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Global Expansion Guide

Saudi Arabia

Manage and pay your employees easily with BIPO in Saudi Arabia and 170+ other markets. Build your international teams today with our global Employer of Record service!

employment guide_currency

Currency

Saudi Riyal (SAR)

employment guide_language

Language

Arabic

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Capital

Riyadh

Employer of Record Saudi Arabia

Employment Contract

Statutory Contributions

Minimum Wage

Public Holidays

Working Hours

Leave

Termination and Compensation

BIPO as your Employer of Record

Benefits of BIPO EOR Service Saudi Arabia

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Employer of Record Saudi Arabia

Embark on your business expansion in Saudi Arabia with BIPO’s Employer of Record (EOR) services. Designed to assist you in navigating the intricacies of local employment laws and regulations, we can help ensure a smooth transition for your business and workforce.

As an Employer of Record (EOR), we act as your legal employment entity, streamlining the process of business expansion. Allowing businesses to focus on their core business operations while the EOR manages all aspects of compliance, payroll, HR, and employee benefits when venturing into the Saudi Arabian market. An EOR provider addresses the common challenges associated with local employment laws, payroll regulations, and work permit requirements.

This guide was last updated on 14 October 2025. The content in this guide is current as of this date and based on common business practices.

Employment Contract

The Ministry of Human Resources and Social Development (MHRSD) provides standard templates for different types of labour contracts.

Key Contents of a Labour Contract

  • The employer’s name and location;
  • The employee’s name and nationality;
  • The employee’s identification documents;
  • The employee’s residential address;
  • The agreed remuneration (including benefits and allowances);
  • The type and location of work;
  • The employment start date;
  • The contract term (for fixed-term contracts);
  • The basic rights and obligations of both parties.
  • Additional clauses may be included provided they do not contravene the law or its implementing regulations.

Expiration and Renewal of Fixed-Term Contracts

  • A fixed-term contract shall be automatically terminated upon the expiration of its term.
  • If both parties continue to perform the contract after the expiration, the contract shall be deemed to have been converted into an open-ended contract.
  • If the contract stipulates a renewal clause, it may be renewed in accordance with the agreement.
  • If the contract is renewed three consecutive times, or if the total duration of the original and renewed contracts reaches four years (whichever occurs first) and performance continues, the contract must be converted into an open-ended contract.
  • The renewal period shall be deemed as a continuation of the original contract term and shall be used for calculating the length of service and relevant rights and interests.

Contracts for Specific Work

If a contract is signed for the completion of a specific task or project, it shall be automatically terminated once the work has been completed.

Statutory Contributions

Scope of Application: GOSI and SANED are only applicable to Saudi national employees.

Type of Social Insurance Employer’s Contribution Employee’s Contribution
GOSI (General Organization for Social Insurance) 9% 9%
SANED (Unemployment Insurance) 0.75% 0.75%
Occupational Hazard Insurance (Work-related Injury and Occupational Hazard Insurance) 2% –
Mandatory Health Insurance Determined by the insurance plan selected by the employer –

Minimum Wage

The minimum wage in Saudi Arabia is SAR 4,000, effective from 2020.

It applies only to Saudi nationals, with no minimum wage requirement currently set for foreign employees.

Public Holidays

The public holidays in Saudi Arabia for 2025 are listed below. Please refer to official announcements from the Saudi Arabian government for the latest updates.

Holiday Name Date
Founding Day 22 February 2025
Eid al-Fitr 29 May 2025
30 May 2025
31 May 2025
1 June 2025
Arafat Day 5 June 2025
Eid Al Adha 6 June 2025
7 June 2025
8 June 2025
National Day 23 September 2025

Note:

  • If a public holiday falls on a weekly rest day, the employee shall be granted equivalent compensatory leave either before or after the holiday.
  • If a public holiday overlaps with annual leave, the annual leave shall be extended by the number of overlapping days.
  • If a public holiday occurs during sick leave, the employee shall receive full pay for the holiday, and the sick leave remuneration shall remain unaffected.
  • If National Day coincides with Eid al-Fitr or Eid al-Adha, no additional compensatory leave shall be granted.

Overtime Compensation: Overtime shall be paid at the normal hourly wage plus 50% of the basic wage. With the employee’s consent, the employer may provide paid compensatory leave in lieu of overtime pay.

Exemptions from Overtime Compensation on Public Holidays: None.

Working Hours

Normal Working Hours

Category Per Day Per Week
Non-Ramadan Period 8 hours 48 hours
Ramadan Period 6 hours 36 hours

Rest Time

  • Friday shall constitute the weekly rest day, providing all employees with 24 consecutive hours of leave with full pay.
  • With prior notification to the competent labour office, the employer may designate an alternative day of the week as the rest day for certain employees.

  • Employers must allow employees to observe their religious obligations.

    • The weekly rest day shall not be compensated with cash.

Overtime Compensation

  • Overtime shall be paid at the normal hourly wage plus 50% of the basic wage. With the employee’s consent, the employer may provide paid compensatory leave in lieu of overtime pay.
  • Exemptions from Overtime Compensation: None.

Leave

Annual Leave

  • Applicable Employer Type: Single employer
  • Eligibility: Employees of private enterprises
  • Entitlement: Minimum of 21 days per year. Employees with five or more years of continuous service with the same employer are entitled to a minimum of 30 days per year.
  • Postponement of Annual Leave: Employees may postpone annual leave to the following year with the employer’s approval. Employers may defer leave for operational needs by up to 90 days. Postponements exceeding 90 days require the employee’s written consent, and the total postponement may not extend beyond the end of the following year.
  • Annual Leave Allowance: Full pay
  • Compensation for Unused Leave: Employees leaving the company without taking their annual leave shall be compensated at full pay for the unused days, calculated proportionally to their working time during the year.

Sick Leave

  • Eligibility: Employees of private enterprises certified as ill
  • Duration: Up to 120 days

  • Allowance:

    • Days 1–30: Full pay
    • Days 31–90: 75% of the salary
    • Days 91–120: Unpaid

  • Work-related Injury:

    • Employees injured at work are entitled to full pay for the first 60 days. Thereafter, 75% of the salary may be paid for the remaining recovery period.
    • If recovery extends to one year or the employee is deemed permanently unfit for work, the disability is considered total disability. In this case, the labour contract shall be terminated, and the employee shall receive work-related injury compensation. The employer cannot reclaim wages or benefits paid during this period.

Maternity Leave

  • Eligibility: Female employees

  • Duration: 12 weeks in total

    • The six weeks immediately following childbirth are mandatory. The remaining six weeks may be taken at the employee’s discretion, which can commence up to four weeks before the expected delivery date.
    • If delivery occurs later than expected and fewer than six weeks remain, the shortfall is treated as unpaid leave.

  • Postponement:

    • Employees may extend maternity leave by up to one month (unpaid).
    • In cases where the child is ill or has special needs, employees are entitled to one additional month of paid leave, and may extend it by another month of unpaid leave.
  • Allowance: Full pay

Other Leave Types

  • Examination Leave: Full pay; submission of proof of examination participation required.
  • Emergency Personal Leave: Up to five days per fiscal year, subject to supervisor approval and availability of annual leave, with full pay.
  • Caregiver Leave: For accompanying immediate family members (child, spouse, parent, or dependent sibling) for medical treatment. Mothers may accompany children under seven years old. Leave may be taken from annual leave with full pay; for leave exceeding annual entitlement, payment is according to the sick leave pay ratio (full/half/quarter/no pay).
  • Study/Educational Leave: Eligibility requires completion of general secondary education or equivalent, at least three years of service, and satisfactory work performance. Leave duration is determined by the institution based on the study plan. This leave is unpaid, and withdrawal or failure of studies may result in leave cancellation.

  • Bereavement Leave:

    • 3 days of full pay for the death of a parent, child, or spouse; 1 day for the death of a sibling.
    • Iddah (Mourning Period): Female employees whose husband passes away are entitled to 4 months and 10 days of fully paid leave.
  • Paternity Leave: One day of paid leave within one week of the child’s birth.
  • Rescue and Civil Defence Work Leave: Up to 45 days per year with full pay.
  • Cultural Activity Leave: National employees who are writers or literary workers may take leave to participate in cultural events, conferences, seminars, or lectures organised across Saudi Arabia, upon recommendation by literary clubs. Maximum leave is 31 days per year.

Termination and Compensation

Notice Period

  • For permanent contracts:

    • Both the employer and the employee may terminate the contract with just cause, provided written notice is given.
    • For employees paid monthly, notice shall be given at least 30 days in advance.
    • For employees paid otherwise, notice shall be given at least 15 days in advance.

  • Circumstances allowing immediate termination by the employer:

    • Assaulting the employer or a supervisor at work
    • Failing to perform basic work obligations or refusing to comply with safety instructions
    • Engaging in dishonest conduct or committing gross negligence
    • Intentionally causing property damage to the employer
    • Securing employment through forgery
    • Being in the probationary period
    • Unauthorised absence from work (more than 20 days per year or 10 consecutive days, following a written warning)
    • Using the position for personal gain
    • Disclosing business or industrial secrets related to the work

  • Circumstances allowing immediate resignation by the employee:

    • Employer fails to perform contractual or statutory obligations
    • Employer commits fraud when signing the contract
    • Employee is assigned work substantially different from the agreed duties
    • Employer, employer’s family members, or employer’s managers commit violent or immoral acts against the employee or their family
    • Employer or manager treats the employee cruelly, unfairly, or humiliatingly
    • Serious safety or health risks in the workplace that the employer fails to address
    • Employer’s actions make it appear that the employee has voluntarily terminated the contract

Compensation

For open-ended contracts:

  • If the party initiating the termination fails to comply with the required notice period, they shall pay compensation to the other party equivalent to the employee’s wage for the notice period.
  • If the notice period is only partially fulfilled, compensation shall be calculated based on the remaining unserved days.

Calculation standards:

  • For a work tenure of less than 2 years: Half a month’s wage for each full year of service.
  • For a work tenure of 2 years or more: One month’s wage for each full year of service.

Calculation basis:

  • For employees paid monthly or hourly, the basis shall be the last wage received.
  • For employees paid by piecework or productivity, the basis shall be the average wage of the actual working days in the last year. This average wage shall be used to calculate the employee’s entitled benefits under the labour law (e.g., termination compensation, notice period pay, etc.).

  • For employees whose entire wage consists of commissions or a percentage of sales, the average daily wage shall be calculated as:

    (Total commissions ÷ Bonuses received on actual working days in the last year) ÷ Actual working days.

    This average daily wage shall then form the basis for calculating statutory benefits.

End-of-Service Bonus (EOSB)

  • Upon termination of the employment relationship, the employer shall pay an end-of-service bonus. For the first five years of service, half a month’s wage shall be paid per year; for each subsequent year, one month’s wage shall be paid. The bonus shall be calculated based on the employee’s last wage. For service periods of less than one year, the bonus shall be prorated according to actual working time.

  • If the employment relationship ends due to the employee’s resignation, the bonus shall be paid as follows:

    • Continuous service of 2 to 5 years: one-third of the full bonus.
    • Continuous service of more than 5 years but not exceeding 10 years: two-thirds of the full bonus.
    • Continuous service of 10 years or more: full bonus.

BIPO as your Employer of Record

BIPO’s total HR solutions include our award-winning HR Management System, Global Payroll Outsourcing, Employer of Record service, and Athena BI.

As your EOR partner, our services are designed to provide a comprehensive, hassle-free experience:

  • Initial Consultation:
    The journey typically begins with an in-depth discussion to understand your specific business needs, ensuring our EOR services perfectly align with your objectives.
  • Payroll Management:
    We offer a streamlined payroll system that ensures timely and accurate salary disbursement, complete with statutory deductions and contributions in full compliance with Saudi Arabian regulations.
  • Contributions and Taxes:
    Our expertise in managing local social security requirements ensures your business complies with in-country financial obligations.
  • Compliance with Minimum Wage and Working Hours:
    We guarantee that your employment practices adhere to Saudi Arabia’s minimum wage and working hours standards, safeguarding your business against potential legal issues.
  • Leave and Paid Time Off Management:
    Implement and manage leave policies that comply with Saudi Arabia’s laws, ensuring a fair and transparent leave management system for your employees.
  • Regulatory Compliance:
    Stay ahead of local labour laws and regulations with our up-to-date compliance services, minimising legal risks for your business.
  • Other services:
    Work visa, permit applications, termination procedures.

Services may vary across countries.

Benefits of BIPO Employer of Record Service in Saudi Arabia

Unlock your growth potential with BIPO’s Employer of Record service in Saudi Arabia. Our EOR service empowers businesses with seamless scalability while ensuring regulatory compliance.

From smooth onboarding to risk mitigation, BIPO handles the administrative HR tasks, enabling companies to concentrate on core business functions and accelerating growth. Our local expertise and global reach ensure efficient operations, enhancing flexibility and reducing operational complexities.

Stay up to date with the latest employment regulations.

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Frequently Asked Questions

An Employer of Record (EOR) is a partner company that acts as the official employer for your employees.

An EOR company handles all the HR aspects and processes, including the legal complexities associated with regulatory and tax compliance.

As your EOR, BIPO supports your organisation by providing a comprehensive range of HR, payroll and advisory services to ensure your business stays compliant. These include end-to-end on/offboarding services for your employees (e.g.: payroll processing, HR and benefits administration, labour contracts, visa applications, payroll/tax compliance, and more).

By engaging BIPO as your EOR, your business benefits from:

  • Compliance in the global markets where you operate
  • Reduced costs and risk mitigation
  • Overall workforce productivity, effectiveness, and efficiencies

A global EOR benefits organisations regardless of size or industry. It is especially useful for organisations that want to:

  • Scale their global business and be fully operational in foreign markets quickly
  • Reduce financial and HR complexities while expanding internationally
  • Minimise time spent trying to understand local labour laws and foreign tax systems
  • Stay compliant across global markets while reducing HR and administrative workflows
  • Benefit from a centralised and intuitive cloud HR platform to manage international teams

A global EOR enables businesses to fast-track their market entry into international market, and reduce the complexities of setting up multiple foreign entities.

When you partner with BIPO, we take on the the day-to-day administrative tasks, while you maintain full control of the business and delegate HR workflows and hiring needs.

Our vast network of business partners across 170+ markets globally supports your business expansion plans, with in-country HR experts providing localised support. Going global has never been easier!

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