Saudi Arabia Employer of Record

If a lack of speed or local expertise are among your top concerns when expanding to or employing workers in Saudi Arabia, an employer of record may be the best option for achieving your global growth objectives.

An employer of record, sometimes known as an international PEO, enables you to quickly hire and onboard workers in Saudi Arabia ―often in as little as two weeks―without having to take on the cost and risk of establishing a local entity.

Learn about the hiring, employment, payroll and benefits requirements for workers in Saudi Arabia and how our employer of record service, EOR, and local HR experts can help you manage your international employment needs.

Employment in Saudi Arabia is regulated by the Labor Law, the Social Insurance Law, and provisions of Shari’a (Islamic law).

In 2015, the Council of Ministers approved 38 amendments to the Labor Law affecting a wide range of employment terms and conditions, including leave entitlements, fixed-term contracts, and notice periods. The amendments also introduced new penalties for labor law violations ranging from 100,000 riyals to the closure of the business.

The General Organization for Social Insurance administers social insurance programs that provide benefits after termination of employment due to retirement, disability, or death, as well as benefits for occupational injuries and diseases.

As you look to hire employees in Saudi Arabia, here are some standard regulations you’ll need to know to create a compliant contract, as well as how an employer of record and PEO can provide support for your unique HR needs.

Employees shall not be asked to work more than 40 hours per week and eight hours per day.

Regular working hours are eight in a day and 48 in a week. Maximum working hours, including overtime, are 12 a day. The Ministry of Labor may limit working hours to seven hours per day for workers in certain hazardous industries or jobs. During the month of Ramadan, the working hours for Muslims are reduced to a maximum of six per day or 36 per week.

Friday is the weekly paid rest day for all workers, lasting 24 consecutive hours.

Rest periods should be scheduled so that no employee works more than five consecutive hours without a break of at least 30 minutes for rest, prayer, and meals, provided that a worker does not remain at the workplace for more than 12 hours a day. The rest periods are included in working hours.

As you consider the appropriate salary to offer new employees, keep in mind:

As your employer of record in Saudi Arabia, we can provide you with resources and insights about employee compensation, so you are better equipped to make a competitive employment offer.

Saudi Arabia does not mandate employers to provide bonus payments to employees but it is customary to provide employees a 13th month bonus on Eid al-Fitr.

Probationary periods of up to 90 days are permitted. They can be extended an additional 90 days with the employee’s written consent.

An employee may not be employed on probation more than once by the same employer unless they change jobs or haven’t been employed by the same employer in the previous six months.

In an indefinite contract, either party may terminate it for a valid reason specified in a written notice served at least 60 days before termination.

If either employer or employee terminates a contract without the required notice, they must compensate the other wages for the duration of the notice period or the balance of the contract.

If an employee is terminated without a valid reason and no amount of severance is specified in the employment contract, they are entitled to 15 days’ wages for each year of employment through an open-ended contract or all remaining wages under a fixed-term contract; however, the minimum compensation must be at least two months’ wages in either case.

End-of-service awards are mandatory. They amount to a half month’s wages for each of the first five years of service and one month’s wages for each subsequent year. The award is calculated using the last full month’s wages. An employee who resigns is entitled to one-third of the award after service of two years to five years and two-thirds of the award for service between five years and 10 years.

A female worker is entitled to the full award if she ends her employment within six months from the date of her marriage or three months from the date of giving birth.

A contract can be terminated during the probationary period without notice by either party unless it only gives that right to one of them and there is no end-of-service award

When negotiating terms of an employment contract with a candidate in Saudi Arabia, here are some of the statutory benefits and paid leave requirements to keep in mind, as well as how an employer of record can support your company’s benefits strategy.

Pregnant employees are entitled to paid maternity leave for four weeks before the delivery date and six weeks after. Employees who give birth to a child who is sick or has special needs are entitled to an additional month of paid leave that can be extended by one additional month of unpaid up to a maximum of 18 weeks of combined paid and unpaid leave.

An employer may not terminate anyone who is on maternity leave, or for the duration of any illness that results from pregnancy or delivery for up to 180 days afterward.

Employees are entitled to 21 days of paid leave a year. After five consecutive years with the same employer, this increases to 30 days per year.

Employers may determine the dates of their employees’ leave but must notify them of the dates at least 30 days in advance. With the employer’s permission, annual leave may be postponed until the next year.

An employer can postpone the leave for up to 90 days after the end of the year when it is meant to be taken, and they can extend it if work conditions require it and the employee consents in writing. The postponement cannot extend beyond the end of the year after the year when the leave is meant to be taken.

After at least two consecutive years of work, employees are entitled to 10 to 15 days of paid leave to perform Hajj, a pilgrimage to Mecca, including the Eid Al-Adha holiday. This paid leave must be given once during employment with the same organization, and only if the employee has not performed Hajj before. The employer may determine how many employees receive this leave annually.

Employees are entitled to the following paid holidays:

If National Day falls on a weekend, a day off is given on a day before or after the weekend.

Employees are entitled to 30 days of sick leave at full pay each year, an additional 60 days at 75% pay, and another 30 unpaid days. The year is counted starting from the first day of sick leave.

An employer cannot terminate an employee due to illness until they have exhausted all their sick leave. Employees can request their sick leave to be combined with annual leave.

Employers are required to provide health insurance to foreign workers and their dependents. Visas and residence permits will not be issued or renewed for foreign workers without health insurance.

The General Organization for Social Insurance (GOSI) administers the social insurance programs. Men at 60 years of age (62 under the Hijri calendar) and women at 55 with at least 120 months of contributions to the social insurance fund qualify to receive a pension. Only Saudis are eligible for benefits for retirement, old-age and survivors.

The employer makes a combined contribution of 9% of payroll and an employee 9% of gross earnings to the retirement, old-age and non-work-related disabilities programs.

In addition to healthcare benefits, employees in Saudi Arabia are entitled to pension, which is funded by government tax revenues, as well as workers compensation, which is covered through mandated employer insurance.

Employer social costs will cover a large portion of employee benefits in Saudi Arabia, but we can consult with you about supplemental coverage options, such as additional pension contributions or life insurance if needed.

Updated: February 13, 2024

We write and validate all local employment contracts, streamlining the onboarding process for you and your Saudi Arabian employees—all you have to do is provide relevant information and review and approve the employment agreement. As your employer of record in Saudi Arabia, we will:

The entire onboarding process for the employee is often completed in as little as two weeks.

With over a decade of service, we are the longest-serving employer of record and PEO provider in the international market. Organizations around the world rely on EOR, our employer of record solution, to expand and hire in over 170+ countries around the world, quickly and compliantly.

We’ve seen just about every global employment circumstance imaginable—and with our extensive knowledge of local law and culture, we know what it takes to get employment right in Saudi Arabia. We provide written contracts in the local language, salaries in the local currency and HR support in your employees’ time zone.

Additionally, a global payroll provider we support payroll administration—including payments, filings and other calculations— all around the world and can accommodate the payroll outsourcing needs of any size organization.

Whether you’re looking to hire as part of a strategic expansion or to meet specific talent needs, our global solutions advisors can walk you through your international hiring options so you can make the right choice for your organization. Contact us today.