G-P’s Employer of Record (EOR) model allows your company to start hiring talent in minutes via our global entity infrastructure. Unlike a Professional Employer Organization (PEO), G-P allows your company to expand your global footprint without the hassle of entity setup and management.
Our global employment products, including G-P EOR Prime™ and G-P EOR Core™, are backed by the largest team of HR and legal experts in the industry. We handle the growing complexities of compliant global expansion — so you can focus on opportunities ahead.
As a global EOR expert, we manage payroll, employment contract best practices, statutory and market norm benefits, employee expenses, as well as severance and termination. You’ll have peace of mind knowing you have a team of dedicated employment experts assisting with every hire. G-P allows you to harness the talent of the brightest people in 180+ countries around the world, quickly and easily.
Hiring in Saudi Arabia
Saudi Arabia, officially the Kingdom of Saudi Arabia, has recently strengthened its policy of “Saudization.” Saudization is the national policy of Saudi Arabia to encourage the employment of locals in the private sector, which is in practice largely dominated by expatriate employees. Due to the policies promoting Saudization, it has become increasingly difficult to sponsor new work permits for employees coming in from outside the country to work in Saudi Arabia for the first time. Sponsoring iqamas and visas for expatriates in Saudi Arabia can be achieved, but only at a premium cost.
Note also that all new jobs have to be advertised to locals before they can be offered to expats. As such, it is always better to recruit employees residing in Saudi Arabia who already hold an iqama.
Saudi Arabia is home to many expatriates, who must have a work and residency permit to work in Saudi Arabia. An exit-entry visa to leave and re-enter the Kingdom will also likely be required.
When an employee needs a visa for an extended duration, an alternative could be to issue a Multiple Entry “Invitation Work Visit Visa.” This visa allows an individual to work in the Kingdom for the validity of the visa and continually renew and re-issue the visa in their country of residence when the visa expires. The cost-effectiveness and duration of this visa issued depend on the individual’s nationality. Family visas cannot be issued under this visa.
Compensation in Saudi Arabia must be broken down into base salary plus allowances for housing and transportation. When negotiating the terms of an employment contract and offer letter with an employee in Saudi Arabia, it may be useful to keep the following in mind.
Employment contracts in Saudi Arabia
Best practice is to put a strong, written employment contract in place in Saudi Arabia that spells out the terms of the employee’s compensation, benefits, and termination requirements. An offer letter and employment contract in Saudi Arabia should always state the salary and any compensation amounts in Saudi riyals (SAR) rather than another currency.
Nationals who complete 3 consecutive fixed-term contracts or work continuously for 4 years — whichever is less — will automatically have their contracts converted to unlimited contracts.
Working hours in Saudi Arabia
Employees in Saudi Arabia generally work a 40-48 hour week: 8 hours a day, 5-6 days a week. During Ramadan, the workday is reduced to 6 hours. This is typically applied to all employees, but employers are only required to provide it to Muslim employees. If employees work more than 40 hours a week, they are entitled to overtime, which is time and a half. There is no cap on overtime.
The weekend in Saudi Arabia is Friday and Saturday.
Holidays in Saudi Arabia
Saudi Arabia celebrates 2 major religious festivals during the Islamic year — Eid Al-Fitr and Eid Al-Adha.
The amount of public holidays granted each year is variable and announced by the government.
- Eid Al-Fitr, which lasts for 3 days, is customarily celebrated for 10 days at the end of the month of Ramadan.
- Eid Al-Adha lasts for 4 days and is also recognized as a 10-day holiday usually extending from the 5th to the 15th day of the month of Thul-Hijja.
- Unification of the Kingdom Day always falls on September 23.
Vacation days in Saudi Arabia
The statutory minimum vacation leave is 21 days. From the 6th year of employment onward, the statutory minimum is 30 days. It is customary for most employers to provide 30 days of vacation from the 1st year, with senior management typically receiving 40 or more vacation days. It is permissible to allow carryover of unused time to the next year. It is also permissible to cap carryover.
Employers typically pay for airplane tickets for expatriate employees to go home to visit family on their annual leave.
Muslim employees are generally entitled to Hajj leave after 2 years of continuous employment. The leave may be up to 10 days and can only be taken once in 5 years with the same employer.
Saudi Arabia sick leave
Employees are generally allowed up to 4 months of sick leave if they provide a medical certificate. Sick leave is paid as follows:
- First 30 days: 100%
- 31 to 90 days: 75%
- 91 to 120 days: unpaid
Maternity and paternity leave in Saudi Arabia
Pregnant employees are generally entitled to 10 weeks of paid maternity leave. They may take up to 4 weeks before the birth and must take at least 6 weeks after. During this leave, employees are entitled to half pay if they have been employed for at least 1 year, and full pay if they have been employed for at least 3 years from the commencement date of the leave. However, if an employee takes their annual vacation during the same year as maternity leave, they are only entitled during that vacation to half pay or to no pay, depending on whether they received half pay or full pay during their maternity leave. Medical expenses related to pregnancy and delivery must be paid by the employer.
Partners are eligible for 3 days of paid parental leave.
Health insurance in Saudi Arabia
While medical and hospital care is provided for free through the national system for citizens, employers must provide private health insurance to all employees and their dependents, whether they are expats or locals.
Saudi Arabia supplementary benefits
Some common supplementary benefits include the following:
- Health insurance
- Travel tickets home for vacation
- Education expenses
- Retirement plans
- Mobile phones
- Housing allowances
- Transportation allowances
Generally, it’s recommend that companies budget 25% for benefits on top of the gross salary, including housing allowances or other allowances, to allocate the total employer’s expense, including benefits in Saudi Arabia.
Termination and severance in Saudi Arabia
Probation periods of up to 90 days are allowed in Saudi Arabia. If both the employer and the employee agree, the period can be extended an additional 90 days. Probationary periods are not a statutory requirement.
Employees with unlimited contracts are entitled to receive 60 days’ notice of termination. Employees with other contracts are entitled to 30 days’ notice. If proper notice is not given, the parties can agree to compensation instead. During the notice period, employees may use 8 hours of work time per week to find alternate employment. There is no notice period for definite contracts, as it is rare to have a valid reason for ending a definite contract early.
When an employment contract ends, an employee is entitled to an “end-of-service award” equal to one-half of one month’s wages for each of the first 5 years of employment and a full month’s wages for each year of employment thereafter, pro-rated for any partial year’s service.
Paying taxes in Saudi Arabia
Employers must pay Saudi Arabia’s social insurance tax (GOSI) on behalf of their employees. The contributions are levied on basic salary, including housing allowances. This can be estimated at 10% of the employer’s expense.
Employers must pay contributions for occupational hazards insurance at a rate of 2% for both local and international employees.
Why G-P?
At G-P, we help companies unlock the power of the everywhere workforce through our industry-leading Global Growth Platform™. Let us handle the complex and costly tasks involved in finding, hiring, onboarding, and paying your team members, anywhere in the world, with the speed and guaranteed global compliance your business needs.
Contact us today to learn more.