Employer of Record in Saudi Arabia

Hiring in Saudi Arabia for the first time can be complex, especially when navigating local employment laws and cultural expectations. Whether you hire independent contractors, set up a legal entity, or use an EOR service, understanding the local employment landscape is crucial for success. CableMasters's comprehensive guide can help you get started if you're hiring locally or relocating a team member.

Companies can hire employees in Saudi Arabia in the following ways:

• Setting up a local entity. Entity establishment allows direct hiring but can be costly and time-consuming, making it less practical for companies seeking quick and flexible solutions for hiring in Saudi Arabia.
• Partnering with an Employer Of Record. An EOR, like CableMasters, is a third-party entity that serves as the legal employer of your international workforce, handling hiring, payroll, and compliance with Saudi labor laws and tax regulations.
• Hiring independent contractors. Hiring contractors gives companies a flexible, affordable alternative to hiring local employees, though it involves unique misclassification risks.

Using an Employer of Record in Saudi Arabia

An Employer of Record (EOR) acts as the legal employer for workers in Saudi Arabia, taking on key responsibilities to ensure compliance with local labor laws and regulations. The EOR facilitates the hiring process for businesses that want to employ workers without establishing a legal entity in the country.

The employer of record in Saudi Arabia is responsible for:

• Employment Compliance: Ensure all employment contracts comply with Saudi labor laws and regulations, including proper classification of employees.
• Payroll Management: Calculate, process, and distribute employee salaries in accordance with Saudi payroll laws, including deductions for taxes and social insurance contributions.
• Tax Filing and Contributions: Handle the registration, filing, and payment of employer taxes and social insurance contributions to the relevant authorities.
• Employment Contracts: Draft and maintain compliant employment agreements, detailing salary, benefits, working hours, and termination terms in line with Saudi legal requirements.
• Benefits Administration: Provide mandatory employee benefits as required by Saudi labor laws, such as health insurance, pension contributions, and statutory leave.

Businesses must comply with Saudi labor laws, including drafting compliant employment contracts and meeting payroll and social insurance obligations. Learn more about the employment laws and regulations in Saudi Arabia below to avoid any compliance issues.

Employment Contract Requirements

Employers in Saudi Arabia must provide new employees with a written employment contract in Arabic, outlining essential terms such as:

• Identification of both parties
• Workplace location
• Job description and title
• Start date
• Duration of contract (fixed or indefinite)
• Salary, benefits, and payment frequency
• Working hours
• Leave entitlements
• Notice periods
• Applicable labor regulations

Onboarding Process

Onboarding in Saudi Arabia typically involves registration with the General Organization for Social Insurance (GOSI), medical insurance enrollment, and, for foreign employees, obtaining the appropriate work visa and residency permit (Iqama).

Working Hours in Saudi Arabia

The standard workweek is 8 hours per day, 48 hours per week. During Ramadan, Muslim employees work 6 hours per day, 36 hours per week. Employees are entitled to a 30-minute break after 5 hours of continuous work.

Overtime in Saudi Arabia

Overtime is paid at 150% of the regular wage, including work on rest days and public holidays.

Probation Period in Saudi Arabia

Probation periods in Saudi Arabia can last up to 90 days, extendable to 180 days by mutual agreement. During this period, either party may terminate the contract with minimal notice.

The minimum wage of SAR 4,000 per month applies only to Saudi nationals working in the private sector (raised from SAR 3,000 in 2021). There is no statutory minimum wage for expatriates; their pay is determined by contract.

Expanding your team in Saudi Arabia is exciting but comes with regulatory and cultural challenges. An Employer of Record (EOR) removes much of the risk by acting as the legal employer on your behalf, taking responsibility for compliance, contracts, payroll, and employee benefits.

This allows you to scale at your own pace, whether hiring one employee or building a larger team, without the burden of setting up and managing a local entity. You remain in control of day-to-day responsibilities and performance, while the EOR ensures every hire is legally protected and properly supported.

Why work with an Employer of Record Solution?

• Expertise in Saudi labor law and compliance, including Saudization requirements.
• Coverage for employment across 180+ countries.
• Employee portal and dedicated support.
• Reliable, cost-effective services with no annual commitments.

Payroll Frequency: Salaries must be paid at least once per month in Saudi Riyal (SAR), through the Wage Protection System (WPS). Payslips should itemize salary, benefits, and social insurance deductions.

GOSI Contributions: For Saudi nationals, total GOSI contributions are 21.5% (9.75% employee + 11.75% employer), covering pensions, unemployment, and occupational hazards. For expatriates, the employer contributes 2% (occupational hazard only); expats have no pension or unemployment contributions. Update as of July 2025: For new hires (from July 3, 2024), pension contributions will increase by 0.5% annually for both employer and employee, reaching 11% by July 2028.

Foreign employees require a work visa and residency permit (Iqama) to work in Saudi Arabia. The process involves sponsorship by a local employer, submission of required documents, and approval from the Ministry of Labor and Social Development.

Mandatory Leave Entitlement in Saudi Arabia

Employees are entitled to a minimum of 21 days of paid annual leave, increasing to 30 days after five years of service.

Public Holidays In Saudi Arabia

Saudi Arabia observes several public holidays, including:

Paid Time Off in Saudi Arabia

Employees are entitled to paid leave for annual vacation, public holidays, and special occasions as per Saudi labor law.

Maternity Leave In Saudi Arabia

Female employees are entitled to 10 weeks of paid maternity leave, with at least 4 weeks taken after childbirth.

Paternity Leave In Saudi Arabia

Fathers are entitled to 3 days of paid paternity leave upon the birth of a child.

Sick Leave In Saudi Arabia

Employees are entitled to up to 120 days of sick leave per year, with varying pay rates depending on the duration of absence.

Parental Leave In Saudi Arabia

There is no statutory parental leave, but employers may offer additional leave at their discretion.

Employers must provide statutory benefits, including social insurance, health insurance, and paid leave. Additional benefits such as housing allowance, transportation, and bonuses are common but not mandatory.

A well-managed benefits program helps attract and retain talent, ensures compliance, and builds trust with employees.

Termination Process in Saudi Arabia

Termination must comply with Saudi labor law, including notice requirements and valid grounds for dismissal. Unlawful termination can result in penalties and compensation.

Notice Period in Saudi Arabia

The standard notice period is 30 days for indefinite contracts, or as specified in the employment contract.

Severance in Saudi Arabia

Employees are generally entitled to an end-of-service benefit, calculated based on length of service and final salary, as per Saudi labor law.