Saudi Arabia has warned strict action against companies which fail to comply with the new wage protection system that has been introduced to protect the rights of both employer and employee, said a report.

The Ministry of Labor said any business organization which has over 1,000 employees on its rolls, must adopt the new system under which salaries of employees are required to be paid through banks in a prescribed format, reported the Arab News.

The ministry said the second phase of the wage protection system will be implemented next month.

To teach erring firms a lesson, the ministry said any employee who is not paid salary for three months will be free to transfer his sponsorship without the consent of defaulting employer.

The ministry officials said they were constantly monitoring the new wage system implementation by employers and advised them to open bank accounts for employees without further delay.