Payroll software in Jordan: the rules a system must follow
A payroll run has to follow the Labour Law on when pay is due and what can be taken from it, and the Social Security Law on contributions. This checklist sets out those rules, works through an example, and lists what to check in each system.
When pay is due
Wages and overtime pay must be paid within no more than seven days of falling due, and nothing may be deducted except as the law permits (Labour Law, Article 46(a)). Signing a wage statement or receipt does not waive any further amount due (Article 46(b)).
If a wage is disputed, the Wage Authority can hear the claim urgently. It covers underpayment, unlawful deductions, late payment and overtime. A worker can file while still employed, or within six months after leaving (Article 54). Keep the records that prove each payment.
- Store the due date and the payment date for each pay run, so you can show the seven-day rule was met.
- Keep the agreed wage, allowances and overtime approvals behind every payslip.
What may be deducted
The Labour Law lists the only deductions allowed from wages (Article 47). The payroll should apply the limits automatically:
- Advances: each repayment instalment no more than 10% of the wage (Article 47(a)).
- Overpayments: the amount paid in excess of what was due (Article 47(b)).
- Social security contributions, and other deductions that another law requires (Article 47(c)).
- Savings-fund contributions, and agreed deductions for employer housing or other benefits (Article 47(d) and (e)).
- Amounts due under a court judgment (Article 47(f)).
- Fines and damage, within the limits below (Article 47(g)).
A fine can be imposed only for a violation in the penalty schedule approved by the Minister. It cannot exceed three days' wage in a month, and an unpaid suspension cannot exceed three days in a month. The worker must be heard first, and no action can be taken more than 15 days after the violation. Each fine goes into a special register with the worker's name, wage and reason. The worker can object to the labour inspector within a week (Article 48).
Damage to the employer's tools, machines or products, caused by the worker's error or breach of instructions, can be deducted up to five days' wage in a month (Article 49).
Social security contributions
The Social Security Law sets the contribution rates and the wage cap. The figures below come from the law as amended to April 2023. Check them with the Social Security Corporation before you set up the system, and again whenever they change.
- Employer: 14.25% in total, made up of work injury 2% (the Board can raise this by bylaw), maternity 0.75%, unemployment 0.5%, and old-age, disability and death 11% (Articles 24, 33, 42, 48 and 59).
- Employee: 7.5% in total, made up of unemployment 1% and old-age, disability and death 6.5% (Articles 48 and 59).
- The contribution wage is capped in the law at JOD 3,000, indexed each January, with exceptions for older insured persons (Article 20). Ask the Corporation for the current cap.
- Contributions run from the first day of employment, month by month, until employment ends. Part of a month counts as a full month, and the one-month notice period counts as service (Article 20(d)).
- Contributions are due during the first 15 days of the following month. Late payment carries 1% interest a month (Article 22(a)).
- Health insurance starts only when the Council of Ministers issues a resolution bringing it into force (Article 3(c)). Check whether one applies to your staff.
Example. An employee's contribution wage is JOD 900 a month. The employee pays 7.5%, which is JOD 67.50, so the net pay before income tax and any other deduction is JOD 832.50. The employer pays 14.25%, which is JOD 128.25 on top of the wage. The employer's total cost for the month is JOD 1,028.25, before allowances and other costs.
Overtime and rest days
Overtime needs the worker's consent. Each overtime hour is paid at least 125% of the usual wage (Article 59(a)). Work on a weekly rest day, a religious feast or an official holiday earns an additional amount of at least 150% of the usual wage (Article 59(b)).
Example. If the usual hourly wage is JOD 2.00, an overtime hour must be paid at least JOD 2.50. The articles above do not set a formula for the hourly wage, so agree the method in writing and apply it to every worker in the same way.
Compulsory overtime is limited (Article 57). Up to 30 days a year, with no more than 10 hours on each day, for annual stocktaking, budgets and accounts, or preparing a sale. Up to 30 days a year to prevent loss of perishable goods, avoid technical risk, or receive, deliver or move materials. Work on these days is paid at the overtime rate.
Leave, sick pay and maternity
- Annual leave: 14 days on full pay for each year of service, or 21 days after five consecutive years with the same employer. Unused days are paid when service ends, for any reason (Articles 61(a) and 63).
- Sick leave: 14 days a year on full pay, on a doctor's report. It can be renewed for another 14 days on full pay for a stay in hospital (Article 65).
- Maternity leave: 10 weeks on full pay, before and after delivery, with at least six weeks after the birth (Article 70).
- Insured mothers: if she qualifies, the social security maternity allowance equals her last wage, less the contributions the law deducts, and replaces the employer's pay for that leave (Social Security Law, Articles 44 to 46 and 102(c)).
- Paid nursing breaks: up to one hour a day, for a year after the birth, once maternity leave ends (Article 71).
End of service
Whether a worker receives the end-of-service indemnity or the gratuity depends on social security coverage.
- Covered workers: the employer's old-age, disability and death contributions replace the end-of-service indemnity (Social Security Law, Article 102(a)). For service before the Social Security Law applied to the worker, the employer still owes the indemnity (Article 102(b)).
- Workers not covered: one month's wage for each year of actual service, with a proportional amount for part-years, calculated on the last wage (Labour Law, Article 32).
- Commission or piece-rate pay: use the monthly average of the last 12 months, or of the whole service if it is shorter. Gaps between jobs of 60 days or less count as continuous service (Article 32).
- Savings or retirement funds set up by the employer pay on top, under their own rules (Article 33).
Example. A worker not covered by social security has a last wage of JOD 900 and six years and four months of service. The gratuity is 6 × JOD 900 = JOD 5,400, plus 4/12 of JOD 900 = JOD 300. The total is JOD 5,700.
Questions for every vendor, in writing
- Does the system apply the 10% advance limit, the three-day fine limit and the five-day damage limit automatically?
- Does it record the due date and the payment date for each pay line?
- Can it calculate overtime at 125% and 150%, and record the worker's consent?
- How are the contribution rates, the wage cap and the leave rules updated, and from which date?
- Does it show the employer's and the employee's shares separately, and treat covered and non-covered workers differently for end of service?
- Can we run one payroll in parallel before the first live run, and compare net pay worker by worker?
- Can we export every payroll run and its ledger postings if we leave?
Where SSByte stands
BYTE is coming soon. Ask us in writing which payroll rules are ready before you decide, and do not rely on any feature we have not confirmed in writing. For the hiring, leave and discipline side, read the HR checklist. For hours and overtime, read the attendance checklist.
Questions people ask
What is the employer's social security share?
14.25% of the contribution wage in total, under the Social Security Law as amended to April 2023: work injury 2%, maternity 0.75%, unemployment 0.5%, and old-age, disability and death 11%. The work injury share can be raised by bylaw, so confirm the current rates.
When must social security contributions be paid?
During the first 15 days of the following month. Late payment carries 1% interest a month (Social Security Law, Article 22(a)).
What if a worker is not covered by social security?
The end-of-service gratuity under Labour Law Article 32 applies: one month's wage for each year of actual service, with a proportional amount for part-years, on the last wage. Covered workers are treated under Social Security Law Article 102.
Can payroll deduct for lateness or damage?
Only as the law allows. A fine cannot exceed three days' wage in a month and must follow the approved penalty schedule and the hearing rules (Labour Law Article 48). Damage can be deducted up to five days' wage a month (Article 49).
This guide summarises the Labour Law and the Social Security Law as amended to 2023. It is general information, not legal or tax advice. Confirm current rates and caps with the Social Security Corporation and your accountant before you decide. Talk to us for a written answer to any question here.