Hire in Saudi Arabia
Here’s where you get started with human resources best practices and hiring in Saudi Arabia.
Currency of Saudi Arabia
Saudi Riyal (SAR)
The Capital of Saudi Arabia
Time Zone in Saudi Arabia
Important Facts About the Country of Saudi Arabia
Introduction to Saudi Arabia
Saudi Arabia, officially known as the Kingdom of Saudi Arabia, is a country that covers most of the Arabian Peninsula. Until 1992, the country was ruled as an absolute monarchy by the House of Said, the Saudi royal family, which then introduced the country’s first constitution. The legal system in Saudi Arabia is based on Sharia, which is Islamic law.
Saudi Arabia is one of the founding members of OPEC and holds a permanent membership in the G20. It is also the world’s largest exporter of oil and the second largest producer, following Brazilian-Venezuelan output.
What to Know about Saudi Arabia's Geography
Saudi Arabia is bordered by the Red Sea and the Gulf of Aqaba to the west, and by Jordan, Iraq and Kuwait to the north. To the east, it is surrounded by the Persian Gulf, Qatar, the United Arab Emirates, and Oman. To the south and southwest, it shares a border with Yemen. Bahrain, a small island nation, is located to the east of Saudi Arabia. Saudi Arabia spans an area of about 2,150,000 square kilometers, placing it among the world’s largest countries.
Climate in Saudi Arabia
The climate of Saudi Arabia is predominantly desert, with the exception of the southwestern part of the country which has a semi-arid climate. In the central region, summers are extremely hot and dry, with temperatures ranging from 27°C to 43°C (81°F to 109°F) in the inland areas and 27°C to 38°C (81°F to 100°F) in coastal areas.
Winters, which occur from December to February, are cooler with average temperatures ranging from 14°C to 17°C (57°F to 63°F). Overall, the climate of Saudi Arabia is characterized by its aridity and high temperatures, with minimal rainfall throughout the year.
The Culture of Saudi Arabia
Saudi Arabia’s culture has been influenced by its Islamic heritage and its history as an ancient trade center. As a result, the country’s culture is traditional and conservative, with Islam and Arab customs playing a central role in people’s social, familial, political and legal lives.
The principles of Islam, including its values, beliefs, and practices, are deeply ingrained in Saudi culture. These are reflected in various aspects of daily life, such as dress, food, language,and social interactions. Additionally, the country’s legal system is based on Islamic law, or Sharia, which guides the conduct of individuals and the state alike.
Religions Observed in Saudi Arabia
Saudi Arabia’s state religion is Islam and the majority of the population are Sunni Muslims, estimated to be between 75% to 90%. The remaining 10% to 25% are Shia Muslims. The official form of Sunni Islam practiced in Saudi Arabia is known as Wahhabism.
Although there is no law mandating all citizens to be Muslims, non-Muslims and some Muslim groups whose beliefs do not conform to the government’s interpretation of Islam may face discrimination and restrictions on practicing their religion in public. Foreigners who violate these laws are at risk of deportation. As a result, many non-Muslims and non-Wahhabi Muslim groups practice their faith privately to avoid potential repercussions.
Languages Spoken in Saudi Arabia
Arabic is the official language of Saudi Arabia, with three main regional variants: Najdi, Hejazi Arabic and Gulf Arabic. Additionally, the country has a large expatriate population and many of these communities speak their own languages. The largest non-Arabic speaking community in Saudi Arabia is the Bengali community, followed by those who speak Tagalog, Eastern Punjabi, Urdu and Egyptian Arabic.
As a result of this linguistic diversity, many residents of Saudi Arabia are multilingual and may use different languages in different settings, such as at home, at work or in public spaces.
Saudi Arabian Human Resources at a Glance
Employment Law Protections in Saudi Arabia
The Labor Law (Royal Decree Number M/51 of 23 Sha’ban 1426, dated September 27, 2005) is the main legislation governing employment relationships in Saudi Arabia, together with resolutions issued by the Ministry of Human Resource and Social Development that cover specific issues. However, the Labor Law does not apply to certain groups, including:
- An employer’s family members who constitute a firm’s only employees
- Domestic servants
- Certain maritime and agricultural workers
- Foreign nationals entering Saudi Arabia to perform a specific task for two months or less
The Labor Law is generally favorable to employees and there are statutory rights that employees may not waive.
Foreign nationals comprise approximately 80% of the private sector workforce in Saudi Arabia. n order to promote employment opportunities for Saudi nationals, the government has implemented a policy known as “Saudization,” which encourages companies to hire more local employees. As part of this policy, Saudi nationals are granted certain preferential legal rights and benefits in the workforce, including:
- Being employed on indefinite-term employment contracts
- Entitlement to statutory minimum wage
- Permission to perform “flexible work”
- Statutory protection from discrimination on grounds such as sex and age
- Permission to elect labor committees
- Specific protection from collective redundancies
- Receiving vocational training from their employer
Employment Contracts in Saudi Arabia
Employers in Saudi Arabia must provide a written employment contract, preferably in Arabic, but it may also be written in another language. Failure to issue the contract within the first 90 days of employment can result in a fine of SAR 5,000. Any clause in the contract that violates the Labor Law is considered invalid.
Moreover, all job openings, including newly created positions, must be reported to the public employment service within 15 days. The employment service can recommend Saudi job seekers for such vacancies and the employer must report the outcome within seven days. This is part of the government’s policy of Saudization, which aims to increase the employment of local citizens. Expatriate employees have the right to transfer their sponsorship if they are not provided with a written contract within the first 90 days.
In case of any conflict or ambiguity in the contract, the Arabic version takes precedence.
Companies in Saudi Arabia need to document 80% of employee contracts on the MHRSD (The Ministry of Human Resource and Social Development) Qiwa platform.
Saudi Arabia's Contract Terms
The following terms must be included in all contracts:
- Details of employer and employee details
- Start date of employment, type and location of work
- Contract duration for fixed-term
- Agreed salary and benefit entitlements
- Annual leave
- Leave rights, including sick leave, and maternity leave for female employees
- Termination rights
- End-of-service gratuity
- For expatriates, employers are obligated to pay fees relating to work permits and visas
Part-Time Contracts in Saudi Arabia
In Saudi Arabia, only Saudi nationals are eligible for part-time and flexible work. The General Organization for Social Insurance (GOSI) contributions apply to part-time employees based on GOSI rules.
Here are some important details about part-time contracts:
There is no probation period for part-time employees.
Part-time contracts must be in writing and include the number of working hours.
Part-time employees cannot work for more than 95 hours per month for a single employer.
The employment relationship for part-time employees must be for a fixed term.
Part-time employees have the right to refuse work at any time.
Saudi Arabia's Fixed Term Contracts
Fixed-term employment contracts, including renewals, cannot exceed a maximum duration of four years. Expatriate workers must only be issued fixed-term contracts.
If a fixed-term contract is terminated before its expiration, the party that terminates the contract must compensate the other party an amount equal to the salary for the remainder of the fixed term duration.
If an employer and employee continue with the employment relationship after the expiration of the fixed-term contract – without any agreement on renewal or if the total employment duration exceeds four years – the fixed-term employment contract may be deemed to be an indefinite-term contract.
Employers are legally allowed to conduct background checks during the hiring process but it is recommended they only do so when necessary and after making an employment offer. Prior notice should be given to applicants, letting them know the offer is subject to a background check.
Employers can request references and require medical examinations as part of the hiring process.
In some cases, employers may also require a police clearance letter from applicants regarding their criminal record.
Saudi Arabia's Guidelines Regarding Probation Period/Trial Period
During the probation period, which typically lasts for 90 days, either the employer and employee can terminate the employment contract without prior notice unless otherwise stated in the contract.
If the probationary period coincides with Eid al-Fitr or Eid al-Adha, it may be extended. The probation period can also be extended for an additional 90 days, with the agreement of both parties.
Regulations and Rules Regarding Working Hours in Saudi Arabia
Employees in Saudi Arabia have standard working hours of eight hours per day or 48 hours per week, except during the holy month of Ramadan, when working hours are reduced to six hours per day or 36 hours per week. Fridays are considered paid rest days. Employees should also be given a 30-minute break after working for five hours, which includes time for rest, meals and prayer. Additionally, employees must not be required to stay in the workplace for more than 12 hours in a single day.
However, there are certain circumstances that may require extended working hours of up to 10 hours per day or 60 hours per week, such as annual inventory taking, preparing for seasonal sales or discounts, budgeting, liquidation or to prevent or reduce accidents. These extended working hours must not exceed 30 days in a year.
Saudi Arabian Laws Regarding Overtime
If an employee works beyond the normal working hours or during national holidays, they are entitled to receive overtime pay. The rate for overtime pay is calculated at 150% of the regular wage. However, an employee’s yearly overtime should not exceed 720 hours.
Timesheets & Record Keeping
Employment data should be retained for varying lengths of time, depending on the type of data. Recruitment data should be stored for up to six months, while data relating to maternity or other leaves should be kept for three years. Additionally, data such as employees’ personal records, performance appraisals and employment contracts should be retained for six years from the last date of employment.
Rules Regarding Bonus and 13th Month Pay in Saudi Arabia
There are no prescribed regulations that dictate the payment of bonuses. Instead, the terms and conditions for providing bonuses are open to negotiation between the employer and employee.
For fixed-term contracts, an employee may be dismissed by:
- Non-renewal of the contract at the end date
- Termination as specified in the contract’s terms
- Conversion of the contract to an indefinite term
- Expiration of the work permit (for expatriate employees)
An employer may dismiss an employee for the following reasons:
- Unauthorized absence
- Failure to perform job duties deemed essential
- Failure to comply with rules for health and safety
- Assaulting the employer
- Disclosure of industrial or trade secrets
The employment relationship can also end by:
- Mutual agreement between the parties, with written consent from the employee
- The employee reaching retirement age
- Force majeure
When dismissal is due to disciplinary reasons, a process must be followed:
- The employee must be notified in writing of the allegation within 30 days of the employer discovering the alleged offense.
- A meeting must be held to question the employee on the allegation and allow the employee to defend themselves.
- Meeting minutes must be recorded and retained.
- If there is a disciplinary sanction, the employee must be notified in writing within 30 days of the employer completing its investigation.
The employer must not terminate employment in the following scenarios:
- The employee is on maternity leave.
- If the employee is on medical leave for up to 180 days resulting from pregnancy or childbirth.
- The employee is out on medical leave but has not yet used their entitlement.
Saudi Arabia's Requirements Regarding Notice Periods
Employment contracts with an indefinite term require a minimum notice period of 60 days for termination. However, if the employment contract specifies a longer notice period, the longer period will apply instead. For employees who are not paid monthly, the minimum notice period is 30 days. Fixed-term contracts require a minimum notice period of 30 days for non-renewal.
Redundancy/Severance Pay in Saudi Arabia
An employee is entitled to an end-of-service gratuity instead of severance pay upon termination. The amount of gratuity is calculated based on the employee’s last wage and years of service:
The gratuity for the first five years of service is half a month’s wage for each year of service.
For each year of service in excess of five years, the gratuity is one month’s wage for each year.
Post-Termination Restraints/Restrictive Covenants
Employment contracts may contain non-competition clauses, but they must meet certain requirements to be enforceable. The non-competition clause must be in writing and specify:
The duration of the clause (which cannot be longer than two years from the termination of the employment contract)
The geographical area where the clause applies
The type of work the employee is prohibited from engaging in
Although there are no explicit laws for data protection, the Constitution ensures the privacy of individuals and their communications. Surveillance is prohibited except when permitted by law. Moreover, Sharia law allows a person to receive compensation if their personal information has been disclosed without their consent and resulted in a loss.
Tax and Social Security Information for Employers in Saudi Arabia
Personal Income Tax in Saudi Arabia
Saudi Arabia does not have employment-related taxes or income tax.
Social Security in Saudi Arabia
In Saudi Arabia, it is mandatory for Saudi nationals to register with the General Organization for Social Insurance (GOSI). Both the employee and employer must make monthly contributions to the pension fund via bank transfer. These contributions cover pensions, disability insurance and unemployment insurance for Saudi nationals, as well as occupational hazards insurance for all employees.
For Gulf Cooperation Council (GCC) nationals working in Saudi Arabia, registration with GOSI is also required for pension contributions. The contributions are then transferred to the relevant social insurance authority based on the requirements of their home country.
Employers are responsible for deducting and paying social insurance contributions for their employees, which are calculated based on the employee’s monthly salary:
|Type||Employer Contribution (%)||Employee Contribution (%)|
|Unemployment Insurance (SANED)||1.0||0.75|
*For expats, only the 2% Occupational Hazard contribution by the employer applies; there is no employee contribution.
Important Information for Saudi Arabian Employees
To ensure that employees receive their wages and entitlements accurately and on time, employers in Saudi Arabia are required to pay all wages and other entitlements in Saudi riyals (SAR) and deposit them directly into the employee’s bank account through a Saudi Arabian bank. The frequency of payment depends on the time-related basis of the employee’s pay, with monthly employees receiving payments at least once a month and daily or weekly employees receiving payments at least once a week.
To enforce this system, employers with five or more employees must register themselves and their employees with the official Wage Protection System (WPS) of the Ministry of Human Resource and Social Development. This system requires employers to submit monthly payroll information online.
There is no statutory requirement for employers to provide employees with payslips. However,it is common practice to do so.
Every employee in Saudi Arabia is entitled to a minimum of 21 days of annual paid leave. However, if an employee has served continuously for at least five years with their employer, they are entitled to a minimum of 30 days of annual paid leave. While employees are permitted to carry over their annual leave entitlement for up to one year with their employer’s approval, it is recommended they take their annual leave in the year it is earned.
Employers are responsible for scheduling annual leave according to the company’s operational requirements. However, they must inform employees of their scheduled leave dates no less than 30 days in advance. While employees cannot demand to receive payment in lieu of their statutory annual leave, an employer must compensate an employee for any accrued leave not taken when their employment comes to an end.
If an employee becomes ill or injured while on annual leave, their annual leave entitlement is suspended. Their absence from work will be counted as sick leave.
Employees are entitled to take a maximum of four months of sick leave per year, as long as they provide a medical certificate to their employer. If an employee has used up all of their sick leave, they may ask to use any remaining annual leave entitlement as sick leave instead.
Entitlement to paid sick leave are as follows:
First 30 days: full wages
Next 60 days: 75% of wages
Final 30 days: the employer is not required to pay
Leave of Absence
Employees who are Muslim and have worked with their employer continuously for at least two years are eligible to take a paid leave of 10 to 15 days, which includes the Eid al-Adha holiday. However, to be entitled to this leave, they must not have performed the Hajj pilgrimage previously. Employers may restrict the number of employees who can take Hajj leave during a given year.
Employees who are pursuing a course at an educational institution are entitled to receive paid leave to take any exams and unpaid leave to retake exams. This leave must be applied for at least 15 days before the scheduled exam date.
Compassionate & Bereavement Leave
Employees are entitled to compassionate and bereavement leave as follows:
Marriage leave: five days’ paid leave
Death of an immediate relative (child, grandchild, parent, grandparent): five days’ paid leave
Death of wife – three days’ paid leave
Death of husband (for non-Muslims) – 15 days’ paid leave
Death of husband (Muslims) – four months and 10 days paid leave
Death of husband, if pregnant (Muslim only): Unpaid leave until the birth after four months and 10 days
When requesting the leave mentioned above, the employee should provide the employer with appropriate documentation to support the event.
Maternity & Paternity Leave
Expectant mothers who are employees are entitled to 10 weeks of fully paid maternity leave from their employer. They must not work for six weeks following the birth and should take no more than four weeks before the expected due date. The employee can decide when to start their leave within these guidelines. After the 10 weeks of paid leave, the employee may take an additional month of unpaid leave.
If the newborn is ill or has a disability, the mother is entitled to another month of paid maternity leave in addition to the unpaid month.
Three days’ paid leave.
Nursing Care Leave
Employees are entitled to take one hour of paid leave each day to nurse their child until the child turns two years old. This hour is included in the employee’s working time and they are entitled to be paid for it.
The following public holidays are to be observed by employers in Saudi Arabia:
Eid al-Fitr — four days (dates variable)
Eid al-Adha — four days (dates variable)
September 23 (National Day)
If National Day falls within Eid al-Fitr or Eid al-Adha, employees do not receive an additional holiday. For public holidays that fall on the employee’s usual off day or while an employee is on annual leave, the employee will receive an additional day off.
Benefits to the Employee in Saudi Arabia
Saudi Arabian Statutory Benefits
Employers in Saudi Arabia are obligated to provide comprehensive medical health insurance for all their employees, including the employee’s dependents such as their spouse, unmarried daughters and sons up to the age of 25.
Additionally, Saudi nationals who have completed a minimum contribution period of 120 months and have reached the age of 60 are eligible to receive a retirement pension from the General Organization for Social Insurance (GOSI). This pension is calculated by multiplying 1/40th of the employee’s average monthly wage for the past two years by the number of contribution years.
- housing allowance
- transport allowance
- annual flight ticket or allowance for expatriate employees
Rules Regarding Visas and Foreign Workers in Saudi Arabia
Once the work visa is issued, the candidate can enter Saudi Arabia and the employer must apply for a residence permit (known as ‘Iqama’) on their behalf within 90 days of arrival, which also serves as a work permit. The MLSD application must include:
- a signed employment contract
- copies of academic and professional qualifications
- police report detailing any convictions
- medical report.
If a work visa is rejected, there is no appeal process. A new application must be submitted, as visa application fees are non-refundable.
The Residence Permit has certain conditions, which include:
- It’s valid for up to two years, and the employer can renew it.
- Employers must provide medical insurance for foreign employees.
- Foreign nationals are only allowed to work for the employer and in the role specified in their permit.
- If an employer fails to pay wages for three consecutive months or does not meet their Nitaqat obligations, the foreign national has the right to switch employers.
- Employers of foreign nationals are responsible for covering the costs of their recruitment.
To hire foreign nationals, an employer in Saudi Arabia must follow a two-step process. First, the employer must obtain a “block visa” from the Ministry of Human Resource and Social Development and then receive authorization from the Ministry of Foreign Affairs. The process requires registering with the Ministry of Interior (MOI) to open an immigration file and submitting company information, such as Commercial Registration, tax/Zakat certificate, social insurance (GOSI) certificate and a Saudization (‘Nitaqat’) statement issued by the Ministry of Labor and Social Development.
An employer’s ability to obtain and renew work visas for foreign workers is subject to its compliance with the Nitaqat scheme.
- Temporary Work Visa: Individuals can enter Saudi Arabia on a temporary work visa to conduct short-term business activities. In this case, a local company would act as a sponsor. The visa must be used within one year of its issue and allows foreign workers to work in Saudi Arabia for up to 90 days, with the option to extend for an additional 90 days. The visa is valid for multiple entries.
- Premium Residency Permit: Foreign nationals can pay a high fee for a “premium” residency permit that doesn’t require sponsorship. It allows them to work for any private sector employer, except for specific roles reserved for Saudi nationals. It also provides the freedom to change jobs. This visa requires a one-time fee of SAR 800,000 and can be renewed annually.
Public Holidays Recognized by Saudi Arabia in 2023
|4.||Saudi National Day||23.Sep.2023|