Employer of Record (EOR) in Saudi Arabia: Ultimate Hiring Guide

An Employer of Record (EOR) serves as the legal employer for your workforce in Saudi Arabia, handling HR, payroll, and compliance. This enables businesses to expand without a local entity, reducing risks and administrative burdens.

Saudi Arabia, the Arab world’s largest economy, contributes 25% to regional GDP, driven by 263 billion barrels of oil reserves. Vision 2030 promotes diversification in health, education, tourism, and infrastructure, targeting a 65% private-sector GDP share. English is widely used, and tech-driven hiring simplifies talent acquisition.

An EOR manages:

• Compliance: Labor laws, sponsorship, immigration.
• Payroll: Salaries, deductions, GOSI contributions.
• HR: Recruitment, onboarding, terminations.
• Culture: Islamic traditions, gender segregation, customs.
• Operations: Administrative efficiency.

Saudi Labor Laws

• Contracts: Written in SAR, detailing salary, benefits, terms. Fixed-term contracts convert after three renewals or four years.
• Kafala: Employers sponsor expatriates for visas and permits.
• Culture: Respect for Islamic practices, dress codes.
• Anti-Discrimination: No bias; Saudization prioritizes locals.

Saudization (Nitaqat)

The Nitaqat program mandates hiring Saudi nationals based on industry and size. EORs ensure compliance to avoid visa bans or fines.

Immigration and Work Permits

• Iqama: Annual residency/work permit, employer-sponsored.
• Employment Visa: For long-term roles, requiring approvals.
• Temporary Work Visa: For short-term projects.
• Business Visit Visa: For non-work activities.
• Premium Iqama: Sponsor-free for skilled individuals.
• Exit-Entry Visas: Required for expatriate travel.
• Penalties: SAR 10,000 fine for overstaying.
• Health Insurance: Mandatory for expatriates, dependents.

Payroll Cycle

Monthly by the 10th; weekly options available. 13th-month bonuses are optional incentives.

Minimum Wage

• Saudis: SAR 4,000/month for Nitaqat.
• Expatriates: SAR 1,000–2,000 for low-skilled roles.
• WPS: Ensures timely payments via banks.

GOSI Contributions

• Saudis (SAR 4,000–45,000): 22% (12% employer).
• Non-Saudis (up to SAR 45,000): 2% employer.
• GCC Nationals: 17–22% (9% employer).

Contracts must include:

• Employee/employer details
• Job title, description, location
• Salary, allowances, benefits
• Contract duration
• Working hours, overtime
• Leave entitlements
• Probation (up to 180 days)
• Termination conditions
• Non-compete, confidentiality
• Dispute resolution

Mandatory Benefits:

• GOSI contributions
• Health insurance
• End-of-service gratuity
• Overtime (150%)
• Repatriation costs
• Paid leave

Additional Benefits:

• Housing/transport (~25% salary)
• Travel tickets
• Education/retirement plans
• Mobile allowances

Work Hours

• 48 hours/week (8 hours/day).
• Ramadan: 6 hours/day for Muslims.
• Overtime: 150% for excess hours.
• Weekend: Friday–Saturday.

Public Holidays

• Founding Day: Feb 22
• Eid Al-Fitr: 4–5 days
• Eid Al-Adha: 4–5 days
• National Day: Sep 23

Paid Leave

• Annual: 21–30 days
• Sick: 120 days (tiered pay)
• Maternity: 10–12 weeks
• Paternity: 3–6 days
• Bereavement: 5 days
• Marriage: 3 days
• Hajj: 10–15 days

Before First Day

• Collect employee details.
• Prepare contracts.
• Arrange visas/Iqamas.
• Set up payroll.
• Plan orientation.

First Day

• Welcome meetings.
• Policy access.
• Set expectations.

First Week and Beyond

• Manage reviews.
• Ensure compliance.
• Support integration.

Termination Process

Aligns with Saudi Labour Law (Articles 74–77). Grounds: resignation, agreement, contract end.

Notice Period

• Probation: 1 day
• Unlimited: 60 days
• Fixed-term: 30 days

Severance

• Employer termination: Half month’s pay per year (1–5 years).
• Resignation: Partial gratuity based on tenure.

EORs protect IP by:

• Enforcing NDAs.
• Complying with IP laws.
• Securing data.
• Training employees.
• Addressing violations.

Evaluate:

• Expertise in Saudi laws.
• Compliance systems.
• Service scope.
• Technology platforms.
• Market reputation.

• Capital: Riyadh
• Currency: SAR
• Language: Arabic, English
• Time: UTC+03:00
• Fiscal Year: Jan–Dec
• Date Format: DD/MM/YYYY
• Code: +966

An Employer of Record (EOR) is the perfect solution for hiring in the Kingdom without a local company.

However, if your business is already legally registered in Saudi Arabia and you’re looking to streamline HR, manage payroll, and ensure ongoing compliance for your own entity, your ideal solution is a Professional Employer Organization (PEO).

A PEO acts as your co-employment partner, providing expert HR support for your established operations.