In This Guide
How to Hire Employees In Saudi Arabia
Hiring in Saudi Arabia for the first time can be challenging due to the Kingdom’s unique labor laws and Saudization requirements. Whether you’re expanding operations, hiring remote talent, or relocating staff, it’s essential to understand the local employment landscape. SOURCEitHR’s guide simplifies the hiring process and helps ensure full compliance.
Companies can hire employees in Saudi Arabia in three main ways:
- Setting up a local entity.
Establishing a legal presence in Saudi Arabia allows for direct hiring, but the process is often expensive, time-consuming, and heavily regulated. This path suits companies looking for long-term commitment in the Kingdom. - Using an Employer of Record (EOR)
An EOR like SOURCEitHR becomes the legal employer on your behalf. The EOR manages compliance, contracts, payroll, and benefits under Saudi labor law—ideal for companies wanting fast, risk-free market entry without opening a local branch. - Hiring independent contractors.
Though flexible and cost-effective, contractor hiring carries misclassification risks under Saudi law. Companies must ensure that contractors are not effectively functioning as employees to avoid penalties.
Using an Employer of Record In Saudi Arabia
An Employer of Record takes on all legal responsibilities for employment in Saudi Arabia. This includes:
- Compliance with Labor Laws
Ensures contracts and practices align with Saudi labor regulations, including Nitaqat (Saudization) requirements. - Payroll Management
Handles salary processing, GOSI (General Organization for Social Insurance) contributions, and compliance with the Wage Protection System (WPS). - Visa Sponsorship and Iqama
For expatriate workers, the EOR manages visa applications and residency permits (Iqama), which are mandatory for employment. - Contract Generation
Drafts legally compliant bilingual contracts (Arabic and English) including all required terms under Saudi Labor Law. - Benefits Administration
Manages statutory benefits such as health insurance, annual leave, end-of-service gratuity, and sick leave.
Good To Know
Key Employment and Labor Laws in Saudi Arabia
Businesses can only operate smoothly in Jordan if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Jordan below, to avoid any compliance issues.
Employment Contract Requirements
Saudi employment contracts must be in writing and include the following:
- Names and addresses of employer and employee
- Job title and description
- Duration of the contract (limited or unlimited)
- Salary and benefits
- Working hours and leave entitlements
- Notice period
- Termination terms
Probation Period
The probation period must not exceed 90 days (extendable up to 180 days with employee consent), during which either party may terminate without severance.
Onboarding Process with SOURCEitHR
- Iqama & Visa Process: Expatriate employees require a work visa and Iqama before they can legally start.
- Timeline: Onboarding typically takes 1–3 weeks depending on visa processing and document submission.
- Payroll Cut-off Date: Usually 25th of each month.
Working Hours and Overtime
- Standard Hours: 8 hours/day or 48 hours/week.
- During Ramadan: Working hours for Muslims are reduced to 6 hours/day.
- Breaks: One-hour rest is mandatory after five continuous hours of work.
- Overtime Pay: 150% of the base wage for hours worked beyond standard hours.
Payroll Management in Saudi Arabia
Payroll Cycle
Most companies pay salaries monthly through bank transfer using the Wage Protection System (WPS).
Minimum Wage
- Saudi Nationals: SAR 4,000/month (as of 2024, for Nitaqat compliance).
- Expatriates: No official minimum wage, but must follow fair wage principles.
Employer Contributions
| Contribution | Rate |
|---|---|
| GOSI (Saudis) | 12% |
| GOSI (Expats) | 2% |
| Occupational Hazard | 2% (for all employees) |
| Total (Approx.) | Up to 14% |
Employee Contributions
| Contribution | Rate |
|---|---|
| GOSI (Saudis only) | 10% |
Note: Expats do not contribute to GOSI except for the occupational hazard portion.
Employee Social Security Contributions
In Jordan, the typical estimation for employee payroll contributions cost is 7.5%.
| Tax Type | Tax Rate |
|---|---|
| Social Security and Pension | 7.5% |
Leave & Benefits in Saudi Arabia
Annual Leave
- 21 days/year after 1 year of service; increases to 30 days after 5 years.
Public Holidays
Usually include
| Eid Al-Fitr | 4 Days |
| Eid Al-Adha | 4 Days |
| National Day | 23-Se |
| Founding Day | 22-Feb |
Maternity Leave
- 10 weeks (fully paid for the first 4 weeks, 50% for the next 6 weeks if <3 years of service)
Paternity Leave
- 3 days of paid leave
Sick Leave
- 120 days/year:
First 30 days: full wage
Next 60 days: 75% wage
Final 30 days: unpaid
Hajj Leave
Muslim employees may take 10–15 days once during their employment after two years of service.
End-of-Service & Termination
Notice Period
- 30 days minimum for both employer and employee (unlimited contracts)
- Shorter terms for fixed contracts unless otherwise stated
End-of-Service Gratuity
21 days’ salary per year for the first 5 years
30 days’ salary for each additional year
Gratuity is prorated if service is less than a full year
Why Use SOURCEitHR’s EOR in Saudi Arabia?
- Rapid hiring without a legal entity
- 100% compliance with Saudi labor and Saudization laws
- End-to-end visa, payroll, and benefits administration
- Fast onboarding and ongoing HR support
- Coverage across GCC and 180+ countries
DISCLAIMER
This content is prepared for informational purposes only and is subject to change. It does not constitute legal or tax advice. Please consult a local legal advisor or the SOURCEitHR team before making any employment-related decisions.