Employer of Record in Saudi Arabia

How Employer of Record services work in Saudi Arabia

Saudi Arabia is creating new opportunities for international businesses by transforming its economic and labor markets. However, setting up a local entity to hire employees still presents some challenges, and without an entity, it is difficult to leverage the economic opportunities provided by Saudi Arabia’s strategic position in the Gulf.

One practical option is to partner with an Employer of Record (EOR) like Rivermate. We become the legal employer and handle employment compliance, while you retain control over daily tasks and manage the employee’s performance.

In summary: Rivermate facilitates your ability to hire compliantly in Saudi Arabia without the administrative burden of establishing your own legal entity.

Saudi Arabian labor market: A snapshot

The hiring market
Major hiring hubs:	Riyadh, Jeddah and the Dammam metropolitan area
Average onboarding timelines:	Local: 3-5 days Foreign nationals: 2-4 weeks
High-growth sectors:	Construction, IT, renewable energy, oil and gas and real estate
Sectors with skills shortages:	Mega-project engineering, technology, AI, data analytics

The salary market
Employer tax contributions:	Mandated by the Social Insurance Law. GOSI contributions split over three branches: Annuities Occupational hazards Unemployment insurance (SANED) Two systems currently apply to Saudi nationals and affect the contribution amount. The old system applies to nationals registered before 3 July 2024, and the new system applies to nationals registered on or after 3 July 2024. Foreign nationals: 2% for occupational hazards
Monthly minimum wage:	SAR4,000 for Saudi nationals who are part of the Nitaqat scheme. Saudis paid less than this amount do not count as a full headcount in the Saudization ratio.
Average annual salary:	SAR126,000 (Saudi private-sector workers)
Income tax rates:	No personal income tax

Calculate hiring costs in Saudi Arabia

Saudi Arabia has a unique pay structure. Locals and foreign nationals are remunerated differently, and pay is heavily influenced by Saudization rules (Nitaqat). In Saudi Arabia, the General Organization for Social Insurance (GOSI) manages contributions mandated by the Social Insurance Law.

Indicative salary ranges for in-demand sectors

Salaries in Saudi Arabia vary widely by industry, occupation, experience level and whether an employee is a Saudi national or a foreign national. These indicative ranges come from various salary surveys and provide practical insight into salaries in Saudi Arabia.

Job	Monthly salary range SAR (closest available benchmarks)
	Min. 1 year experience	10 years+ experience
Technology	15,000 - 30,000	35,000 - 60,000
Engineering	7,000 - 15,000	29,000 - 60,000
Finance	6,000 - 10,000	24,000 - 35,000
Sales	15,000 - 25,000	35,000 - 45,000+
Marketing	10,000 - 18,000	30,000 - 45,000+

In Saudi Arabia, employers must pay salaries in SAR directly to an employee’s bank account. A digital monitoring system is used to track private-sector wage payments, called the Wage Protection System (WPS). The Ministry of Human Resources and Social Development runs this system and ensures employees are paid their correct wages on time.

Employer contributions

Payroll compliance obligations in Saudi Arabia are split into social security and pension contributions for Saudi nationals. For foreign nationals, a flat rate of 2% goes to OHI. For employees registered before 3 July 2024, the contributions are:

Contribution	Rate for Saudi nationals	Rate for foreign nationals
Pension contribution	9%	0%
Occupational Hazard Insurance (OHI)	2%	2%
Unemployment Insurance (SANED)	0.75%	0%

For employees registered on or after 3 July 2024, the 2026 employer contributions are:

• Saudi nationals: 12.75% (consisting of 10% pension contribution plus 2% OHI and SANED of 0.75%)
• Foreign nationals: 2% OHI

The new pension contribution for Saudi nationals is being phased in from 18% to 22% in total, with both the employer and employee paying 50%. The phased implementation timeline is:

Date	Employer contribution
1 July 2026 (current)	10%
1 July 2027	10.5%
1 July 2028	11%

Employee mandatory benefits

Under the Saudi Labor Law, employees are entitled to certain rights and benefits. This applies to both Saudi nationals and foreign workers.

Statutory benefit	What employers need to know
Working hours	Maximum of 48 hours per week, with no more than 8 hours per day, under Saudi Labour Law (Royal Decree M/51 of 2005, Part VI). This limit is reduced to 6 hours a day during Ramadan for Muslim employees.
Public holiday	4 official public holidays which span several days at a time.
Overtime	Under Article 107 of the Saudi Labor Law, an additional amount equal to the hourly wage plus 50% of the employee’s basic wage must be given for overtime work.
Annual leave	Under Article 109 of the Saudi Labor Law, prepaid annual leave of a minimum of 21 days. After 5 consecutive years - 30 days per annum.
Sick leave	Under Article 117 of the Saudi Labor Law, Sick leave must be proven as eligible to be paid as follows: First 30 days - 100% of wage Next 60 days - 75% of wage Next 30 days - Unpaid This applies whether the leave is continuous or intermittent.
Maternity leave	Under Article 151 of the Saudi Labor Law, Female workers receive 12 weeks to be taken at the employee's discretion. The leave may start 4 weeks before the expected delivery date, but the mother may not work during the 6 weeks immediately following the delivery. If she chooses, she may take an additional two months of unpaid leave.
End-of-service award (severance)	Under Article 84 of the Saudi Labor Law, ‘Upon the end of the employment relation, the employer shall pay the worker an end-of-service award equivalent to the amount of a half-month wage for each of the first five years and a one-month wage for each of the following years’
End-of-service award (resignation)	Under Article 85 of the Saudi Labor Law, The worker is: ‘entitled to one third of the award after service of not less than two consecutive years and not more than five years, to two thirds if his service is in excess of five consecutive years but less than 10 years, and to the full award if his service amounts to 10 years or more.’

Employment cost calculator

What hiring in Saudi Arabia is really like

The Saudi government has clear objectives set out in Vision 2030 to transform the labor market, which until recently was heavily dependent on hiring foreign nationals. Plenty of opportunities remain for skilled foreign professionals, but employers are prioritizing Saudi nationals through initiatives like the Nitaqat Program.

Hiring is guided by Saudization quotas, which are set by industry, company size and economic activity. Foreign employment is closely linked with immigration status, and transfers from one employer to another are strictly regulated.

Market condition	Current reality	Description
Hiring difficulty	🟡 Moderate	How difficult it is to hire both local citizens and foreign nationals. Includes the complexity of the employment regulations.
Talent pool size	🟢 Large	Speaks to the size of the workforce available for hiring, across all industries.
Talent availability	🟡 Moderate	How easy it is for an employer to find a suitable candidate for a position.
Specialist talent	🔴 Competitive	The nature of the recruitment process when hiring skilled professionals.
Salary pressure	🟡 Rising	Indicates how much pressure employers face to offer higher salaries and additional benefits to attract talent.

The effect of Saudization on hiring

Saudization is a policy that requires foreign companies to employ a percentage of Saudi nationals when expanding into the country. This policy, also known as the Nitaqat Program, is run by the Saudization Agency.

Companies are classified by their Saudi employee-to-expat ratio, and incentives are offered to companies that meet their targets. The policy also reserves specific positions for Saudi nationals. Failure to meet Saudization targets can mean restrictions on obtaining Saudi work visas and government work contracts, and can lead to financial penalties.

The MHRSD has implemented a new Nitaqat calculation method, effective 15 April 2026. Quotas will be calculated based on employment contracts electronically entered on the ‘Qiwa’ platform. The Ministry of Human Resources and Social Development affirmed that the new process is essential for accurately calculating Nitaqat numbers and to establish the correct employer classification.

Where hiring expats can be challenging in Saudi Arabia

Several nuances affect not only the initial immigration process but also transfers and Nitaqat quotas when an employee changes jobs.

The difference between a work visa, work permit and residence permit

Many people use these terms interchangeably when discussing the immigration process in Saudi Arabia, but they are three distinct documents an employee needs to enter, work and live in the Kingdom.

• Work visa: Obtained before arrival and gives the employee permission to enter the country.
• Work permit: Gives the employee permission to practice a profession inside Saudi Arabia.
• Residency permit (Iqama): Proof of permission to stay (legal residency) in the Kingdom.

A sponsoring employer must initiate the process for all three documents and pay the work permit fee.

The employer must apply for the Iqama permit within 90 days

An employer must apply for an employee’s residence permit (Iqama) within 90 days of the worker’s arrival in the Kingdom. Before submitting the application through the Qiwa portal, the employee must complete a local medical check and purchase medical insurance. Once these procedures are complete, the employer can request the Iqama.

According to our local expert, Sakshi Jain, ‘The Iqama approval itself takes about 1-2 days through the government's Qiwa portal once everything's submitted, then the employee can start within 3-5 working days total’. However, she also noted that the process can be delayed if the portal is unavailable.

Iqama transfer fees increase when changing sponsors

Under Article 40 of the Saudi Labor Law, the new employer is responsible for fees related to transferring a worker. These fees increase with the number of transfers an employee has had. The fees discourage workers from ‘job-hopping’ and help stabilize the Saudi employment market, but Iqama transfers are faster and cheaper than first-time applications.

• First transfer: SAR 2,000
• Second transfer: SAR 4,000
• Third transfer: SAR6,000
• Fourth and subsequent transfers: SAR6,000

These transfers take 15-30 days, depending on how quickly the documentation is provided.

Nitaqat quotas are affected by transfers

When an expat employee transfers to another company, the transfer is done via the Qiwa system and the previous employer is notified. Once the transfer is completed, the employee is removed from their expat count, allowing the employer to regain this headcount towards their Nitaqat quota.

Key compliance issues to understand when partnering with an EOR provider

Partnering with an EOR provider, like Rivermate, is a good alternative to establishing your own legal entity in Saudi Arabia. The EOR service manages compliance with local labor laws, but foreign companies should understand key issues that guide the EOR's employment decisions.

Employment contracts

Saudi Arabia requires written employment contracts that comply with local regulations. Both the employer and the employee must retain a copy of the contract (Article 51 of the Saudi Labor Law). Contracts must be in Arabic, even if you provide a translation into another language.

For expats, a written, fixed-term contract is required for work permits and visas. The contract is registered on the Qiwa government portal as part of the immigration process.

Probation periods

The initial probation period in Saudi Arabia is 90 days and can be extended to 180 days by written agreement. If employers require a probation period, they must include it in the employment contract. They are recommended for testing the employee’s job fit. However, they are not mandatory and can be excluded.

Terminations

When employees are terminated for economic or operational reasons (i.e., they bear no fault), they are entitled to severance pay called the end-of-service award (EOSA). The EOSA cost is accrued monthly while the employment relationship lasts, preventing a surprise payout by the EOR provider.

Benefits of using an EOR provider in Saudi Arabia

Saudi Arabia can feel unfamiliar and difficult to navigate, especially for employers without previous experience hiring in the Middle East. Despite labor and immigration reforms, the country still has restrictions on how business is done, and legal compliance can feel burdensome. For companies without an established presence in the country, it may be impractical to handle these issues while testing the Saudi market.

When considering the high cost of managing the Saudi Arabia payroll process, workforce quotas, immigration and other compliance issues, an EOR provider emerges as not only a viable option for hiring in Saudi Arabia, but also a partner in managing the employment relationship.

Ready to hire in Saudi Arabia?

Rivermate handles the complexities so you can hire with confidence.

Talk to a Saudi Arabian Hiring Expert

Sources:
Average Salary in Saudi Arabia
Human Resources and Social Development Media Release April 2025
https://www.hrsd.gov.sa/fil/node/5580136?
Bureau of Experts at the Council of Ministers Official Translation Department Social Insurance Law
What are the fees and costs borne by the employer? | Ministry of Human Resources and Social Development