Hire talent in
Saudi Arabia
with EOR
Enter the Saudi market without the need to set up a local entity, ensuring smooth operations while staying compliant with ever-evolving labor laws
- Fully licensed and compliant
- Secure and transparant payments
- Fast and worry-free
Capital City
Riyadh
Currency
Saudi Riyah
Language
Arabic
Population Size
32,175,224
Facts & Stats
Capital City
Riyadh
Currency
Saudi Riyal
Language
Arabic
Ease of doing Business
Moderate to difficult
Gross Domestic Product
$2.354 trillion (2024 estimate)
Working Hours
Maximum of 8 hours per day, or 48 hours per week
Average Education Level
41% (2019) achieved tertiary education.
Capital City
Riyadh
Currency
Saudi Riyal
Language
Arabic
Ease of doing Business
Moderate to difficult
Gross Domestic Product
$2.354 trillion (2024 estimate)
Average Education Level
41% (2019) achieved tertiary education.
Why choose Saudi Arabia
How EOR works in Saudi Arabia
In Saudi Arabia, employment contracts are legally binding agreements that define the terms of employment between an employer and an employee. These contracts cover crucial aspects such as salary, working hours, job responsibilities, and notice periods for termination. Saudi labor laws are highly regulated, and businesses must comply with specific requirements to ensure that both employer and employee rights are protected.
Below are the types of contracts managed in the Kingdom of Saudi Arabia:
Fixed-Term Contracts
Fixed-term contracts are established with a clear duration and typically used for project-based roles or temporary positions. These contracts terminate upon the agreed expiry date. Key considerations include:
Renewal: A fixed-term contract can be renewed upon mutual agreement. However, if the contract is renewed for three consecutive terms or exceeds a combined period of four years, it will automatically convert into an unlimited term contract.
Termination: Typically, these contracts conclude upon the specified end date, but early termination is possible under certain contractual conditions.
Unlimited Term Contracts
Unlimited term contracts are often associated with permanent positions and offer greater job security. However, there are specific regulations:
Saudi Nationals: Unlimited term contracts are generally offered to Saudi nationals.
Foreign Nationals: While foreign employees can enter into unlimited term contracts, these are often treated as fixed-term contracts tied to the duration of the work permit. If the employment extends beyond the validity of the permit and no renewal is arranged, the contract automatically terminates.
The Ministry of Human Resources and Social Development provides a standard model employment contract, which serves as a foundational guideline. Additional clauses can be added, provided they align with the Labor Law and its regulations.
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Why businesses choose us
Discover why we’re the top choice for Employer of Record (EOR). Our comparison table showcases our unmatched support, compliance, and efficiency.
Our Competitors
What you can expect
No need to limit your growth
We can assure a compliant legal entity for your business to grow in the country of your choice.
Decide Between an EOR and Establishing a Legal Entity
When expanding into Saudi Arabia, companies must choose between setting up a legal entity or using an EOR service. Establishing a legal entity involves registration, compliance with local laws, and opening bank accounts, which can be time-consuming. An EOR handles all these processes on your behalf, allowing you to hire employees quickly without setting up a local entity.
Choose the best EOR for your business
Hire and onboard your employees
Run payroll efficiently
Cost of EOR services in Saudi Arabia
Taxes and payroll
Employer taxesÂ
Employers in Saudi Arabia are required to make several mandatory contributions for Saudi employees as part of the overall employment cost.
- 9.00% – Social Insurance Tax for Saudi employees, which includes pension contributions applied to income between 1,500 and 45,000 SAR monthly. Foreign workers are exempt from social insurance contributions.
- 1.00% – Unemployment Insurance Tax (SANED) for Saudi employees, also applied to income between 1,500 and 45,000 SAR monthly. Foreign workers are exempt from unemployment insurance contributions.
- 2.00% – Occupational Hazard Insurance, applicable to both Saudi and foreign workers.
In total, the employment cost for Saudi employees can range from 2% to 12%, depending on various factors such as the specific job role and salary range.
Employee payroll contributions
Saudi employees are subject to specific payroll contributions, primarily related to social insurance and unemployment insurance. These contributions are deducted from the employee’s salary. Below is a breakdown:
- 9.00% – Social Insurance Tax for Saudi employees, which includes pension contributions. This applies to income between 1,500 SAR and 45,000 SAR. Foreign workers are exempt from social insurance contributions.
- 1.00% – Unemployment Insurance Tax (SANED) for Saudi employees, also applied to income between 1,500 SAR and 45,000 SAR. Foreign workers are exempt from unemployment insurance contributions.
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Total Employee Cost for Saudi employees amount to 9.75% of their salary.
- Employee Income Tax – 0.00%
There is no individual income tax regime in Saudi Arabia. Earnings from employment are not subject to income tax.
Ways to perform payroll in Saudi Arabia
No need to limit your growth
We can assure a compliant legal entity for your business to grow in the country of your choice.
Internal Payroll
Outsourced Payroll
Employer of Record (EOR)
Payroll via Professional Employer Organization (PEO)
Salary, compensation & benefits
In Saudi Arabia, understanding salary structures, compensation and benefits is critical for companies looking to attract top talent and maintain a competitive edge. Here is an overview of various compensations and benefits, pension system to help you ensure fair and competitive remuneration for your employees.
This overview provides an understanding of compensation, benefits, and the KSA pension system, essential for attracting and retaining top talent while maintaining a competitive edge:
Compensation and Benefits
Basic Salary + Allowances:
- Salaries are typically structured as a combination of a basic salary and various allowances, including housing, transportation, and, in some cases, education allowances for expatriates with school-going children.
- These allowances often form a significant part of an employee’s total compensation, especially for expatriates.
Health Insurance:
- Employers are required by law to provide health insurance to both Saudi nationals and expatriates.
- Insurance typically covers a range of medical needs, such as doctor visits, emergency care, hospitalization, and sometimes dental care, depending on the policy and employer.
Housing Allowance:
- Many companies offer housing allowances to expatriates, given the high cost of living in cities like Riyadh, Jeddah, and Dammam.
- Housing allowances can range from 15% to 25% of the basic salary, depending on the company’s policies.
Annual Leave:
- Employees are entitled to 21 days of paid leave per year after completing one year of service. After five years of continuous service, this increases to 30 days of paid leave per year.
- Employees are also entitled to paid national holidays, such as Eid and Saudi National Day.
End-of-Service Gratuity:
- Expatriates and Saudi nationals are entitled to an end-of-service gratuity based on their length of service.
- The gratuity is calculated as half a month’s salary for the first five years of service and a full month’s salary for each additional year, provided the employee has completed at least two years with the company.
Airfare Allowances:
- Many companies offer annual or biennial airfare allowances for expatriates and their families to return to their home countries. This is especially common in sectors that attract expatriates, such as oil & gas, healthcare, and construction.
Performance Bonuses:
- Performance-based bonuses are common, particularly in sectors like banking, oil & gas, and finance.
- These bonuses are often linked to individual performance and overall company profitability.
Working Hours and Overtime:
- The standard working week in Saudi Arabia is 48 hours, typically 8 hours per day across six days. However, during Ramadan, the working hours are reduced to 6 hours per day.
- Overtime is compensated at a rate of 1.5 times the regular hourly wage.
Other Benefits:
- Some employers offer additional benefits such as vehicle allowances, mobile phone allowances, or subsidies for utilities.
- Companies may also provide educational allowances for expatriates with children attending international schools.
This structure of compensation and benefits is designed to attract both local and expatriate talent, particularly in key sectors driving the Saudi economy.
Pension System in Saudi Arabia
Saudi National Employees:
- Saudi nationals are covered by the General Organization for Social Insurance (GOSI).
- Both the employer and the employee are required to contribute to the pension fund. The current contribution rates are typically as follows:
- Employee contribution: 9% of the salary.
- Employer contribution: 9% of the salary.
- These contributions go towards the employee’s pension, social security, and other insurance benefits such as disability and unemployment insurance.
- Upon retirement, Saudi nationals receive a pension based on their years of contribution, age at retirement, and final salary.
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Expatriate Employees:
- Expatriates are not covered by the GOSI pension scheme.
- Instead, expatriates receive an end-of-service gratuity as their retirement benefit, which is calculated based on the length of service and final salary. This serves as a lump sum payment when their contract is terminated or when they retire, as outlined in Saudi labor law.
Early Retirement:
- Saudi nationals can opt for early retirement if they have completed a certain number of years of service. GOSI provides a reduced pension in such cases.
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This pension structure is a key part of Saudi Arabia’s social security system, ensuring financial support for Saudi citizens after retirement, while expatriates rely on the end-of-service gratuity for retirement benefits.
Understanding the probation and termination processes in Saudi Arabia involves knowing the key requirements set by local labor regulations. This helps employers and employees stay informed about their rights and duties, promoting a clear and fair working environment.
Period of probation
According to Saudi Labor System, the probation period must be clearly stated in the employment contract and should not exceed 90 days, though it can be extended to 180 days with a written agreement. Holidays like Eid Al-Fitr, Eid Al-Adha, and sick leaves are not counted in this period. Either party may terminate the contract during probation unless an exclusive termination right is specified.
An employee can only be placed on probation once with the same employer, unless it’s for a different role or after a break of at least six months. If the contract is terminated during probation, neither party is entitled to compensation or an end-of-service award.
Terminating and giving notice
In Saudi Arabia, termination and notice periods are regulated by the Saudi Labor Law to ensure fair treatment of both employers and employees. The regulations vary depending on the type of employment contract (fixed-term or unlimited term) and the reason for termination.
Notice Period:
- For unlimited term contracts, either party may terminate the employment with a minimum of 60 days’ written notice if the employee is paid monthly. For other wage structures, a 30-day notice period may apply.
- For fixed-term contracts, termination before the end of the contract period requires mutual agreement or valid reason. If terminated without valid reason, the terminating party may be required to compensate the other party for the remaining term.
Termination Without Notice:
- Both the employer and employee may terminate the contract without notice under specific circumstances, such as serious misconduct by the other party.
- Employers can terminate an employee without notice for reasons including absence from work for more than 30 consecutive days, or 15 consecutive days without a valid reason.
Compensation:
- If either party fails to provide the required notice, the non-compliant party is obligated to compensate the other party with payment equivalent to the notice period’s wage.
Working hours
According to law firm, DLA Piper, the Saudi Labor Law establishes clear guidelines for working hours, with specific exceptions based on the type of industry and employee demographics. The key provisions include:
Standard Working Hours: Employees are generally required to work a maximum of 8 hours per day or 48 hours per week. However, certain sectors, such as trade, hotels, catering, and security, may require employees to work up to 9 hours per day.
Ramadan Working Hours: For Muslim employees during Ramadan, the workday is reduced to a maximum of 6 hours per day or 36 hours per week.
Working Hours for Women: Women are generally prohibited from working at night for more than 11 hours, except in certain industries such as healthcare, air transport, or if they hold senior or leadership positions. Additionally, women are not allowed to undertake dangerous or hazardous work roles.
Overtime:
Overtime work is compensated at a rate of the employee’s hourly wage plus an additional 50%. Employers must ensure that overtime hours comply with the legal limits unless specific agreements or circumstances justify additional hours.
Rest Periods:
Employees must receive at least one break after every 5 consecutive hours of work, as well as a full day of rest each week, typically on Fridays.
By complying with these working hour regulations, employers can ensure a healthy and legally compliant work environment for their employees while respecting sector-specific and gender-specific labor laws.
Leave and holidays
Annual leave: Every employee working under an indefinite or fixed-term contract is entitled to paid annual leave. This leave is calculated based on the length of service the employee has with the organization. According to the law, every worker in Saudi Arabia is entitled to a minimum of 21 days of paid leave per year of service. This number then increases to 30 after five years of continuous service.
Sick leave: When an employee needs to request sick leave, they are entitled to a full wage for the first 30 days of leave. After that, the employee will receive ¾ of the full salary up to day 90. After day 90, the employee is not entitled to pay.
Holidays: Saudi Arabia observes several holidays and national days. Employees working on these days are entitled to overtime pay. These days include:
- Saudi National Day (September 23rd)
- Founding Day (February 22nd)
- Eid Al-Fitr, in April which lasts for four days
- Eid Al-Adha, in June which lasts for four days
- Islamic New Year (July 7th)
- Other types of leave include:
Maternity leave: for a period of 10 weeks. In the employee has served for less than 3 years, they are entitled to half the salary. After 3 years, they are entitled to full salary.
Death of spouse or children: 5 days of leave. Should the employee be a female and her husband dies, she is entitled to 15-130 days of leave, depending on religion.
Hajj leave: the employee is entitled to 10-15 days of paid leave should they decide to perform the Hajj pilgrimage.
Employee rights
In Saudi Arabia, employers are responsible for paying for the air fare ticket of incoming employees. This also applies when employment is ended. The employer should then assume the cost of airfare too.
Work Residence Permit (Iqama)
The most common residence permit for foreign employees, the Work Residence Permit (Iqama) is issued to expatriates who are employed by a Saudi company or a registered entity. This permit is tied to the employer and allows the employee to reside and work in the Kingdom. The employer, or the EOR if you are using such services, is responsible for managing the application and compliance processes.
Dependent Iqama
This type of permit is granted to the immediate family members (spouse and children) of expatriates who hold a valid Work Residence Permit. Employers or EOR providers typically assist in the application process to ensure dependents are covered under the employee’s residency.
Premium Residency (Saudi Green Card)
The Premium Residency program offers expatriates the opportunity to live in Saudi Arabia without a local sponsor.
Visitor Visa (Family and Business)
For short-term stays, Saudi Arabia offers visitor visas. These are not typically used for employment but may be relevant for business visitors, consultants, or contractors.
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Other Available Residency Permits
There are additional permits for specific purposes, such as study or specialized visas for investors and entrepreneurs. These, however, are not commonly used for standard employment arrangements facilitated by an EOR.
The benefits of global EOR
WTS Energy stands out for its industry expertise and global reach. Our professionals have extensive experience in the energy sector, making us uniquely equipped to handle the specific challenges of hiring and managing a global workforce. We provide:Â
Compliance with Local Regulations
Stay on the right side of local laws with EOR services that ensure compliance with labor laws, tax codes, and employment regulations, minimizing legal risks in the energy sector.
Cost EfficiencyÂ
Cut costs and hassle with EOR services, which eliminate the need for local entities and free up resources for your core business activities.
Lightning-Fast Market Entry
Beat the competition by rapidly onboarding skilled professionals with EOR services, ensuring you meet project deadlines and secure contracts quickly.
Tap into Global Talent
Hire the best from around the world! EOR services give you access to a global pool of specialized professionals for your complex energy projects.
Focus on What Matters
Let EOR handle the nitty-gritty of employment management, so you can concentrate on strategic planning, project execution, and driving innovation.
Enhanced Flexibility
Adapt to project needs with ease. EOR services offer the flexibility to scale your workforce up or down without the hassle of permanent local hires.
Reduce Your Risks
EOR services help you navigate regulatory changes and geopolitical challenges, ensuring your workforce management is compliant and robust.
Simplify Payroll & Benefits
Streamline payroll and benefits management across multiple jurisdictions with EOR services, boosting operational efficiency and employee satisfaction.
Get Ongoing HR Backup
Beat the competition by rapidly onboarding skilled professionals with EOR services, ensuring you meet project deadlines and secure contracts quickly.
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How to get started, step-by-step
At WTS Energy, we offer comprehensive EOR services in the KSA designed to simplify international hiring and compliance for energy companies. Our tailored solutions ensure that you can efficiently and effectively manage your global workforce, allowing you to focus on your core business activities.
No need to limit your growth
We can assure a compliant legal entity for your business to grow in the country of your choice.
Consultation and Needs Assesments
We begin with a detailed consultation to understand your specific needs in the energy sector, including project scopes and workforce requirements, then assess your staffing and regulatory needs, analyzing necessary skills and certifications.
Custom Solution DevelopmentÂ
We develop a tailored EOR solution, including payroll, tax compliance, and benefits administration.
Implementation
We manage the onboarding process, ensuring all legal and administrative requirements are met for seamless integration.Â
Ongoing Management
Our team provides continuous support, handling payroll, compliance, and HR issues, ensuring smooth operations.
Feedback and ImprovementÂ
We actively seek feedback to refine and enhance our services, ensuring the best possible experience for both employers and employees.Â
EOR to help you grow in Saudi Arabia
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