Hiring employees in Saudi Arabia is becoming more popular among businesses looking to expand abroad. Saudi Arabia boasts a large and growing market, as well as significant support for foreign investors, making it an attractive destination for business expansion.

This help guide will provide you with nine key steps to hiring in Saudi Arabia, from understanding your hiring needs to developing a clear recruitment strategy. We’ll also make sure you know the mandatory benefits workers in Saudi Arabia are entitled to, ensuring your business is compliant with local labor laws. 

Why Expand Your Business to Saudi Arabia

Strategic Advantages of the Saudi Arabian Market

Saudi Arabia offers a range of opportunities to companies seeking growth in the Middle East. 

The government is known for incentivizing foreign investment through tax benefits in different sectors, and they offer a range of global trade routes to countries such as Jordan, the United Arab Emirates, Bahrain, and into Africa.

They are also the world’s largest exporter of oil, resulting in a strong economy and providing reassurance to companies expanding into Saudi Arabia.

Importance of Being Aware of Saudi Arabia's Labor Laws

Familiarizing yourself with Saudi Arabia’s labor laws is crucial when operating in this country. 

The Saudi Labor Law is a legal framework that dictates the rights and obligations of employers/employees, covering a range of factors such as working hours, overtime, termination rules, and leave entitlement. Adhering to Saudi Arabian labor laws will protect companies from legal issues and ensure a good reputation.

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Step 1: Define Your Hiring Needs

The first step in the hiring process is to outline which roles you need to fill and how many employees you’ll need.

Think about the sort of skills and experience you need for your business, and how these roles will align with your long-term business goals to ensure you’re making the right choices for the future of your company.

Step 2: Familiarize Yourself with Compliance Requirements

It’s crucial when hiring in Saudi Arabia to make yourself an expert on the compliance requirements in this country.

This includes local labor laws, tax obligations, minimum wages, and social security requirements. Familiarizing yourself with these procedures will protect your company from any legal risks/penalties.

Step 3: Choose Your Hiring Method

There is a range of hiring methods in Saudi Arabia, each with different benefits depending on a company’s hiring goals and budgets.

Establishing a Legal Entity

Setting up a legal entity gives you full control over the hiring process. This involves obtaining a license from the Ministry of Investment of Saudi Arabia (MISA) and registering your company with the Ministry of Commerce for a Commercial Registration.

It’s important to bear in mind that this method does require significant time and investment, which is generally best suited to larger-scale companies.

Using an Employer of Record (EOR)

An Employer of Record is a popular choice for companies looking to maintain some control of hiring employees while outsourcing certain legal responsibilities.

An EOR would hire employees on your behalf and can handle a range of tasks such as payroll, benefit compliance, and HR.

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Hiring Independent Contractors

There are many benefits to hiring independent contractors when working in Saudi Arabia.

Hiring contractors can be a more flexible, affordable way of hiring, which is ideal for companies looking to hire on a project-by-project basis. However, it’s important to classify contracted workers correctly to avoid any legal issues surrounding local labor laws.

Step 4: Develop a Recruitment Strategy

The next step is to create a strong recruitment strategy. This will ensure you attract the best candidates for your business while always maintaining compliance.

Put together clear job descriptions for your adverts that accurately explain what the role requires, and make sure these align with Saudi Arabia’s anti-discrimination laws: primarily gender, nationality, and religion.

There is a range of top online job sites that you can use to post your adverts, including Bayt, GulfTalent, and Naukrigulf. It’s also worth exploring professional networks such as LinkedIn to find the best talent in your industry.

Step 5: Conduct Interviews and Assessments

The interview process is a highly important step when recruiting, as it’s your opportunity to create a great first impression with potential employees.

Be mindful of cultural norms in Saudi Arabia when carrying out interviews to make candidates feel at ease. For example, Islamic traditions are highly important in this country, so being respectful of prayer times and modest dress will help when carrying out interviews.

Step 6: Know the Legal Limitations of Background Checks

While background checks are a standard part of the hiring process in Saudi Arabia, companies much fully understand local data protection laws and legal boundaries that must be followed.

Consent must always be obtained before any background checks are carried out, and personal data must always be collected carefully and stored lawfully. Staying compliant with these laws will protect your company from legal risks, which will in turn prevent damage to your reputation.

Step 7: Draft Employment Contracts

Putting together your employment contracts will set the basis for your working relationship with employees, so it’s really important to get these right.

Make sure the job title, job description, notice periods, and probationary periods are clearly outlined, and consider having your contracts read by a legal professional to ensure they meet Saudi labor law requirements.

It’s also worth thinking about writing your contracts in Arabic to suit your new employees.

Step 8: Register with Authorities and Set Up Payroll

Once your new employees have been hired, it’s time to register with local authorities in Saudi Arabia.

These include the General Authority of Zakat, Tax, and Customs (ZATCA) for tax obligations, and the General Organization for Social Insurance (GOSI).

This is also the time to set up any payroll processes to ensure accurate salary payments/contributions.

Step 9: Onboard Your New Employees

Now for the final step – integrating your new employees into your organization.

Make sure your recruits have the necessary training and resources they need to do their jobs to the best of their ability, and introduce them to the new colleagues they’ll be working with.

Getting this step right is key to ensuring a good working relationship and setting the right precedent when it comes to company culture and work ethic. Give your new employees a full explanation of relevant company policies/procedures in the onboarding process to set the right expectations moving forward.

Key Employment Laws and Regulations

The Saudi Arabia Labor Code

The Saudi Labor Code is a legal framework outlining the rights and responsibilities of employers and employees surrounding working hours, overtime, and general working practices.

Ensuring your company is familiar with these laws and regulations will ensure you hire compliantly, reducing the risk of any legal implications.

Social Security Regulations

Saudi Arabia’s Social Security System is managed by the GOSI and protects workers in Saudi Arabia in the event of retirement, disability, and workplace injuries.

Employers and employees must make monthly contributions to social insurance with the following rates applying as of 2025:

Employee TypeTotal Contribution RateBreakdown
Non-Saudi Employees2%Paid entirely by employer
Saudi Employees21.5%9.75% from employee and 11.75% from employer

Employment Standards and Employee Rights

Unions and Works Council

Saudi Arabia does not permit trade unions; however, work councils are permitted for Saudi national workers.

Employee representation tends to be managed through government bodies such as the Ministry of Human Resources and Social Development (HRSD).

Types of Employment Contracts

There are two main types of employment contracts in Saudi Arabia.

Fixed-Term Contracts

These contracts are set for a defined period and are usually used for temporary or project-based work. 

Fixed-term contracts may range from a few months to several years.

Unlimited-Term Contracts

Unlimited-term contracts have no set end date and continue until the employer or employee decides to terminate the contract.

These contracts are common in Saudi Arabia as they provide more job security and are best for ongoing working relationships.

Working Hours and Overtime

Standard Working Hours

Employees in Saudi Arabia typically work 8 hours a day or 48 hours per week. Working hours differ in the month of Ramadan, where the hours are limited to 6 hours per day or 36 hours per week.

Overtime Regulations

Hours worked over an employee’s contracted hours count as overtime and must be compensated accordingly.

This is generally paid at a rate of 150% of an employee’s normal wage, and working hours are limited to 11 hours per day (including overtime. Employees are not permitted to work more than 480 hours of overtime per year.

Leave Entitlements

There are various leave entitlements for workers in Saudi Arabia.

Annual Leave

Employees in Saudi Arabia are entitled to annual leave, which is dependent on their years of service:

Length of ServiceLeave Entitlement
Less than 5 years21 days
5 years or more30 days

Unused leave can often be carried over to the following calendar year upon approval from the employer.

Sick Leave

If an employee cannot work due to sickness, they are entitled to up to 120 days of sick leave per year.

This is usually paid in full for the first 30 days of sickness, at 75% of an employee’s pay for the next 60 days, and unpaid for any remaining sick days.

Maternity and Paternity Leave

Female employees are entitled to 12 weeks of fully paid maternity leave in Saudi Arabia. This is usually taken as 6 weeks before birth and 6 weeks after birth.

Male employees may take 3 days of paid paternity leave within the first 7 days of their child being born.

Termination and Severance

Notice Periods

Notice periods for employment termination differ depending on whether it was initiated by the employer or the employee.

Employees must give 30 days’ notice when resigning from a position, while employers must give 60 days when terminating a contract.

Severance Pay

If an employer terminates a contract, severance pay is as follows:

Length of ServiceSeverance Pay
First 5 years of serviceHalf a month’s pay per year of service
After 5 years of service1 month’s pay per year of service

If an employee resigns, they must be paid as follows, using the above calculations for severance pay:

Length of ServiceSeverance Pay
Less than 2 yearsNo severance pay
2 to 5 years⅓ of calculated severance pay
5 to 10 years⅔ of calculated severance pay
10 years or moreFull calculated severance pay

Mandatory Contributions

Social Security Contributions

Employers and employees must pay social security contributions at the following rates:

  • Non-Saudi employees: 2% (paid by employer)
  • Saudi employees: 21.5% (9.75% from employee and 11/75% from employer)

Health Insurance and Pension

Saudi Arabia provides free healthcare to those working in the public sector, while private sector workers are generally required to enrol in private health insurance.

The pension system in Saudi Arabia is made up of a mandatory public pension, which consists of an old-age pension and an old-age settlement fund. There is also a range of private pension options, but these are voluntary and not widespread.

Optional Benefits

Employers should consider offering supplementary employment benefits to aid staff retention rates and increase the number of job applications for new roles. Some examples of additional perks employers could offer include:

  • Performance bonuses
  • Health insurance
  • Housing allowances
  • Company car
  • Advanced training opportunities
  • Flexible/remote working

How to Hire Employees in Saudi Arabia — Our Take

Hiring employees in Saudi Arabia can be easier when working with Remote People.

We offer Employer of Record (EOR) services that allow you to hire workers in full compliance with Saudi labor laws—without setting up a local entity. The EOR acts as the legal employer, managing benefit compliance, payroll, and other key HR responsibilities on your behalf.

Other services we can offer include payroll outsourcing and recruitment, helping to hire the best people for your business and allowing you to focus on other important areas.

Contact Remote People to see how we can streamline the hiring process for your expansion into Saudi Arabia.