.
7-	The application of this system is not limited to the transfer of employee salaries alone it also includes the transfer of their entitlements. The handling of these salaries and entitlements with the banks should be done by opening the two accounts as specified in paragraph (1).
8-	Employees who do not wish to have their salaries and entitlements transferred to current accounts at banks, as well as employees of entities without branches of local banks, will have their salaries and entitlements disbursed in accordance with the Ministry of Finance and National Economy Circular No. 12/1936 dated 16/6/1405H, which outlines the implementing rules for salary disbursement through local banks. Separate payrolls will be issued for these cases.

Second: Procedures for Transferring Employee Salaries via SARIE.

1-	The government entity shall send the payment orders for its employees' salaries to the Ministry of Finance and National Economy on the 12th of each lunar month. The beneficiary's name on the payment order should be written as follows: Pay to the order of: Salaries of Employees of [Name of the Entity/City], Account No. [Full Account Number for Salaries or Entitlements] at [Bank Name].
2-	The Ministry of Finance and National Economy shall process the payment order in accordance with the current regulatory procedures. The issued cheque shall specify the full name, account number, and bank.
3-	The cheque shall be delivered to SAMA for the transfer of its value to the bank where the government entity’s account is held. This process will continue until the automated systems are linked, technical tests are conducted, and procedures are revised at both the Ministry of Finance and National Economy and SAMA, to replace cheques with direct transfers to government entities' accounts at banks.
4-	The bank shall credit the amount to the government entity's account and notify the entity accordingly to carry out the necessary accounting entries.
5-	All government entities are required to send their employee data to the banks they work with on CDs by the middle of the lunar month. This data must include all employee details such as names, account numbers, bank names, and net salaries due. The data can be transmitted via an automated information exchange line between the government entity and the bank to expedite the process of data delivery and processing. For government entities that do not use computer systems for preparing employee salary data, coordination between these entities and the banks is necessary to determine the method of data transmission. Government entities are allowed to make any necessary changes to the data sent to the bank up to two days before the due date. The bank is responsible for implementing the required changes and notifying the government entity so that the necessary accounting entries can be made. It is preferable to agree on a standardized method for sending employee data to the bank in accordance with SAMA guidelines to minimize the need for data corrections during transmission.
6-	Regarding the salaries of employees benefiting from installment services provided by banks, who currently receive their salaries via hand-delivered cheques from the bank, their salaries will be automatically transferred to current accounts opened in their names at the same banks. Banks will be notified of this change in salary disbursement method in accordance with the Circular of the Ministry of Finance and National Economy No.12 /162 dated 2/12/1413H.
7-	Payroll transfer statements are prepared automatically by the Human Resources Department and are sent along with their attachments, to the Finance Department for review and recording in accordance with financial regulations. The recording should be based on the approval order for disbursement as follows:
	From Account No.	To: Expenses (relevant items) To the mentioned individuals
	Account No. /	Payment Orders (in the name of the Pension Fund or the General Organization for Social Insurance and the Credit Bank for settling their dues).
	Account No. /	Revenues (amounts that may be added to revenues, such as penalties).
	Account No. /	Deposits (amounts held in deposits for any reason).
	Account No. /	Payment Orders (for the net salaries specified in the disbursement approval order).
8-	The dealing bank deposits the net salaries due into the employees' current accounts with it, as well as transfers the salaries of employees with accounts in various local banks to be credited to their accounts automatically. All salaries are deposited into employees' accounts at all banks on the 25th of the lunar month. Banks provide their customers with summary notifications by the 5th of each lunar month, confirming the addition of salaries to the employees' accounts with them and with other banks for the previous month. Government entities, after reviewing these notifications, attach them to the payroll statements for the relevant month and prepare them for submission along with their monthly documents to the General Auditing Bureau as per the standard procedure.
9-	Employee entitlements that are not recorded in their accounts for any reason and reported by the bank are issued as cheques payable to the beneficiaries. These cheques are drawn on the entity's general account.
10-	If the entity discovers an error or determines that an employee is not entitled to their salary or a part of it, which has been transferred to the bank, it must immediately notify the bank to make the necessary correction, and this must be done at least two days before the due date. If the error is discovered by the entity after this deadline, the entity should address it by making the following entry:
	From Account No. /	Advances Under Collection (Employee's Account)
	To Account No. /	Expenses under exclusions (Relevant Item)
	The amount should be deducted from the employee's entitlements in the following month or collected in cash to settle the advance.
11-	Government entities must ensure that all employees listed in the payroll files sent to the banks are still active. They should establish procedures and controls to prevent the transfer of salaries or other entitlements to employees who are no longer on duty. Monthly payroll statements should be accompanied by declarations from the heads of the main and subsidiary departments affirming the accuracy of the information provided and confirming that all employees listed are still active. These declarations must be approved by the Directors of Human Resources and Accounting, as well as the General Manager of Financial and Administrative Affairs. These individuals will be jointly responsible for any amounts incorrectly transferred or issued without entitlement.
12-	The financial administration within government entities and public institutions should retain copies of monthly payroll statements and detailed reports of transactions issued by the banks, as requested. These documents should be kept in dedicated files for reference when needed.

Unified Agreement for Transferring Employees' Salaries via the Saudi Arabian Riyal Interbank Express (SARIE) System

On the day of ..../.... / 14....H, corresponding to ..../.... / 199....G, an agreement has been made between:

The First Party:

The Government Entity (________________________) Address at (________________________).

Represented in the signing of this agreement by His Excellency / __________________.

Hereinafter referred to as the "Government Entity."

The Second Party:

The Bank (________________________) Address at (________________________).

Represented in the signing of this agreement by __________________.

Hereinafter referred to as the "Bank."

Introduction:

Based on the Government Entity’s desire to enlist the Bank to provide banking services, particularly the transfer of monthly salaries and other entitlements to its employees through direct deposit into their current accounts. This includes the transfer of monthly salaries and other entitlements to employees with accounts at other local banks through the Saudi Electronic Funds Transfer System (SARIE) instead of disbursing salaries through cheques, in accordance with the general rules and executive procedures for the payment of state employees' salaries via SARIE as issued under Circular No. ___________ from His Excellency the Minister of Finance dated ..../..../ 1419H. This agreement is supplementary to the implementing rules for paying state employees' salaries through local banks issued by the Minister of Finance and National Economy under Decision No. 11/H/1351 dated 16/5/1405H, circulated under No. 12/1936 dated 16/6/1405H and subsequent clarifications and additions. Furthermore, based on SAMA's approval to enter into an agreement with the Second Party to facilitate salary disbursement as outlined in Letter No. ___________ dated ..../.... /14....H, this agreement has been made between the two parties.

Article 1: Bank Obligations

1-	The bank shall open two current accounts in the name of the Government Entity in accordance with the rules and regulations for opening current accounts for ministries, governmental entities, and public institutions as issued by SAMA. One account is for salary transfers, and the other is for other employee entitlements such as overtime and delegation allowances, which are paid collectively (by one check).
2-	The bank shall provide the Government Entity with detailed automated reports regarding account activity via terminal screens, floppy disks, or another method that serves reconciliation purposes with their records. This should be done at least once a month or upon request.
3-	The bank shall transfer the employees’ monthly salaries to their current accounts opened with the bank or with other local banks based on the data provided by the Government Entity.
4-	The bank shall not charge any commissions or banking fees for the services provided under this agreement to the Government Entity or its employees. Employees are not required to maintain a minimum account balance (SAMA Circular No. M/A/142 dated 18/2/1417H).
5-	Current accounts opened for employees under this agreement shall enjoy all the benefits available to other current accounts at the bank, including the use of Saudi ATM networks and point-of-sale services.
6-	The bank shall issue an ATM card to every employee with a current account at the bank free of charge, and it shall be renewed upon expiration without charge. In the event of card loss or damage, the bank shall issue a replacement card.
7-	The bank shall credit the employees’ salaries to their accounts on the 25th day of the Hijri month unless the following exceptions occur:
		A)	If the 25th day falls on a Friday, the crediting will take place on the 26th day.
		B)	For the last month of the fiscal year, salaries will be paid in accordance with the instructions issued by the Ministry of Finance and National Economy for closing accounts at the end of the fiscal year.
		C)	The salary for the month of Ramadan will be paid on the 20th day of Ramadan.
8-	The bank shall provide the Government Entity with the names and entitlements of employees whose salaries were not credited to their accounts for any reason, whether at the bank or other banks, no later than two days after the due date. The Government Entity shall then issue checks for the total salary amount to the beneficiaries.
9-	The bank shall provide the following information to the Government Entity no later than five days after the salary transfer date:
			Confirmation of the amounts credited to the opened accounts and any amounts not credited for any reason. Confirmation of the total amounts transferred for employees with other banks and any returned amounts.
10-	The bank shall provide necessary support to rectify any errors in the data sent by the Government Entity upon notification.

Article 2: Government Entity Obligations

1)	The Government Entity shall provide the bank with detailed employee salary data, including the names of employees and their complete account numbers, through terminals, floppy disks, or other methods deemed suitable by both parties. The Government Entity is responsible for the accuracy of this data.
2)	The Government Entity shall deposit the total amount of monthly salaries in its current account with the bank no later than the 20th of the month, ensuring sufficient funds to cover the monthly payroll. The Government Entity will also deposit any additional amounts required for other entitlements it wishes to transfer to its employees.
3)	The Government Entity shall not approve the transfer of an employee's salary from one bank to another or cancel the transfer and replace it with a check if it had previously committed to another bank for the transfer.
4)	The Government Entity shall transfer the salaries of employees benefiting from loan services provided by the bank to current accounts in their names at the same bank.

Article 3: General Provisions

1)	This agreement shall be valid for two years and will be automatically renewed for the same period unless either party notifies the other party at least four months before the end of the current term of its desire not to renew.
2)	Upon signing this agreement, the bank shall coordinate with the Government Entity to complete all procedures necessary for implementing the agreement.
3)	This agreement is governed by the laws and regulations currently in force in the Kingdom of Saudi Arabia.
4)	In the event that either party breaches any of the obligations stated in this agreement, the other party has the right to terminate the agreement without compensation, provided that two written warnings are issued, and two months pass for each warning without corrective action.
5)	In matters not covered by this agreement, reference shall be made to the general rules and executive procedures for salary transfers via SARIE issued under Circular No. 28810/12 dated 15/7/1419H by the Minister of Finance and National Economy.
6)	In case of any dispute regarding the implementation of this agreement, SAMA shall have the authority to settle it.
7)	This agreement is made in three original copies, one for SAMA, one for the Government Entity, and one for the bank, all to be executed accordingly.

The First Party The Second Party

On behalf of (The Government Entity) On behalf of (The Bank)

Signature: Signature:

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Executive Regulations for Disbursing State Employees' Salaries

Unified Agreement for Transferring Employees' Salaries via the Saudi Arabian Riyal Interbank Express (SARIE) System