Employer of Record in Saudi Arabia

An EOR (Employer of Record) solution might give you the ideal option to capitalise on this dynamic market without the necessity for entity creation if you’re trying to grow your business into Saudi Arabia.

You can easily enrol your remote workforce and handle their payroll, benefits, and other HR-related tasks in a compliant way thanks to our unified and automated global HR platform. Additionally, we offer professional guidance for navigating Saudi Arabia’s convoluted hiring procedures, rules, and laws.

With the help of our EOR solution, you may accelerate the process of international growth while concentrating on what you do best: expanding your company. You don’t have to worry about the complicated legal and administrative requirements of establishing a distinct legal organisation since we take care of everything, including hiring, managing employees, probation, and regulation.

Our EOR solution can assist you in easily tapping into this interesting market since Saudi Arabia is quickly becoming a centre for business and talent in the Middle East. To find out more about how we can assist you with expanding your company into Saudi Arabia in the easiest possible way, get in touch with our specialists right now.

Summary of Saudi Arabia

• Population: 34.08 million (as of 2019)
• Currency: SR Saudi riyal
• Capital City: Riyadh
• Languages Spoken: English, Arabic, Urdu
• GDP: 701.47 billion US dollars

Top Things to Know Before Hiring in Saudi Arabia

Those who are not familiar with the Quran and the Sharia law upon which Saudi Arabian law is based may find it difficult to navigate the country’s legal system. Further complicating matters for international firms looking to fill positions with Saudi labour are new rules like the Saudi law. Although Saudi Arabia permits women to work, there are still limitations. However, companies can get over these legal barriers by working with an Employer of Record (EOR). Companies may more easily establish a local office and grow business in the region with the help of an experienced EOR partner who can help them through the complexity of Saudi Arabian legislation.

Entitlements	Explanation
Statutory Working Hours	Normally, there are 48 hours in a workweek, however (for Muslim employees) there are only 36 hours during Ramadan.
Overtime Eligibility	Article 107 of the Saudi Labor Law stipulates that overtime compensation is increased by 150% over regular salary. The maximum daily overtime hours are 11 hours; however, the employee may go beyond that amount. the same.
Paid Public Holidays	Compared to other Arab countries, Saudi Arabia has fewer paid public holidays, and as they are frequently associated with religious occasions, the dates might change from year to year. Al Fitr, Eid Al Adha, and National Day will all be commemorated in 2023 on May 22, July 28, and September 23 respectively. It’s important to note that those working for the government often get more vacation time than people working for businesses.
Holiday Pay	Employees in Saudi Arabia have the right to paid time off for federal holidays, authorised medical leave, and maternity or paternity leave. Additionally, after five years of service, they are eligible for 30 days of paid leave, up from the standard 21 days. After two years of employment, Muslim employees are also entitled to an extra 10 to 15 days of paid religious leave to perform the Hajj to Mecca. Additionally, employees are given a paid educational leave that starts 15 days before exams begin and lasts until the end of the exam period. Additionally, an employee receives an additional five days of leave immediately following their marriage.
Medical Leave	Employees who can provide medical documentation are entitled to paid sick leave for the first 30 days, followed by 60 days of pay at 75%, and the final 30 days of the year without pay. The option to seek to combine annual leave and sick leave is available to employees. If a worker’s sick leave and annual leave fall on the same day, the annual leave will be postponed until the sick leave is over. The yearly leave will restart when the sick leave is over. An employee will not be given extra rest days if their sick days and weekly rest days fall on the same week. For a period of 60 days following an injury, an employee is entitled to receive their full pay. The employee is not permitted to request any further salary during this time.
Maternity and Paternity Leave	For the first 30 days of their sick leave, employees who can show proof of a medical condition will be paid; after that, they will receive 60 days of paid sick time at a rate of 75%; and the final 30 days of the year will be unpaid. Employees have the choice to combine annual leave and sick leave, and if a worker’s sick leave and annual leave fall on the same day, the annual leave will be delayed until the sick leave is finished. If a worker’s weekly rest days and sick days fall on the same week, no further rest days will be granted. An employee is entitled to get their full pay for 60 days after an injury, during which time they are not allowed to ask for any further compensation.  Additionally, Article 151 of the Labor Law expressly mandates maternity leave, allowing working women up to 10 weeks of leave, of which no more than four weeks may be taken prior to the due date indicated by a medical certificate. A woman may extend her leave for an additional month of paid leave and an additional month of unpaid leave if she gave birth to a sick or handicapped kid. A total of three days of parental leave are available to fathers. When a spouse passes away, male employees are granted five days of leave while female employees are granted 15 days.
Leave Expiry	Every Saudi Arabian employee is required to use their annual vacation time. If an employee fails to comply, the company may decide to either lose the benefit or provide them leaves for subsequent years.
Leave Cash Out	A leaving employee is the only exception to the prohibition on leave encashment under Article 109 of the Saudi Labor Law.
Accrued Leave at Termination	According to Saudi Labor Law Article 111, a leaving employee’s accrued leave balance may be exchanged for cash.
Employee Protection and Anti-discrimination Rights	Saudi nationals must be treated equally, according to Article 3. Foreign labourers have not had the same protections.
Confidentiality of Personal Information	Employers are not required to follow any specific protocols under Saudi law when sending employee data outside of the country.

Contractors vs. Full-Time Employees

The Saudi labour law does not make any distinctions depending on the class of an employee. However, some advantages are particular to people based on their nationality.

Fixed-term agreements are typical in Saudi Arabia and are terminated at the conclusion of the predetermined time. In most areas, freelancing and self-employment are uncommon, while the agriculture industry has a higher percentage of part-time contractors. Like all other commercial enterprises in the nation, anybody who wants to work for themselves must get a trade licence.

Recruiting in Saudi Arabia

Depending on the size of the organisation, potential employees can be sourced through various methods such as referrals or open applications. Online job websites are also a viable option, and in Saudi Arabia, some of the most effective sites for finding employees are Bayt.,expatriates ,and gulftalent

Probation & Termination

Saudi Arabia labour law, in particular articles 53 and 54, regulates the hiring probationary term. Any agreement pertaining to the probationary period must be specified in the employment contract in order to ensure transparency and clarity. Both the employer and the employee have the ability to mutually cancel the contract during the probationary period, which can run up to 90 days with the potential of being extended to 180 days. But holidays like Eid ul-Fitr and Eid ul-Adha and paid sick time are not included in this. It is significant to note that Saudi Arabian instructors are subject to several probationary requirements, and their probationary term may run up to two years.

According to Article 54 of the labour code, the employee cannot be placed again on probation after the initial trial term has ended unless all parties agree to broaden the employee’s responsibilities. Unless otherwise specified in the contract, either the employer or the employee may end the employment relationship during the trial period. However, the employee won’t receive any payment or notice of end of service if the contract is terminated during this time. Additionally, if they quit their jobs or are fired for being unfit during the probationary period, foreign national employees are responsible for covering the costs of travelling back to their home countries.

According to the domestic workers’ statute, the probationary term for domestic employees is only allowed to last 90 days. If the employee is shown to be incompetent while on probation, the employer may dismiss them without incurring any obligation.

Termination

termination of a contract without notice by either party	A contract may be cancelled without notice for a number of reasons or situations. These consist of consent from all parties concerned, failing a medical exam, and reaching retirement age. While the retirement age for women is 55, it is 60 for men. However, if both parties agree, the parties may decide not to retire or terminate the contract. The contract’s expiration is yet another circumstance that might result in contract termination. In certain circumstances, the contract expires automatically after the predetermined amount of time. It is crucial to remember that the terms and conditions of the contract, as well as any applicable laws and regulations, must be followed in order to terminate a relationship without notice.
Dismissal of the employee by the employer without notice	The contract may, under certain conditions, be terminated by the employer without notice. These situations include those in which an employee falsified paperwork to get a job, disobeyed work-related instructions, attacked management and revealed trade secrets.
Termination of the contract without notice by the employee	An employee’s agreement with the employer may be terminated under specific conditions. These circumstances may occur for a number of reasons, such as the employer not honouring the benefits, remedies, or rights that were given to the employee in a contract or by law. Contract termination may also be justified if the employer gives the employee work that deviates from the initial arrangement. Additionally, the employee has the option to end their contract if the employer violates workplace safety and health regulations or misrepresents work conditions or circumstances. The employee has the right to end their contract if the employer assaults them or a member of their family. It’s crucial to remember that the grounds for contract termination must adhere to the clauses set forth in the contract as well as any applicable laws and regulations.

EOR Solution in Saudi Arabia

By choosing an Employer of Record (EOR) solution for Saudi Arabia, company development into the country may be streamlined and hastened. Without the need to form a corporation, businesses may guarantee effective and legal payroll processing and fulfilment of other employment obligations with an EOR. Our services may help you manage important chores for your Saudi Arabian employees, such as monthly payroll, contracts, work licences, and taxation. To find out more about how we can support the growth of your company in the area, schedule a demo now.

Outsourcing Employment Through an Employer of Record

When your business decides to grow in Saudi Arabia, you must also choose the expansion strategy you’ll utilise, i.e., whether you’ll create an internal team or hire an EOR service to run the operation. On your behalf, our team of knowledgeable experts will manage the challenging work of handling worldwide payroll, compliance, and taxation.

Types of Visas in Saudi Arabia

An employment visa must be obtained in order to work in Saudi Arabia, and the procedure starts with the employer’s application. There are several steps involved:

• An immigration file is established to capture the information of all foreign employees when the sponsoring employer registers with the Saudi Arabian Ministry of Interior.
• The employer submits an application for an employment visa to the Ministry of Labor, which notifies the Ministry of Foreign Affairs when it is approved.
• The Ministry of Foreign Affairs grants a visa permission number in two weeks.
• The employee sends their application to the appropriate embassy along with a number of supporting papers, such as a current passport, evidence that the visa cost was paid online, a signed medical report, and a criminal history report.
• The employee can fly to Saudi Arabia when the embassy grants the visa in about three weeks.
• The employee must submit an application for a residency permit to the Ministry of Labor, who will subsequently issue the permission to them.
• The worker must always have their residency permit on them because it is a necessary document. If the employee has to temporarily leave Saudi Arabia, they must also have departure and re-entry licences.

Work Permit

Foreign nationals who wish to work in Saudi Arabia must be sponsored by a Saudi national or a foreign business. Since only with the sponsor’s permission can an expatriate work and leave the country, the sponsor is crucial in facilitating the expatriate’s work and exit from the country. A work permit from the Ministry of Labor is necessary in order to receive an Iqama. Work permits for overseas employees can be sponsored by our local partner in Saudi Arabia, simplifying the employment procedure. We are able to assume the obligations and demands of work as an EOR in Saudi Arabia. While entrusting us with employment-related tasks, the client company can continue to monitor its employees’ day-to-day activities and business operations. 

Work Permit Terms	Details
Processing Time	Depending on the embassy, processing takes typically one to three weeks. After receiving the Work/Employment Visa from the embassy, the person can depart for Saudi Arabia. The stay period covered by the Work/Employment Visa ranges from 14 to 90 days.
Work permit process	The section on employment visas has already described the permission procedure.
Passport Submission	The original passport must be submitted as part of the application procedure..
Work Permit Validity	The stay period covered by the Work/Employment Visa ranges from 14 to 90 days.
Work Permit Process for Different Countries	With a few variations, the general procedure is the same for all nations.
Change of Sponsor Within Saudi Arabia	If the former sponsor and the employee are in agreement, the sponsorship may be changed. The Qiwa System must be used to effect such a modification.
When Can an Employee Travel to Saudi Arabia?	Once the employment visa has been approved, the employee can depart.
What’s the Cost of Iqama?	The rate varies depending on the hiring split between Saudi Arabians and foreigners. rate is different.
Duration of Business Visa Processing	Processing takes one to three weeks once at the embassy.
Can Spouses Work on Dependent Visas?	No
Termination of Work Permit	Depending on the reasons for the termination, the permit may be revoked with a variety of notification requirements.
Special Requirements for Work Permit Cancellation	Usually, the permission is revoked by the employer.

Essential Information for Establishing Payroll in Saudi Arabia

The way business is conducted in Saudi Arabia is unique, and the country’s employment culture mainly relies on contracts. Since there can be severe consequences for non-compliance, compliance is essential. To operate successfully as a foreign firm in this nation, it is crucial to have a complete grasp of these processes. Setting up an internal department to handle payroll or engaging a local specialist to assure compliance with local rules are two popular strategies for doing this. While no specific requirements are imposed on foreign nationals, Saudi employers are expected to contribute 12% of the salaries of their Saudi national employees to social insurance.

Taxes in Saudi Arabia

Residents of Saudi Arabia are not subject to personal income taxes. On their tax-adjusted profits, non-Saudi citizens and anyone outside the Gulf Cooperation Council (GCC) are liable for a flat tax of 20%. These people could also be compelled to pay withholding tax on any income they receive from Saudi Arabia. Whether Saudi Arabia and the foreign national’s country of origin have an international tax agreement will determine whether other taxes are applicable.

Bonuses

Annual bonuses are commonplace, and the state usually awards a bonus that is equal to one month’s worth of pay. Performance-based bonuses are also typical.

The best entity to form in Saudi Arabia will depend on the size of the business. The limited liability corporation (LLC) is the entity that is employed the most frequently.

The Saudi Arabian Ministry of Investment has established an SR 500,000 minimum capital requirement for forming an LLC, despite the fact that there is no legal basis for it. The corporation also has to have between 2 and 50 shareholders, as well as one or more managers.

A board of directors may be established by shareholders through the memorandum of association, while it is not required. There must be a “board of controllers,” which performs comparable duties to a board of directors if the corporation has more than 20 shareholders.

Due to its expanding economy, Saudi Arabia has a multitude of commercial prospects, making it a desirable location for many companies seeking to develop. However, it is essential to fully comprehend the various laws and rules pertaining to incorporation.