Gloroots offers an EOR (Employer of Record) solution in Saudi Arabia, allowing employers to navigate the local employment landscape without the need for entity setup. Our all-in-one global HR platform simplifies remote team onboarding, payroll, benefits, and ensures compliance. We facilitate your global expansion with our international network.

Gloroots streamlines the complexities of Saudi Arabia's hiring policies, handling recruitment, payroll, employee management, regulations, and local laws. No separate legal entity required. Contact Gloroots experts today for a hassle-free business expansion into Saudi Arabia, a desirable place for employers in the Middle East due to its pro-business measures.

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Gloroots, a reliable EOR (Employer of Record) and PEO (Professional Employer Organization) in Saudi Arabia, helps businesses seize opportunities in a nation historically dependent on oil but now diversifying its economy. 

Saudi Arabia has exceptional talent, which is evidenced by its high ranks for “Labour productivity per employee” (11) and “Ease of finding skilled employees”(8). To tap into this talent pool, foreign employers must navigate the gulf nation’s one-of-a-kind labor laws. Saudi Arabia's labor laws are influenced by Islamic principles and are designed to align with Islamic values. This impacts various aspects of employment, including working hours, prayer breaks, and religious holidays. Plus, Saudi Arabia has a policy known as "Saudization" (Nitaqat) to encourage the employment of Saudi nationals in the private sector. Employers are required to meet specific quotas for hiring Saudi citizens, which can vary depending on the size and type of business.

Gloroots' EOR/PEO services streamline market entry, ensure regulatory compliance, and grant you access to professionals in high-demand fields. This simplifies and accelerates the process of expanding your business in Saudi Arabia, making it more efficient and less complex for employers.

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The cost of Saudi Arabia EOR/PEO services in Saudi Arabia may differ based on various factors, such as the number of employees, the extent of services needed, and the intricacy of the project. The pricing structure for Saudi Arabia, EOR/PEO services, usually involves a monthly fee per employee or a percentage of the employee's salary. Extra charges may apply for additional services or customization.

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Key Metrics For Foreign Employers 

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Saudi Arabia has a substantial GDP of USD 833.54 billion and ranks 63rd on the World Bank's Ease of Doing Business Index.

The economic hubs in Riyadh, Jeddah, Medina, and Mecca offer promising prospects for expansion, supported by the country's dynamic economy and strategic location. In this evolving landscape, there's a growing demand for skills such as data analysts, digital marketers, and software developers. Gloroots can help you tap into this talent pool to thrive in Saudi Arabia.

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The table below depicts key indicators from the Global Talent Competitiveness Report for employers wishing to hire from Saudi Arabia.

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‍Source: The Global Talent Competitiveness Index 2023

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Through the Gloroots’ Recrew platform, you can discover amazing talent in Saudi Arabia.

The term "misclassification of employees" refers to the inaccurate classification of workers by their employers. Misclassification occurs when an employer categorizes a worker as an independent contractor or exempts them from certain employment laws and benefits, even if the worker should be classified as an employee and entitled to legal protections, benefits, and rights. 

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Utilizing a PEO/EOR in Saudi Arabia helps mitigate the risks associated with misclassification by ensuring compliance with labour laws, proper employee classification, accurate payroll processing, and access to comprehensive benefits. This enables businesses to focus on their core operations while entrusting employment-related responsibilities to experienced professionals.

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Employment contract

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Saudi Arabia's Labor Laws govern all employer-employee interactions in the country. It's crucial for both employers and employees to be well-informed about these laws to ensure everything is legal and follows the rules. The sections below provide insights into the key aspects of these laws to help everyone involved understand their responsibilities and rights. These labor laws in Saudi Arabia acknowledge agreements, whether they're in writing or spoken. If there's a written agreement, it needs to be in Arabic, and both the employer and employee should have a copy of it.

When creating employment contracts in Saudi Arabia, there are several crucial factors to consider:

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1. Compensation: It is vital to include a section in the contract that clearly defines the employee's compensation. This section should provide a concise breakdown of the various forms of remuneration, such as salary, bonuses, commissions, and any other benefits. By incorporating this information into the contract, the employer and employee can have a transparent understanding of the compensation package, reducing the likelihood of future misunderstandings or conflicts.

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2. Payment Schedule: It is important to specify the payment frequency in the contract. This may involve indicating whether payments will be made on a monthly or bi-weekly basis, ensuring clarity and predictability for both parties.

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3. Benefits: When drafting employment contracts, it is crucial to explicitly outline the benefits that will be provided to the employee. These benefits can encompass health insurance, retirement plans, vacation days, sick leave, and any other supplementary benefits or allowances.

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By addressing these key aspects in the employment contract, employers and employees in Saudi Arabia can establish a solid foundation that promotes transparency, fairness, and compliance with legal requirements.

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This might sound overwhelming—but it doesn’t have to be. A solution like Gloroots eliminates the barriers for you. With Gloroots’ Employer of Record offering, hiring and managing employees globally is a piece of cake.

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Get an overview of what you need to know when hiring in Saudi Arabia.

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Working time

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In Saudi Arabia, the standard workweek usually consists of 48 hours, with 8 hours per day spread across 5 days each week. However, during the holy month of Ramadan, the daily working hours may be reduced to 6 hours.

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Overtime

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Any work that goes beyond the regular weekly hours should be compensated as overtime and is governed by employment contracts or collective agreements. The maximum daily working hours cannot exceed 11 hours. When an employee works beyond the standard 8 hours a day, they must receive a pay rate of 150% of their regular salary. Timesheets are necessary when arranging overtime.

Exceptions apply based on the nature of the job, such as individuals in high-level management or policy roles.

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Public Holidays

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The country observes 9  public holidays that employees can take as paid days off.

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Minimum Wage

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The current monthly minimum wage stands at 4,000 SAR per month. 

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Annual Leave

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Paid Sick Leaves

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Under Article 117 of the Labor Law in Saudi Arabia, employees are entitled to 120 days of sick leave annually, whether their illness is continuous or intermittent. This sick leave is structured with full pay for the initial 30 days, followed by 1/3 pay for the subsequent 60 days, and then unpaid leave for an additional 30 days of illness. The employer is responsible for covering the costs of sick leave, and it's mandatory for employees to furnish a medical certificate for each day they take as sick leave.

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Maternity leaves

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1. Female employees are entitled to a 10-week paid maternity leave, which begins four weeks before the expected due date. Working is not permitted during the six weeks immediately following childbirth.

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2. Maternity leave is paid by the employer at varying rates based on the employee's seniority. Those with a minimum of one year of service receive 50% of their regular pay, while employees with at least three years of service are paid at a rate of 100% of their regular pay.

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3. Employees who receive full pay during maternity leave are not allowed to take the payment for annual leave in the same year. However, employees receiving 50% pay may also utilize half of their paid annual leave entitlement in the same year.a

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Paternity leaves

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As per Article 113 of the Labor Law, fathers or partners are eligible for three days of paid paternity leave following the birth of their child.

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Tax and Social Security contribution

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Employer Payroll Contributions

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Employee Payroll Contributions

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The Social Insurance Tax for Saudi employees, specifically related to occupational hazard, is set at a fixed rate of 10.00%.

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Employee Income tax

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In Saudi Arabia, there is no system of individual income tax, meaning that income earned from employment is not liable to income tax.

Termination 

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• Termination process varies by contract and reason.
• Justified reasons include misconduct, absenteeism, failure to perform essential duties, safety violations, and more.
• Fixed-term contract dismissal options: non-renewal, adherence to contract terms, conversion to indefinite term, or work permit expiration.
• Disciplinary dismissals require written notification of alleged offenses, a meeting, and written notice of disciplinary actions.
• Unjustified dismissal mandates additional compensation (50 days' pay for each year or outstanding wages) with a minimum of two months' wages.
• Mutual Termination Agreement possible with employee consent.
• Prohibited to terminate employees on maternity or medical leave.

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Severance Pay

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End of Service Gratuity (EOSG) is only payable when the employment ends, not before.

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When the employer terminates the employment, EOSG is calculated by adding ½ a month's wage for each of the first 5 years and 1 month's wage for each subsequent year of service. For any portion of a year, the employee receives a proportional EOSG. This calculation is based on the employee's final salary.

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If the employee resigns, they are entitled to 1/3 of the gratuity after 2 to 5 years of service, 2/3 if they've served over 5 but less than 10 years, and the full amount if their service reaches or exceeds 10 years.

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In specific cases, like military service or force majeure preventing work, employees are still entitled to EOSG. Additionally, female employees can receive EOSG if they resign within 6 months of marriage or within 3 months of giving birth.

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Notice Period

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In Saudi Arabia, the length of the notice period hinges on the contract type. In cases of indefinite term contracts, which are open-ended and paid monthly, a 60-day notice is mandated for either termination or resignation. For fixed-term contracts, a 30-day notice period applies. Notably, during the probation period, a mere one-day notice is needed.

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Probation period

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In Saudi Arabia, the length of the probation period can differ based on the employment contract, but it usually spans 90 days. This period may be extended with the employee's written agreement, but it should not surpass 180 days.

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When hiring globally, ensuring compliance comes with its own set of battles. Employers must ensure all hiring and onboarding activities adhere to employment laws, payroll procedures, DE&I compliance, GDPR and similar data protection, etc. If you think it is hard to set up local entities and start hiring, keeping up with a dynamic compliance landscape is far harder. 

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Gloroots helps you minimize all these efforts by providing a single window to manage all these tasks. Our in-house experts fully shield you from cross-border employment and payroll compliance risks. We do this by helping you generate employment contracts, on-time payments, compliant benefits, while you focus only on screening talent. 

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Our promise is a stress-free global employment experience for both you and your employee.

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Contact our experts today to kickstart your global hiring campaign.

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When you're growing your team, it's important to hire the right people at the right time. In Saudi Arabia, companies often need a local partner to handle important things like following the rules, paying salaries, managing taxes, and taking care of employee benefits. Dealing with all the complicated work laws in Saudi Arabia can be challenging.

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That's where Gloroots comes in. We offer a complete service called the Employer of Record (EoR). We handle all the tricky parts, like paying salaries, taking care of taxes, making sure everyone gets their benefits, and following the rules. This means you can concentrate on what really matters – your team and making your business grow.

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