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Employer of Record (EOR) Saudi Arabia

An Employer of Record (EOR) in Saudi Arabia is a company that takes on the responsibility of being the legal employer for a worker. This includes managing payroll, benefits, and other employment-related tasks on behalf of the worker's actual employer.

employer of record Saudi Arabia

Discover the key considerations and essential details you should be aware of before opting for an Employer of Record (EOR) in the Kingdom of Saudi Arabia (KSA) to help you with your global staffing needs.

Employment Contracts in Saudi Arabia

Regarding contract duration in Saudi Arabia, two distinct employment contract types are in place: fixed-term contracts and unlimited term employment contracts. Fixed-term contracts are exclusively applicable to foreign employees. If an unlimited term employment contract is agreed upon, it will be treated as a fixed-term contract that ends upon the foreign national's work permit expiry. Unlimited term employment contracts are reserved for Saudi nationals exclusively.

Employment contracts in Saudi Arabia must follow a model employment contract provided by the Ministry of Human Resource and Social Development. It includes details including but not limited to the below

  • Name, Nationality and place of residence of the worker
  • Contract Type, Start and end date of employment in case of fixed-term contract
  • Name and Location of the employer
  • Salary
  • Benefits and Allowances
  • Scope of work
  • Job Title
  • And any additional terms of the employment

In fixed-term contracts, both the employer and employee can continue working after the contract duration ends upon mutual agreement. Fixed-term contracts can be renewed only three times in a row. A fixed-term contract will automatically convert to an indefinite contract after four years of employment from the commencement date.

Employment contracts for non-Saudi nationals must be in written form and should be definite contracts with specified end dates. If a contract does not specify the end date, the work permit's expiry date will serve as the contract's end date. The employer is responsible for various costs, including work permit (Iqama) and its renewals, sponsorship transfer, exit visa fees, reentry visa fees, and airfare.

If the employee decides to leave the country for personal reasons and not related to the job, they need to bear the expenses.

Payroll in Saudi Arabia

In Saudi Arabia, payroll can occur on a weekly or monthly basis. For weekly workers, the employer is required to make payments every week, while for those paid monthly, payments must be made at least once a month. Although 13th-month payments are not obligatory, employers have the option to grant performance-based bonuses at their discretion. It's important to note that there is currently no officially defined minimum wage for individuals employed in the private sector in Saudi Arabia. However, the public sector does adhere to a minimum wage of 4,000 Saudi riyals.

Minimum Wages

The minimum wage in Saudi Arabia is 4000 Riyals per month, which is equivalent to 1066.31 USD. USD to SAR conversion rate as of 8th November 2023.

Payroll Cycle

In Saudi Arabia, payroll is typically processed weekly or monthly. Salaries are paid in Saudi local currency, Saudi Riyal (SAR).

Working Hours

The standard working hours in Saudi Arabia is 48 per week and 8 hours per day. During Ramadan, the working hours cannot exceed 36 hours per week for Muslims.

Overtime Pay

Employees are entitled to receive an overtime pay of 1.5 times in Saudi Arabia.

13th Month Salary

It is not legally mandated to pay 13th month salary in Saudi Arabia.

Probation Period and Notice Period

The same employer cannot place an employee on a probation period more than once, with some exceptions. The probation period may be extended upon mutual agreement in writing between the employer and the employee, especially when the new probation relates to a different profession. An extension of the probation period is possible if there is a 6-month gap between the end date of the previous contract and the start date of a new one. Please note that the total duration of the probation period and any extensions should not exceed 180 days.

The notice period in Saudi Arabia is 60 days and it must be given to employees in written format.

Severance Pay

Severance pay in Saudi Arabia increases in relation to the employment duration. Severance pay varies for fixed-term contracts and indefinite contracts.

Employment Duration End-of-Service Award
Up to 5 years Half a month's gross wage
6 years One month's gross wage
7 years One month's gross wage
8 years One month's gross wage
9 years One month's gross wage
10 years or more One month's gross wage per year of service, prorated

Termination Type Compensation
Unlawful termination on definite-term contract Gross wage for remaining contract period or two months' wage, whichever is greater
Unlawful termination on indefinite-term contract 15 days' gross wage for each year of service or two months' gross wage, whichever is greater

Social Security in Saudi Arabia

Social Security Contributions for non-Saudi Employees

Every month, social insurance payments are calculated at 2% for non-Saudi employees (please note that this is not social insurance, but rather occupational hazard). These payments are made by the employer and are determined based on the monthly basic salary along with housing (whether paid or provided in kind), with an upper limit of SAR 45,000.

Social Security Contributions for Saudi Employees

Saudi employees contribute at a rate of 22%, with both the employee and the employer sharing the payment responsibility. Employees contribute 10%, which includes 9% for social insurance and 1% for unemployment insurance (SANED). Meanwhile, employers contribute 12%, which breaks down into 9% for social insurance, 2% for occupational hazard, and 1% for unemployment insurance (SANED).

Type of Employee Contribution Rate Paid by Maximum Monthly Basic Salary
Non-Saudi Employee 2% (Occupational Hazard) Employer SAR 45,000
Saudi Employee Social Insurance - 9%
Occupational Hazard - 2%
SANED - 1%
Total - 22%
Employee (10%)
Employer (12%)
SAR 45,000

Employee Benefits in Saudi Arabia


Holiday Date
Eid Al Fitr Holiday 23rd May to 27th May (End of Ramadan)
Eid Al Adha Holiday 29th July to 2nd August (Feast of the Sacrifice)
Day of the Unification of the Kingdom 23rd September

PTO (Paid Time Off)

Leave Type Description
Vacation/Annual Paid Leave Employees with one year of service are entitled to 15 days of paid annual leave, increasing to 21 days after 10 years.
Unpaid Leave Employees can take 10 days of unpaid leave by agreement with the employer.
Rollovers and Payout of Unused Hours Employees can defer some annual leave to the next year, but the employer can choose leave dates as needed.
PTO Payout at Termination Employees are entitled to pay for unused annual leave, paid immediately if their service terminates.

Maternity, Paternity, and Sick Leave

Leave Type Description
Maternity Leave Pregnant employees are entitled to 10 weeks of leave, paid at 50% regular pay for 1 year of service or 100% for 3 years. Medical expenses are covered by the employer.
Paternity Leave Employees get one day of full pay for the birth of a child, with documentation required.
Sick Leave Employees have 90 days of sick leave, with full pay for the first 30 days and three-quarters pay for the next 60 days, confirmed with a medical certificate. Applies to employers with 20 or more employees.

Jury Duty, Voting, Bereavement, and Military Leave

Leave Type Description
Jury Duty and Voting Leave Not specified by law.
Bereavement Leave Employees are entitled to one day of leave with full payment due to the death of a close family member.
Military Leave If the employee initiated termination due to military service or force majeure, they are entitled to severance pay based on years of service.

Frequently Asked Questions

What is Saudization?

"Saudization," also known as "Nitaqat," refers to the policy in Saudi Arabia aimed at increasing the employment of Saudi nationals in the private sector. The government implements this policy by imposing certain quotas on the number of Saudi nationals that companies are required to hire. It is a part of the country's efforts to reduce unemployment among its citizens and promote their participation in the workforce.

What is Iqama?

"Iqama" (also spelled "Iqamah" or "Iqamatu l-salat") is an Arabic term that refers to the residence permit issued to expatriates living and working in Saudi Arabia. It is a legal document that allows foreign nationals to stay in the country for a specified period while they are employed or have a valid reason to be in Saudi Arabia. The Iqama also serves as an identification card and is required for various activities, including opening bank accounts, getting healthcare services, and more.

What is SANED?

SANED is the Unemployment Insurance System introduced in Saudi Arabia. It provides financial support to Saudi nationals who are unemployed and seeking new job opportunities. The program is designed to assist unemployed citizens by providing them with financial compensation for a certain period, helping them sustain their livelihood while actively searching for employment. SANED aims to reduce the financial impact of unemployment on Saudi nationals and encourage their participation in the workforce.

What is GOSI?

GOSI stands for the General Organization for Social Insurance. It is a government agency in Saudi Arabia responsible for managing social insurance programs for workers and their families. GOSI's main focus is to provide social protection to employees in the private sector by offering various benefits, including retirement pensions, disability benefits, and more. Employers and employees contribute to the GOSI fund, which is then used to provide these social insurance benefits to eligible individuals.

Saudi Arabia Overview

CountrySaudi Arabia
Time zoneUTC+03:00 (Arabia Standard Time)
Total Time zones1
Working hours per week40 (30 during Ramadan)
Working weekSunday–Thursday
Typical hours worked8 (6 during Ramadan for Muslim employees)[30]
Personal Tax filing deadline120 days after the taxpayer's year-end.
Financial Year1st January to 31st December


In conclusion, the concept of the Employer of Record (EOR) in Saudi Arabia provides a valuable solution for businesses looking to expand or establish their presence in the Kingdom. Saudi Arabia is a country with a unique business environment and legal requirements, making the process of hiring and managing employees complex. The EOR service simplifies this process by allowing businesses to focus on their core operations while the EOR entity takes care of legal compliance, payroll, and other HR-related tasks. It offers a practical way to navigate Saudi Arabia's labor laws and cultural nuances, ensuring a smoother entry into the Saudi market. As businesses look for flexible and efficient ways to engage with the Saudi workforce, the EOR model stands as a strategic partner in achieving compliance and growth.