As the Middle East's largest economy with a GDP of over USD 1.2T, Saudi Arabia is a key destination for global companies looking to set up a regional presence. Aside from oil and gas, the country is undergoing a transformation under Vision 2030 to diversify into digital technology, financial services, and advanced manufacturing. The government is focused on developing a skilled talent pool in these new technology and service-based industries to drive long-term sustainable growth.
Before expanding into Saudi Arabia, you’ll need to understand contracts, taxes, wages, benefits, and other employment laws. Our guide will tell you everything you need to know about hiring in Saudi Arabia.
What to know before hiring in Saudi Arabia
If you’re looking to hire employees in Saudi Arabia for the first time, there are legal requirements to be aware of. These norms and laws influence hiring practices in Saudi Arabia and many aspects of the employer-employee relationship, including compensation and benefits.
G-P Gia™, our AI-powered global HR agent, can answer your toughest compliance questions across 50 countries — including Saudi Arabia — and all 50 U.S. states. Reduce your reliance on outside counsel and cut the time and cost of compliance by up to 95% with Gia.
Here are five things to know about hiring in Saudi Arabia.
1. Contract employment in Saudi Arabia
Saudi law requires all employment contracts to be:
-
In writing
-
Registered on the Qiwa platform
-
Drafted in Arabic. For bilingual contracts, the Arabic version prevails in disputes.
The country recognizes fixed-term and indefinite contracts. Contracts have to specify terms such as:
-
Position
-
Compensation
-
Benefits
-
Termination requirements
The probation period can be up to 180 days, provided both parties agree in writing. Holidays and sick leave don’t count toward this limit. For indefinite contracts, the notice period is 60 days for monthly-paid employees and 30 days for others.
End-of-service benefits are half a month's wage per year for the first five years and one month's wage for every year after that. Resignation entitlements are prorated based on length of service.
2. Payroll and taxes in Saudi Arabia
Employers have to contribute to the general organization for social insurance (GOSI) for Saudi employees. The total employer contribution is 11.75% of the employee’s contributory wage. This is broken down as:
-
9% for pension
-
0.75% for unemployment insurance
-
2% for occupational hazards
The contributory wage is defined as the basic salary plus housing allowance, not including all allowances and commissions.
3. Wages and working hours in Saudi Arabia
The workweek is up to 48 hours (eight hours per day, six days per week). For Muslim employees during Ramadan, it’s reduced to six hours per day and 36 hours per week.
Overtime is paid at 150% of the regular wage for hours worked beyond the daily or weekly limits. This includes on Fridays or holidays. Overtime is triggered after 48 hours per week unless a lower threshold is specified in the employment contract.
Compensation for employees has to include a base salary and allowances for housing and transportation.
To be fully counted for Saudization quotas, Saudi employees have to get SAR 4,000 per month. Those getting between SAR 3,000–4,000 count as half a Saudi national for quota purposes.
4. Time off in Saudi Arabia
Employees get a minimum of 21 days of paid annual leave. This increases to 30 days after five years of continuous service. Many employers offer 30 days from the start.
Muslim employees that have completed two years of service with the same employer get Hajj leave of 10 to 15 days (including Eid al-Adha). This leave can only be taken once during employment with the same employer.
Employees get up to 120 days of sick leave per year. The first 30 days are at full pay. The next 60 days are at 75% pay. The final 30 days are unpaid.
Expecting employees get 12 weeks of fully paid maternity leave, regardless of length of service. Fathers get three days of paid paternity leave.
Employees get paid leave for official holidays. These include:
-
Eid al-Fitr (four days)
-
Eid al-Adha (four days)
-
Saudi National Day (September 23)
-
Founding Day (February 22)
The number of days off for Eid can be extended by government announcement, but the law guarantees these minimums.
5. Anti-discrimination law in Saudi Arabia
Saudi Labor Law prohibits workplace and hiring discrimination based on:
-
Age
-
Sex (gender)
-
Disability
-
Race
-
Color
-
Social status
Recent legal reforms have strengthened protections for women and persons with disabilities. The country has made progress in increasing women’s workforce participation. This is supported by both legislative changes (such as the right to drive and travel independently) and government programs aimed at promoting workplace inclusion.
Top hiring hubs in Saudi Arabia
Some cities in Saudi Arabia are known for particular industries. Knowing what each region has to offer allows you to focus your hiring efforts in the right place and fill roles faster.
The top talent hubs in Saudi Arabia are:
-
Riyadh is the capital and largest city in Saudi Arabia. Riyadh is the center for the country's banking, insurance, and investment sectors. The city hosts the Tadawul All Share Index (TASI) and the headquarters of the country’s main financial institutions.
-
Jeddah is a commercial and logistics center. The Jeddah Islamic Port is the busiest container port in the country. The port drives demand for professionals in shipping, supply chain management, warehousing, and customs clearance.
-
Dammam, Khobar, and Dhahran is a tri-city area in the heart of Saudi Arabia’s oil and gas industry. It has many multinational energy companies and a growing presence in manufacturing, logistics, and technology. Dhahran has one of the highest GDP per capita figures in the Middle East. This reflects the concentration of high-level management and engineering roles within the oil and gas sector.
Key industries in Saudi Arabia
Understanding Saudi Arabia’s top industries allows you to benchmark salaries and benefits. You can use this insight to make smart choices about where to invest and grow your talent pool.
The top industries in Saudi Arabia include:
-
Oil and gas: This is the largest sector and the foundation of the economy. Oil and gas generate the majority of government revenue and export earnings.
-
Petrochemicals and refining: Closely related to the oil sector, Saudi Arabia is a global leader in the production and export of petrochemicals, plastics, and fertilizers, primarily through companies like SABIC.
-
Construction and real estate: This sector is driven by unprecedented spending on giga-projects such as NEOM, the Red Sea project, and Qiddiya.
-
Renewable energy: There is a long-term commitment in Saudi Arabia to transition a large portion of the country's power generation to solar and wind energy by 2030.
-
Logistics and transportation: The country is focused on using their strategic geographical location to become a major regional logistics hub through investments in ports, airports, and railway networks.
The cost of hiring an employee in Saudi Arabia
Whether you’re hiring one employee or an entire team in Saudi Arabia, expenses are inevitable. Budget for the following:
-
Setting up an entity (unless you partner with an employer of record)
-
Advertising job positions
-
Paying referral bonuses to employees with connections in Saudi Arabia
-
Paying an in-house hiring committee
-
Traveling to and from Saudi Arabia, including hotel stays, meals, and transportation
-
Partnering with a translator to draft documents or facilitate conversations (if applicable)
-
Using a background check service for screening candidates
-
Drafting employment contracts, legal review, and consultation with HR and legal experts
-
Costs for providing computers, phones, and software licenses
-
Onboarding materials and initial training
-
Costs for maintaining required tax and payroll records and documentation
According to G-P Verified Sources from Gia, the employer burden rate in Saudi Arabia, which includes costs triggered on top of salaries, is about 13–18%, excluding accident insurance that can vary.
What does a company need to hire employees in Saudi Arabia?
Make sure you cover these essentials before expanding your team in Saudi Arabia:
-
Set up a legal entity in Saudi Arabia.
-
Global companies have to get a foreign investment license from the ministry of investment (formerly SAGIA).
-
Register your business with the ministry of commerce to get a commercial registration certificate.
-
Register with the Zakat, tax and customs authority to get a tax identification number for corporate tax and VAT purposes.
-
Open a local bank account.
-
Enroll with the GOSI to manage mandatory social insurance contributions for Saudi and expatriate employees.
-
Set up an account on the Qiwa platform to manage employment contracts, Saudization compliance, and labor relations.
-
Make sure payroll is processed through the government-mandated WPS to comply with wage payment regulations.
-
Meet minimum quotas for hiring Saudi nationals, which vary by sector and company size.
Setting up a subsidiary in Saudi Arabia can take weeks or months. Use G-P EOR to hire full-time employees in Saudi Arabia without setting up your own entity. Build your team at a lower cost and with peace of mind that you’re doing so compliantly.
The steps to hiring employees in Saudi Arabia
The hiring process in Saudi Arabia is similar to the one you’re likely familiar with in your own country. The hiring process follows five basic steps: advertising the job, evaluating applications, interviewing candidates, sending job offers, and onboarding new employees.
1. Advertising job vacancies in Saudi Arabia
Clearly outline the job description, qualifications, and Saudization requirements for the position. Post the vacancy on approved job boards, recruitment platforms, or through recruitment agencies. Job advertisements have to comply with Saudi labor law, including using approved job titles and avoiding discriminatory language.
Bayt, GulfTalent, and Mihnati are popular job sites in Saudi Arabia.
2. Evaluating job applications in Saudi Arabia
Review applications and shortlist candidates. Consider both nationals and global candidates, keeping in mind Saudization quotas.
3. Interviewing candidates in Saudi Arabia
Conduct background checks as appropriate for the role. This isn’t mandatory for all positions but is common for sensitive roles.
4. Making job offers in Saudi Arabia
Issue a formal offer letter and prepare a compliant employment contract in Arabic (and optionally in English). All contracts have to be registered and approved on the Qiwa platform.
5. Onboarding new employees in Saudi Arabia
Now you can onboard new employees. Enroll your new employee with the GOSI for social security coverage. Give mandatory health insurance for your employee (and their eligible dependents) through a licensed provider. Set up payroll through the WPS.
If you’re working with an EOR like G-P, you won’t have to worry about the administrative burden of onboarding. We’ll streamline the process, so you can focus on training your new hire and integrating them into your company culture.
Hiring contractors in Saudi Arabia
Working with independent contractors in Saudi Arabia can be a cost-effective way to test the market and build a presence without the commitment of full-time employees. Contractors based in Saudi Arabia understand local consumer behavior, rules, and business practices. They’ll be ready to start working quickly with their own equipment and established work processes.
Hiring contractors allows you to easily adjust your talent pool based on your business needs, without the complexities and costs of employment.
Before you enter an agreement with an independent contractor in Saudi Arabia, consider the following:
1. Employees vs. independent contractors in Saudi Arabia
It’s important to understand the difference between employees and independent contractors. The legal distinction between employees and contractors under Saudi law is whether the worker performs services under the employer’s management or supervision for a wage. If so, the individual is an employee, regardless of the contract’s title.
While there’s no official list of criteria for classification, control over work, provision of equipment, financial risk, and integration into the business are considered. The actual working relationship, not just the contract wording, determines status.
2. Penalties for misclassification in Saudi Arabia
Classifying someone as a contractor when they’re not can lead to severe penalties. If misclassification occurs, you’ll have to:
-
Pay financial penalties ranging from SAR 1,000 to SAR 3,000 per violation.
-
Face suspension of government services, such as the issuance or renewal of work permits and business licenses.
-
Pay any back wages, social insurance contributions, and benefits owed retroactively.
3. How to pay contractors in Saudi Arabia
G-P Contractor™ takes away the messy, time-consuming process of hiring and paying international contractors. You can create and issue contracts and pay contractors with just a few clicks, all while ensuring a compliant process.
Hire employees and contractors in Saudi Arabia with G-P
Our SaaS and AI-powered products – EOR, Contractor, and Gia – support companies as they build and manage global teams.
G-P is the recognized leader in global employment with more than a decade of experience, the largest team of HR, legal, and compliance experts, and a global proprietary knowledge base.
Make your expansion to Saudi Arabia easier with G-P. Contact us or book a demo today.
