Employer of Record (EOR) Services in Saudi Arabia
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Hiring in Saudi Arabia at a glance
Saudi Arabia is the largest economy in the Middle East and a critical hub for global companies expanding into the Gulf Cooperation Council (GCC) region. With its Vision 2030 strategy, Saudi Arabia is transforming from an oil-dependent economy to a diversified market driven by finance, healthcare, tourism, renewable energy, and technology.
The workforce is a mix of Saudi nationals and expatriates, with major cities like Riyadh, Jeddah, and Dammam serving as talent hubs. While the government enforces Saudization policies (Nitaqat program) that mandate a minimum ratio of Saudi nationals in private-sector jobs, expatriates continue to play a vital role in sectors like engineering, IT, and finance.
At the same time, Saudi Arabia’s employment environment is heavily regulated under the Saudi Labor Law. Employers must provide written contracts in Arabic, comply with working hour restrictions (particularly during Ramadan), and offer statutory benefits such as paid annual leave, end-of-service gratuity, and social insurance contributions. Setting up a legal entity in Saudi Arabia can be time-intensive, requiring approvals from multiple government agencies and adherence to strict local sponsorship rules.
For companies looking to expand quickly, an Employer of Record (EOR) is the most efficient solution. With Gloroots as your EOR in Saudi Arabia, you can hire employees in weeks, not months, while we manage contracts, payroll, benefits, and compliance with Saudi labor law. This allows you to focus on scaling operations while staying aligned with global compliance standards.
What are the key facts about Saudi Arabia’s economy and workforce?
Saudi Arabia is the largest economy in the Middle East and among the top 20 globally (G20), with GDP exceeding USD 1 trillion. Traditionally dependent on oil exports, the country is diversifying under its Vision 2030 program, focusing on sectors such as finance, tourism, healthcare, renewable energy, and technology.
The government actively invests in education and workforce development, with institutions like King Saud University, King Abdullah University of Science and Technology (KAUST), and King Fahd University of Petroleum and Minerals producing top-tier engineering, IT, and business graduates. At the same time, Saudi Arabia continues to rely on a large expatriate workforce, particularly in specialized industries.
Key multinational companies, including Aramco, SABIC, HSBC, Microsoft, and Siemens, operate in the kingdom, and tech hubs in Riyadh and Jeddah are rapidly attracting both startups and international investment.
For employers, the labor market comes with compliance obligations under the Nitaqat (Saudization) program, which requires companies to meet quotas of Saudi nationals in their workforce. Employers must also navigate strict labor rules around contracts, leave entitlements, and end-of-service benefits.
Many global companies choose to hire employees in Saudi Arabia through an Employer of Record (EOR) like Gloroots to ensure compliance and speed of entry.
Data Snapshot: Saudi Arabia’s Workforce
Ready to access Saudi Arabia’s fast-growing workforce? Hire employees in Saudi Arabia with Gloroots to stay compliant while scaling quickly.
What is the work culture and talent pool like in Saudi Arabia?
Saudi Arabia’s work culture blends traditional Islamic values with an increasingly modern, globalized business environment. Workplaces tend to be hierarchical and relationship-driven, with respect for authority and senior leadership. At the same time, Vision 2030 reforms are encouraging more merit-based hiring, gender inclusion, and innovation-driven roles, especially in sectors like tech, finance, and tourism.
The workforce is composed of both Saudi nationals (required under Saudization quotas) and expatriates, who make up a significant portion of the private-sector labor market. While Saudi nationals dominate in government and public administration, expatriates often fill specialized roles in engineering, IT, finance, and healthcare.
Business is conducted in both Arabic and English, with English widely used in international and private-sector companies. Employers should note cultural factors such as adjusted working hours during Ramadan, the five daily prayer times, and gender-based workplace regulations that continue to evolve.
For white-collar hiring, Saudi Arabia offers a growing pool of STEM graduates, bilingual professionals, and expat specialists, concentrated in major hubs like Riyadh, Jeddah, and Dammam.
Data Snapshot: Saudi Arabia’s Talent Pool
Looking to hire Saudi or expat professionals? Hire employees in Saudi Arabia with Gloroots for fast, compliant access to the kingdom’s growing talent pool.
Q: What is the process of setting up an entity in Saudi Arabia?
Setting up a legal entity in Saudi Arabia requires navigating a multi-step, highly regulated process. The most common structure for foreign companies is a Limited Liability Company (LLC), but Joint Ventures (with Saudi partners) and branch offices are also options. Incorporation involves approvals from the Ministry of Investment (MISA), registrations with the Ministry of Commerce, tax authority filings with ZATCA (Zakat, Tax and Customs Authority), and compliance with Saudi labor and social insurance laws (GOSI).
The process typically takes 3–6 months and requires a local office lease, Saudi national director, and minimum capital (varies by sector). Employers must also comply with Saudization quotas, meaning they must hire a certain percentage of Saudi nationals depending on company size and industry.
For many global employers, these requirements make direct entity setup slow and costly. By contrast, Gloroots as an Employer of Record (EOR) enables you to hire employees in Saudi Arabia in weeks, without entity setup. Gloroots manages contracts, payroll, Saudization compliance, and statutory benefits through its local infrastructure.
Step-by-Step Process of Entity Setup in Saudi Arabia
- Obtain Investment License from MISA
- Required for foreign ownership and business activity approval.
- Reserve Trade Name & Draft Articles of Association
- Submit to Ministry of Commerce.
- Obtain Commercial Registration (CR)
- Issued by the Ministry of Commerce after documentation approval.
- Register with ZATCA
- For corporate income tax and zakat compliance.
- Register with GOSI (General Organization for Social Insurance)
- For mandatory employee social insurance contributions.
- Register with Mudad (Ministry of Human Resources & Social Development)
- For labor compliance and Saudization monitoring.
- Open Local Bank Account & Lease Office Space
- Physical office presence required for licensing.
- Hire Employees
- Must issue Arabic employment contracts.
- Register all employees with GOSI.
Q: What are the main benefits of using Gloroots as an Employer of Record in Saudi Arabia vs setting up your own entity?
Setting up a legal entity in Saudi Arabia is a lengthy, capital-intensive process involving licensing through the Ministry of Investment (MISA), registration with tax and social authorities, and compliance with the Nitaqat Saudization program. Employers must also draft Arabic contracts, lease office space, and maintain compliance with multiple ministries. For companies planning only a small team or testing the market, this can create unnecessary overhead.
By contrast, Gloroots as an Employer of Record (EOR) enables companies to hire employees in Saudi Arabia within weeks, without the burden of incorporation. Gloroots becomes the legal employer, handling payroll, Arabic contracts, Saudization compliance, and statutory benefits. Your business retains day-to-day control of employees while Gloroots ensures global compliance with Saudi labor laws.
This model is especially advantageous for companies hiring across multiple roles or provinces, where Saudization targets and compliance requirements can vary.
Direct Entity vs Gloroots EOR (Saudi Arabia)
Why This Matters
In Saudi Arabia, compliance involves multiple ministries, Arabic documentation, and strict Saudization enforcement. For companies with lean teams, these requirements can delay growth.
With Gloroots as your EOR, you can:
- Hire in weeks instead of months.
- Avoid high entity setup and compliance costs.
- Ensure compliant Arabic contracts, payroll, and Saudization quotas.
- Provide employees with a professional, compliant HR experience.
Gloroots makes market entry in Saudi Arabia fast, compliant, and low-risk.
Q: What are the key employment laws in Saudi Arabia that employers should know?
Employment in Saudi Arabia is governed by the Saudi Labor Law, which establishes detailed rules for contracts, working hours, overtime, wages, and employee benefits. Employers must issue written contracts in Arabic, provide statutory leave entitlements, and comply with end-of-service gratuity requirements. Special considerations apply during Ramadan, where Muslim employees work reduced hours.
Saudi labor law is employee-protective, with strict penalties for non-compliance. Employers hiring across sectors must also comply with the Nitaqat Saudization program, which sets minimum quotas for hiring Saudi nationals. With Gloroots as your EOR, businesses can ensure that every employment contract, payroll cycle, and benefits entitlement is compliant with Saudi regulations.
Key Employment Law Provisions in Saudi Arabia
- Employment Contracts
- Must be in Arabic (bilingual versions permitted).
- Must specify job role, salary, benefits, probation period, and termination terms.
- Working Hours
- Standard: 8 hours/day or 48 hours/week.
- During Ramadan: reduced to 6 hours/day or 36 hours/week for Muslim employees.
- Overtime
- Paid at 150% of base hourly rate (time-and-a-half).
- Minimum Wage
- Set at SAR 4,000/month for Saudi nationals (to count towards Saudization).
- No official minimum wage for expatriates, but industry norms apply.
- Maternity & Paternity Leave
- Maternity leave: 10 weeks (4 before birth, 6 after). Employer pays 50–100% depending on service length.
- Paternity leave: 3 days paid.
- Annual Leave
- Minimum 21 days per year, increasing to 30 days after 5 years of service.
- Sick Leave
- 30 days full pay, followed by 60 days at 75% pay, then 30 days unpaid (up to 120 days total).
- End-of-Service Gratuity
- Statutory lump-sum payment on termination, based on years of service:
- Half a month’s wage for each of the first 5 years.
- One month’s wage for each year thereafter.
- Statutory lump-sum payment on termination, based on years of service:
Employment Law Compliance: Direct Entity vs Gloroots EOR (Saudi Arabia)
Why This Matters
Saudi Arabia’s labor framework is strict, detailed, and employee-focused. Employers must comply with Arabic contract requirements, leave entitlements, and gratuity rules. Mistakes can lead to fines, disputes, or government sanctions.
With Gloroots as your EOR in Saudi Arabia, you can:
- Issue fully compliant Arabic contracts.
- Guarantee accurate leave and gratuity administration.
- Ensure compliance with Saudization and labor law.
Gloroots makes workforce management in Saudi Arabia simple, compliant, and low-risk.
Q: What are the types of work visas in Saudi Arabia, and how can Gloroots help with immigration?
Saudi Arabia is one of the largest economies in the Middle East, with strong demand for skilled foreign professionals in oil & gas, construction, technology, healthcare, and financial services. Since the majority of the workforce in Saudi Arabia consists of expatriates, foreign workers must obtain a valid work visa and residence permit (Iqama) to be legally employed.
The immigration process requires sponsorship by a Saudi-registered employer. Employers must secure an approved block visa quota from the Ministry of Human Resources and Social Development, apply for individual work visas, and complete medical, security, and residency formalities for each employee. The process can be complex and bureaucratic, with strict penalties for non-compliance.
With Gloroots as your Employer of Record (EOR), immigration becomes straightforward. Gloroots acts as the official sponsor, securing work visas and managing Iqama residency permits for employees. This allows global companies to hire in Saudi Arabia without establishing a local entity or navigating government approvals directly.
Common Work Visa Types in Saudi Arabia
- Employment Visa (Iqama)
- The standard work visa for foreign employees.
- Requires sponsorship by a Saudi-licensed employer.
- Business Visa
- For short-term assignments, business meetings, or negotiations.
- Does not permit employment.
- Investor Visa
- For foreign nationals investing in Saudi companies.
- Temporary Work Visa
- For short-term work projects, typically valid for 90 days.
- Residence Permit (Iqama)
- Issued after arrival on a work visa.
- Serves as the employee’s legal ID for work, healthcare, and banking.
How Gloroots Supports Immigration
- Work Visa Sponsorship: Acts as the official Saudi employer, securing employment visas.
- Iqama Management: Handles residence permit issuance, renewals, and compliance.
- Quota & Ministry Approvals: Navigates block visa quotas and approvals with Saudi authorities.
- Immigration Compliance: Ensures all processes meet Saudi labor and immigration regulations.
- Renewals & Transfers: Manages visa renewals and employee transfers within Saudi Arabia.
- Seamless EOR Integration: Combines immigration services with payroll, HR, and compliance under the EOR model.
Why This Matters
Saudi Arabia’s immigration system is strict, sponsor-driven, and compliance-heavy. Without a Saudi entity, companies cannot sponsor work visas directly. Delays or errors in visa applications may result in fines, work bans, or employee deportations.
With Gloroots as your EOR in Saudi Arabia, you can:
- Sponsor and onboard employees quickly and compliantly.
- Ensure Iqama residency permits are maintained without lapses.
- Focus on scaling your business while Gloroots manages immigration and HR compliance.
Gloroots makes Saudi immigration seamless, compliant, and risk-free.
Q: What are the risks of misclassification in Saudi Arabia?
In Saudi Arabia, employers must clearly distinguish between employees and independent contractors. Misclassification — labeling an employee as a contractor to avoid social contributions or end-of-service gratuity — is a serious compliance breach. Authorities will evaluate the actual working relationship rather than the label in the contract.
If a contractor performs duties like an employee — fixed hours, integration into company operations, or long-term exclusivity — they may be legally reclassified as an employee. This exposes companies to back payments for social insurance (GOSI), penalties, fines, and retroactive end-of-service gratuity obligations.
With Gloroots as your Employer of Record (EOR), companies eliminate these risks. Gloroots ensures workers are classified correctly, issues compliant Arabic contracts, and manages payroll and social contributions in full alignment with Saudi labor law.
Criteria That Lead to Misclassification in Saudi Arabia
A worker may be deemed an employee if they:
- Work under the company’s direct supervision and control.
- Follow fixed working hours or report regularly to an office.
- Use the company’s tools, equipment, or IT systems.
- Provide services exclusively to one company.
- Are compensated on a salary basis rather than project-based payments.
- Perform tasks integral to the company’s core business.
Penalties for Misclassification
- Back Payments: Retroactive contributions to GOSI (social insurance).
- End-of-Service Gratuity: Employer must pay gratuity for the entire period worked.
- Fines & Penalties: Administrative fines under Saudi Labor Law for misrepresentation.
- Legal Disputes: Employees may claim wrongful dismissal or unpaid benefits.
- Reputational Risk: Non-compliance can damage business credibility and hinder future licenses.
Misclassification Risk: Direct Entity vs Gloroots EOR (Saudi Arabia)
Why This Matters
Saudi Arabia’s labor system is strictly regulated, and misclassification can lead to costly retroactive liabilities. Employers must not bypass GOSI or gratuity obligations.
With Gloroots as your EOR in Saudi Arabia, you can:
- Avoid misclassification risk entirely.
- Ensure compliant contracts and payroll.
- Protect your business from fines, back payments, and disputes.
Gloroots makes hiring in Saudi Arabia safe, compliant, and low-risk.
Q: How does an EOR help you run payroll in Saudi Arabia?
Running payroll in Saudi Arabia is highly regulated and overseen by the Ministry of Human Resources and Social Development (MHRSD). Employers must comply with the Wage Protection System (WPS), which requires that all employee salaries be paid through Saudi-registered bank accounts in Saudi Riyals (SAR), with payment records submitted electronically to the ministry.
Employers must also calculate and remit contributions to the General Organization for Social Insurance (GOSI), covering pensions, workplace injury, and unemployment insurance. Payroll must account for income tax exemptions (as Saudi Arabia does not levy personal income tax on salaries) but include social insurance and any applicable allowances such as housing, transportation, or hardship pay.
Non-compliance — such as late salary payments or missing WPS submissions — can result in hefty fines, blocked work permits, and reputational damage. With Gloroots as your Employer of Record (EOR), payroll is managed seamlessly: salaries are processed in SAR, WPS filings are submitted on time, and GOSI contributions are deducted and remitted accurately.
Key Payroll Compliance Requirements in Saudi Arabia
- Payroll Cycle: Typically monthly, with salaries due by the last working day.
- Currency Requirement: Salaries must be paid in Saudi Riyals (SAR) into local bank accounts.
- Wage Protection System (WPS): Mandatory reporting of wage payments to the Ministry.
- Taxation: No personal income tax on employee salaries.
- Social Insurance Contributions (GOSI):
- Employer: ~12% of salary (9% pension + 2% occupational hazard + 1% unemployment insurance).
- Employee: ~10% of salary (9% pension + 1% unemployment insurance).
- Allowances: Common benefits include housing (typically 25% of base salary) and transportation.
- End-of-Service Benefits: Must be calculated and accrued for every employee.
Payroll Management: Direct Entity vs Gloroots EOR (Saudi Arabia)
Why This Matters
Payroll in Saudi Arabia is compliance-heavy and closely monitored. Employers must adhere to WPS, contribute to GOSI, and manage allowances and gratuity obligations. Non-compliance can halt operations through blocked visas or fines.
With Gloroots as your EOR in Saudi Arabia, you can:
- Run payroll accurately and on time in SAR.
- Ensure WPS reporting and GOSI contributions are handled.
- Deliver a smooth employee payroll experience with compliant payslips.
Gloroots makes payroll in Saudi Arabia seamless, compliant, and risk-free.
Q: How does tax compliance work in Saudi Arabia?
Saudi Arabia’s tax framework is unique compared to most countries. Employees do not pay personal income tax on their salaries. However, companies must comply with the Zakat, Tax and Customs Authority (ZATCA) for corporate tax, zakat, and withholding tax obligations. In addition, employers are responsible for remitting social insurance contributions (GOSI) for both Saudi and expatriate employees.
For employers, this means payroll must still account for statutory deductions, including GOSI, and accurate reporting to authorities is mandatory. Multinational companies operating directly in Saudi Arabia must also manage corporate income tax (20% for foreign-owned entities) or zakat (2.5% on Saudi-owned entities).
With Gloroots as your Employer of Record (EOR), you eliminate the complexity of corporate tax registration. Gloroots manages all employee-related tax compliance, including GOSI deductions, WPS submissions, and payroll reporting, ensuring employees are paid compliantly while you focus on operations.
Tax Framework in Saudi Arabia
- Personal Income Tax:
- No personal income tax on employment income.
- Employees keep gross salaries (minus GOSI contributions).
- Corporate Income Tax:
- 20% rate on profits of foreign-owned companies.
- Zakat:
- 2.5% applied to Saudi/GCC-owned companies.
- Withholding Tax:
- Levied on cross-border payments to non-residents (rates vary by transaction type, e.g., 5% on dividends, 15% on royalties).
- Social Insurance Contributions (GOSI):
- Employer: ~12% (Saudi employees: 9% pension + 2% occupational hazard + 1% unemployment insurance).
- Employee: ~10% (Saudi employees: 9% pension + 1% unemployment).
- For expatriates: employer pays occupational hazard (2%); employee not subject to pension contributions.
Tax Compliance: Direct Entity vs Gloroots EOR (Saudi Arabia)
Why This Matters
While Saudi Arabia does not impose income tax on employees, employer tax compliance is strict, with heavy penalties for missed GOSI contributions or incorrect filings with ZATCA. Direct entity setup requires corporate tax registration and ongoing audits, adding to administrative burden.
With Gloroots as your EOR in Saudi Arabia, you can:
- Avoid corporate tax registration while hiring locally.
- Ensure accurate GOSI contributions and WPS reporting.
- Stay compliant with ZATCA and labor laws without administrative overhead.
Gloroots makes tax compliance in Saudi Arabia simple, compliant, and low-risk.
Q: What benefits and entitlements do employees in Saudi Arabia receive?
Employees in Saudi Arabia are entitled to a comprehensive package of statutory benefits under the Saudi Labor Law. These include paid leave, maternity/paternity leave, sick leave, housing and transportation allowances, and end-of-service gratuity. Employers must also register employees with the General Organization for Social Insurance (GOSI), which provides coverage for pensions, occupational hazards, and unemployment insurance.
While the government provides basic healthcare, many employers supplement this with private health insurance, which is mandatory for expatriates under Saudi law. In addition, benefits like housing allowances (often 25% of salary) and transportation allowances are common market practice, making them an expectation for most employees.
End-of-service gratuity is one of the most significant entitlements. Employers must pay employees a lump sum upon termination, calculated based on years of service and final salary.
With Gloroots as your EOR, you can offer employees both statutory entitlements and supplemental benefits, ensuring full compliance while staying competitive in Saudi Arabia’s evolving job market.
Statutory Benefits & Entitlements in Saudi Arabia
- Annual Leave
- 21 days per year, increasing to 30 days after 5 years of service.
- Public Holidays
- Eid al-Fitr, Eid al-Adha, National Day, and other official holidays.
- Sick Leave
- Up to 120 days per year:
- 30 days full pay.
- 60 days at 75% pay.
- 30 days unpaid.
- Up to 120 days per year:
- Maternity & Paternity Leave
- Maternity: 10 weeks (4 before birth, 6 after), partially or fully paid depending on tenure.
- Paternity: 3 days paid.
- Allowances
- Housing allowance (typically ~25% of base salary).
- Transportation allowance (varies by contract).
- Healthcare
- Private health insurance mandatory for expatriates.
- Saudis covered under government healthcare, but many employers provide supplemental coverage.
- End-of-Service Gratuity
- Half a month’s salary for each of the first 5 years.
- One month’s salary for each year thereafter.
Benefits & Entitlements: Direct Entity vs Gloroots EOR (Saudi Arabia)
Why This Matters
Saudi Arabia’s labor law provides strong protections for employees, especially around leave entitlements, allowances, and end-of-service gratuity. Employers that fail to comply face penalties and disputes.
With Gloroots as your EOR in Saudi Arabia, you can:
- Guarantee all statutory benefits are provided.
- Add supplemental benefits to stay competitive.
- Ensure accurate gratuity and leave calculations.
Gloroots ensures employees in Saudi Arabia receive fair, compliant, and attractive benefits packages.
Q: What’s involved in hiring and onboarding employees in Saudi Arabia?
Hiring in Saudi Arabia is governed by the Saudi Labor Law and requires strict compliance with rules on contracts, Saudization quotas, and GOSI registration. Employers must issue written employment contracts in Arabic (bilingual versions permitted), clearly defining wages, benefits, allowances, probation, and termination terms.
Probationary periods are allowed for up to 90 days (extendable to 180 days with employee consent). Employers must also register employees with the General Organization for Social Insurance (GOSI) within 15 days of hire to ensure pension, unemployment, and occupational hazard coverage.
Onboarding typically includes verifying employee documentation, enrolling expatriates in mandatory health insurance, and providing company policies aligned with Saudi labor law. Non-compliance, such as late GOSI registration or failure to issue proper contracts, can result in fines, blocked work permits, or disputes.
With Gloroots as your Employer of Record (EOR), hiring and onboarding are handled seamlessly. Gloroots drafts compliant Arabic contracts, registers employees with GOSI, manages allowances and benefits, and ensures a smooth onboarding process for both Saudi nationals and expatriates.
Hiring & Onboarding Steps in Saudi Arabia
- Employment Contracts
- Must be in Arabic (bilingual Arabic-English allowed).
- Define salary, housing/transport allowances, leave, probation, and termination terms.
- Probation Period
- Standard: 90 days.
- Can be extended to 180 days with written consent.
- Employee Documentation
- National ID (for Saudis) or Iqama (for expatriates).
- Academic certificates or professional licenses (where applicable).
- Medical fitness certificate (for expatriates).
- GOSI Registration
- Mandatory within 15 days of hire for both nationals and expatriates.
- Health Insurance Enrollment
- Expatriates must be covered by private health insurance.
- Saudis may also be provided supplemental health coverage.
- Onboarding Orientation
- Introduce labor law rights, company policies, and cultural workplace practices (e.g., prayer breaks, Ramadan working hours).
Hiring & Onboarding: Direct Entity vs Gloroots EOR (Saudi Arabia)
Why This Matters
Hiring in Saudi Arabia is documentation-heavy and compliance-driven. Mistakes in contracts, probation, or GOSI registration can lead to fines, blocked permits, or employee disputes.
With Gloroots as your EOR in Saudi Arabia, you can:
- Hire employees in weeks with compliant Arabic contracts.
- Ensure GOSI and insurance registration are completed on time.
- Deliver a professional, culturally aligned onboarding experience.
Gloroots makes hiring in Saudi Arabia fast, compliant, and employee-friendly.
Q: How do you successfully manage a workforce in Saudi Arabia?
Managing a workforce in Saudi Arabia requires balancing strict labor law compliance, Saudization quotas, and cultural considerations. Employers must ensure accurate payroll, GOSI contributions, and leave entitlements, while also meeting government-mandated nationalization targets (Nitaqat program).
Culturally, Saudi workplaces are traditionally hierarchical and relationship-driven, with respect for authority and senior decision-makers. At the same time, Vision 2030 reforms are encouraging more merit-based performance management, gender inclusion, and innovation-driven practices. Employers must also consider religious observances — shorter working hours during Ramadan, daily prayer breaks, and gender-based workplace policies that continue to evolve.
Retention strategies are crucial in a market where skilled Saudi nationals are in high demand. Competitive compensation packages often include housing, transportation allowances, supplemental health insurance, and end-of-service benefits. For expatriates, offering relocation support and cultural orientation programs improves retention.
With Gloroots as your EOR, you can manage your workforce with confidence. Gloroots ensures full compliance with Saudi Labor Law, Saudization, and payroll regulations, while also helping you design competitive employee packages to attract and retain top talent.
Best Practices for Managing a Workforce in Saudi Arabia
- Ensure Compliance First
- Issue Arabic contracts and register employees with GOSI.
- Adhere to Saudization quotas.
- Apply correct leave and gratuity entitlements.
- Adapt to Cultural Norms
- Respect hierarchical decision-making.
- Allow for prayer breaks and Ramadan schedules.
- Support gender diversity as reforms expand women’s workforce participation.
- Offer Competitive Benefits
- Housing and transport allowances are standard expectations.
- Expatriates require private health insurance; Saudis often expect supplemental coverage.
- Focus on Retention
- Skilled Saudi professionals are highly sought after.
- Provide training, clear career progression, and performance-based incentives.
Workforce Management: Direct Entity vs Gloroots EOR (Saudi Arabia)
Why This Matters
Saudi Arabia’s workforce is young, skilled, and rapidly evolving, but managing compliance alongside cultural expectations can overwhelm global HR teams. Failure to meet Saudization quotas or payroll obligations can result in penalties, blocked visas, or reputational damage.
With Gloroots as your EOR in Saudi Arabia, you can:
- Stay compliant with labor law and Saudization.
- Deliver competitive benefits packages.
- Manage employee expectations in line with Saudi culture.
Gloroots makes workforce management in Saudi Arabia compliant, culturally aligned, and retention-focused.
Q: What are the key steps and requirements in terminating employees in Saudi Arabia?
Termination in Saudi Arabia is strictly regulated under the Saudi Labor Law, with employee protections around notice, severance, and end-of-service gratuity. Employers must follow lawful grounds for termination — such as redundancy, contract expiration, poor performance (with documentation), or misconduct. Arbitrary dismissal without cause exposes employers to wrongful termination claims.
Probationary periods allow for more flexible termination, but written notice is still required. For regular employees, termination requires notice, final wage settlement, accrued leave payout, and end-of-service gratuity. Employers must also issue a certificate of employment upon request.
Failure to comply with termination rules can result in fines, employee reinstatement orders, or additional compensation awards. With Gloroots as your EOR, the termination process is handled lawfully and smoothly, ensuring correct calculations and documentation at every step.
Key Termination Rules in Saudi Arabia
- Termination Process
- Must be based on lawful grounds under Saudi Labor Law.
- Written notice required; employer must provide reason for termination.
- Notice Periods
- Monthly paid employees: 60 days’ notice.
- Other employees: 30 days’ notice.
- Payment in lieu of notice is allowed.
- Severance Pay
- Based on end-of-service gratuity formula:
- Half a month’s salary for each of the first 5 years.
- One month’s salary for each year thereafter.
- Based on end-of-service gratuity formula:
- Probationary Termination
- Probationary periods up to 90 days (extendable to 180 with consent).
- Termination during probation requires shorter notice.
- End-of-Service Gratuity
- Mandatory for all employees completing at least 2 years of service (pro-rated if less).
- Unlawful Termination Consequences
- Compensation up to 15 days’ wages per year of service.
- Risk of reinstatement orders.
Termination: Direct Entity vs Gloroots EOR (Saudi Arabia)
Why This Matters
Termination in Saudi Arabia is compliance-heavy and employee-protective. Errors in notice, severance, or gratuity calculation can lead to wrongful dismissal claims, fines, or reinstatement orders.
With Gloroots as your EOR in Saudi Arabia, you can:
- Terminate employees lawfully and transparently.
- Ensure accurate notice, gratuity, and settlement calculations.
- Avoid wrongful dismissal disputes.
Gloroots makes employee exits in Saudi Arabia compliant, fair, and low-risk.
Q: What is the offboarding process in Saudi Arabia?
Offboarding in Saudi Arabia is a compliance-driven process, regulated by the Saudi Labor Law and overseen by the Ministry of Human Resources and Social Development (MHRSD). It ensures that all employee rights are settled, statutory benefits are paid, and government systems are updated to reflect the end of employment.
Employers must issue final settlements, including unpaid wages, accrued leave, allowances, and end-of-service gratuity. Employees must also be deregistered from the General Organization for Social Insurance (GOSI) and private health insurance (mandatory for expatriates). Additionally, an employment certificate must be issued upon request, confirming tenure and role.
Failure to follow offboarding rules — such as delayed gratuity or late GOSI deregistration — can result in fines, disputes, or blocked work permits. With Gloroots as your Employer of Record (EOR), every step of offboarding is handled in compliance with Saudi law, ensuring smooth exits for both Saudi nationals and expatriates.
Key Phases of the Offboarding Process in Saudi Arabia
- Notice & Termination Compliance
- Confirm lawful grounds for termination or employee resignation.
- Apply correct notice period or payment in lieu.
- Exit Clearance
- Return of company assets (laptops, phones, ID cards).
- Completion of handover responsibilities.
- Final Settlement
- Pay all outstanding wages, overtime, unused leave, allowances, and end-of-service gratuity.
- Must be settled within a few days of termination.
- GOSI Deregistration
- Remove employee from the General Organization for Social Insurance system.
- Health Insurance Deregistration
- Cancel private medical insurance for expatriates.
- Employment Certificate
- Provide written certificate of employment tenure and role upon request.
- Government Reporting
- Update MHRSD records to avoid penalties or blocked quotas under Saudization.
Offboarding: Direct Entity vs Gloroots EOR (Saudi Arabia)
Why This Matters
Offboarding in Saudi Arabia is employee-protective and strictly regulated. Employers must complete all settlements promptly and deregister employees from government systems. Failure to do so risks fines, disputes, and Saudization compliance issues.
With Gloroots as your EOR in Saudi Arabia, you can:
- Guarantee timely and accurate final settlements.
- Ensure GOSI and insurance deregistration are completed on time.
- Provide employees with a compliant, respectful exit experience.
Gloroots makes offboarding in Saudi Arabia smooth, compliant, and risk-free.
Q: What costs and financial planning do you need with an Employer of Record in Saudi Arabia?
Expanding into Saudi Arabia requires careful cost planning. Beyond salaries, employers must account for social insurance contributions (GOSI), allowances, healthcare, and end-of-service gratuity. Direct entity setup adds significant upfront costs, including licensing fees, office space, Arabic legal translations, Saudization compliance management, and ongoing accounting obligations.
Employer payroll contributions and benefits typically add 10–15% on top of gross salary for Saudi nationals. For expatriates, employers must still pay occupational hazard insurance and provide private health coverage. Additionally, end-of-service gratuity must be accrued for every employee, creating a long-term liability.
With Gloroots as your EOR, companies avoid entity setup and instead pay a predictable monthly fee per employee. This covers contracts, payroll, GOSI contributions, and benefits administration, allowing you to budget with confidence while staying compliant.
Key Cost Considerations in Saudi Arabia
- Entity Setup & Maintenance
- Licensing with MISA, Ministry of Commerce registrations, GOSI, ZATCA.
- Arabic documentation and translation fees.
- Physical office lease required.
- Corporate tax (20% for foreign-owned companies) or zakat (2.5% for Saudi-owned entities).
- Employer Contributions (GOSI)
- ~12% of Saudi employee salary.
- ~2% occupational hazard insurance for expatriates.
- Allowances & Benefits
- Housing allowance (often ~25% of salary).
- Transportation allowance (contract-specific).
- Private health insurance (mandatory for expatriates).
- End-of-Service Gratuity
- Half a month’s wage per year (first 5 years).
- One month’s wage per year thereafter.
- EOR Fees
- Flat monthly fee per employee covering contracts, payroll, contributions, and compliance.
Costs: Direct Entity vs Gloroots EOR (Saudi Arabia)
Why This Matters
Hiring in Saudi Arabia involves hidden compliance and benefit costs — from housing allowances to gratuity accruals. Entity setup only adds to the financial burden, delaying entry.
With Gloroots as your EOR in Saudi Arabia, you can:
- Avoid high upfront setup costs.
- Pay a predictable monthly fee per employee.
- Ensure accurate gratuity, GOSI, and benefits compliance.
Gloroots makes financial planning in Saudi Arabia simple, transparent, and scalable.
Q: What challenges might you face, and how do you solve them using an EOR in Saudi Arabia?
Saudi Arabia offers a large, young workforce and strategic access to the Middle East, but expansion comes with compliance and cultural challenges. Companies must navigate Saudization quotas (Nitaqat program), issue Arabic employment contracts, and comply with GOSI, WPS payroll rules, and end-of-service gratuity obligations. Hiring expatriates adds further complexity, requiring work permits, health insurance, and ministry approvals.
Entity setup can take months and requires a physical office lease, ministry registrations, and ongoing compliance with corporate tax (20% for foreign-owned entities) or zakat (2.5% for Saudi-owned). Non-compliance risks include fines, blocked work permits, and reputational damage.
With Gloroots as your Employer of Record (EOR), you can bypass these challenges. Gloroots provides a ready-to-use compliant infrastructure, handling contracts, payroll, Saudization compliance, and employee benefits. This enables you to hire employees in Saudi Arabia quickly and compliantly, while reducing administrative overhead and risk.
Common Challenges & EOR Solutions in Saudi Arabia
Why This Matters
Saudi Arabia is a high-growth market, but its employment system is complex, heavily regulated, and culturally unique. From Saudization quotas to WPS payroll and Arabic contracts, employers face compliance risks that can delay or derail expansion.
With Gloroots as your EOR in Saudi Arabia, you can:
- Hire in weeks without entity setup.
- Ensure compliance with Saudization, WPS, and GOSI.
- Provide employees with compliant contracts, benefits, and gratuity.
- Stay agile and scale without long-term liabilities.
Gloroots makes hiring in Saudi Arabia fast, compliant, and risk-free.
Conclusion
Saudi Arabia is a strategic gateway to the Middle East, offering access to a young and rapidly growing workforce, thriving industries, and ambitious opportunities under the Vision 2030 program. From finance and technology in Riyadh to tourism in Jeddah and energy in Dammam, the kingdom is diversifying and modernizing at speed.
At the same time, employers face significant challenges: Saudization quotas, Arabic contract requirements, WPS payroll compliance, GOSI contributions, and end-of-service gratuity obligations. Direct entity setup is time-consuming and expensive, with high compliance risks if mismanaged.
With Gloroots as your Employer of Record (EOR) in Saudi Arabia, you can hire employees in Saudi Arabia in weeks, not months. Gloroots manages contracts, payroll, Saudization compliance, and statutory benefits, giving you peace of mind while you focus on scaling operations.
Gloroots makes expansion into Saudi Arabia compliant, fast, and low-risk.
Frequently asked questions
