Hiring in Saudi Arabia

The terms set out role, salary in SAR, working time, leave, notice and any restrictive covenants. The EOR is the counterparty to the employee, which is what removes the need for your own entity.

Arabic is mandatory, so contracts are usually bilingual with the Arabic text prevailing. The Qiwa version governs in a dispute, so any non-standard terms belong in its additional clauses.

Fixed-term contracts are mandatory for expatriates and usually track the work permit. Saudi nationals can be hired on fixed or indefinite terms.

Set probation from day one. An employee can only be placed on probation once with the same employer, unless they move to a different role or six months have passed since they last worked there.

Some EORs apply the full 180 days as policy because exits are far simpler inside probation. Ask what the provider's default is before you agree a start date.

Overtime is paid at the hourly wage plus 50% of basic pay, and work on rest days and public holidays counts as overtime. Most employers work Sunday to Thursday.

Senior managers with real authority over staff sit outside the overtime rules, so for professional hires the position turns on title and authority. Put it in writing either way.

Senior and expatriate packages often go further, commonly with 30 days from the start and an annual return flight, so quote the market figure when you budget.

Sick leave runs to 120 days a year: 30 at full pay, 60 at three-quarters pay and 30 unpaid. Maternity leave is 12 weeks at full pay and paternity leave is three days, both paid by the employer rather than the state, so confirm how the EOR bills them.

Either side may end an indefinite contract for a valid reason on notice or pay in lieu, with 30 days required from the employee. Terminating without a valid reason triggers compensation of 15 days' wages per year of service, or the balance of a fixed term, with a two-month minimum.

The EOR runs the process as the legal employer and will want the paperwork in order, including final pay, unused leave, the end-of-service award and, for expatriates, the final exit visa. Employees can claim at the labour court, so keep a documented reason.

Private medical cover through a licensed insurer is mandatory for employees and their dependants, unlike many markets where it is optional. Housing and transport allowances are standard in Saudi packages.

The end-of-service award is a liability, not a monthly charge. It builds at half a month's wage per year for the first five years and a full month after that. Ask what the EOR fee includes, what is billed on top and whether the award is accrued monthly.

Employer GOSI contributions add 11.75% for most Saudi nationals, or 12.75% for first-time entrants registered since July 2024, rising each July until 2028. Both are calculated on basic salary plus housing allowance, and that is before the EOR fee.

The expat levy is the trap. Each non-Saudi employee attracts a government levy of SAR 700 to 800 a month plus work permit and iqama fees, all payable by the employer, so check whether the EOR quote includes them.

Ask whether the EOR sponsors directly or refers to a partner. A partner-model EOR often cannot sponsor at all, and Saudisation quotas and visa allocations apply to the sponsor, not to you.

Set start dates after approval, not before.

Get the data processing terms in the service agreement, not just the privacy notice. Transfers outside the Kingdom are restricted and need an approved mechanism, such as SDAIA's standard contractual clauses.

Ask where payroll data is hosted and who in the partner chain can see it.

Incorporation needs a Ministry of Investment licence and commercial registration, and the running cost is the point: Saudisation quotas, GOSI and Qiwa registrations, Zakat and tax filings and audited accounts set an annual floor. Government contracts generally require a regional headquarters in the Kingdom as well.

Permanent establishment risk is about what people do, not where payroll sits. Revenue-generating activity can create exposure regardless of the employment route.