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Saudi Riyal is the official currency of Saudi Arabia. Its currency symbol is ï·¼, SAR.
Arabic is the official language of Saudi Arabia. English is also widely incorporated.
The population of Saudi Arabia is 35.34 million (based on World Bank numbers as of 2021).
Salaries are paid monthly or weekly. Hourly/ Weekly workers must be paid at least once a week.
To start growing your team in Saudi Arabia, you must establish a local entity- including an account with a local bank, a local office and an address registered as a subsidiary.
This allows you to manage payroll, tax, benefits and compliance for your employees, but can take several months.
Emerald can hire and payroll your workers, quickly and compliantly with their ready to go entity. Make growing your team simple with Emerald as a global partner.
Emerald can hire and payroll your workers, quickly and compliantly with their ready to go entity. Make growing your team simple with Emerald as a global partner.
Home to most of the Saudi royals, the capital city of Riyadh is rapidly becoming one of the main economic hubs in the Middle East. With a recent pivot on the national
business model, Saudi Arabia is becoming a good environment for foreign companies looking to get established in the region. By doing business in the country, companies
have access to one of the most permissive tax regimes.
Getting set up in Saudi Arabia can be a lengthy and expensive process – administrative and immigration processes are known to be time-consuming and the initial
investment can be significant. With improving levels of English proficiency, Arabic is still expected for most of the official documentation and processes.
Employee costs in Saudi Arabia are expected to be 10-15% of their salary.
The Saudi government has recently invested significantly in process digitalisation and in information technology infrastructure. For example, the whole country now has
access to fast internet. Since the COVID-19 pandemic, remote working is more common and accepted, with companies offering fully remote options and hybrid alternatives
to their workers.
With more than a third of the country’s population being expatriates, Saudi Arabia has very good living conditions to offer if one is willing to adapt to the country’s traditions
and rules.
There are specific rules for foreign/Saudi individuals. Generally, income tax to employees is not applicable. Individuals might be subject to income tax if their work has
generated qualifying Saudi-source income.
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Contracts in Saudi Arabia must include:
The Ministry of Human Resource and Social Development has drawn up a standard employment contract that complies with the Labour Law. In addition to the core terms in
this standard employment contract, the employer and the employee may agree to add any other terms and conditions as long as they do not conflict with the Labour Law.
Any provision in an employment contract that contradicts the provisions of the Labour Law is deemed null and void. Employment contracts must be in Arabic (as must all
employment-related records and files, and instructions issued by employers to workers). If another language is used alongside Arabic, the Arabic text prevails. Employers
are required to upload all employment contracts to an online portal run by the General Organisation for Social Insurance (GOSI) for authentication.
The typical probation period in KSA is 90 days. This may be extended, subject to the employee’s written consent, but cannot exceed 180 days. One day’s notice is required
to terminate the employment relationship during the probation period.
Emerald Technology can onboard employees in Saudi Arabia within 48 hours.
Restraints that protect the employer’s legitimate business interests may be enforced if reasonable. Non-compete clauses are honoured as long as they are in writing and
clearly specify place, duration (no longer than two years), and type of work. If there is no written agreement, or an express non-compete clause is not included in an
employment contract, the law will not impose any restrictions. Confidentiality clauses must also be in writing and clearly specify place, type of work, and duration, although
there is no specific time limit on these restrictions. If an ex-employee breaches a non-compete or confidentiality clause, the former employer may sue them within one year
after discovering the breach. Customer non-solicit clauses are permissible in narrow circumstances and employee non-solicit clauses are acceptable.
Sponsor employers must provide foreign employees with medical insurance. Healthcare in KSA is currently provided free of charge to all Saudi citizens and expats working in the public sector.
For non-Saudi employees, the employer is required to contribute 1.5% Social Insurance Tax, which covers occupational hazard (minimum earnings 400 SAR, maximum
earnings 45,000 SAR). For Saudi employees, the employer is required to contribute 12% Social Insurance Tax, which covers occupational hazard, pension, and
unemployment (minimum earnings 1,500 SAR, maximum earnings 45,000 SAR). All Social Insurance Tax contributions must be calculated on a daily rather than a monthly
basis.
Expectant mothers are entitled to 10 weeks’ paid maternity leave commencing four weeks before their due date. The payment of maternity leave is dependent on the employee’s length of service, as follows:
Employees receiving the full maternity leave entitlement may not also take the payment of annual leave in the same year. In contrast, an employee receiving 50% of their
salary as a maternity benefit may also take an annual leave entitlement of 50% in the same year.
Fathers are entitled to 3 days’ paid paternity leave for the birth of a child.
Employees are entitled to 120 days of sick leave per year, as follows:
Sick leave is paid by the employer. Employees are required to provide a medical certificate for all sick days.
As the legal employer, Emerald Technology requires the following employee documents to ensure complete compliance:
When an employer dismisses an employee it must be with just cause and they must give them notice. The notice period starts from the day after the employer notifies the employee of the termination. Notice must be given in accordance with the following schedule at a minimum:
| Notice Periods: | The mandatory notice period is 30 days for employees on a fixed term contract and 60 days for employees on an indefinite contract. Employees are entitled to the following |
The termination process is based on the type of contract and reason for termination. The employer must give a valid reason for the dismissal of an employee. If an employer cannot provide lawful reasoning, compensation may be issued. If an employee resigns, the employer must issue their final salary immediately.
If an employee is made redundant, they are entitled to a payment based on years of continuous service.
| Severance Pay: | 50% of salary for each year served for the first five years |
The annual leave entitlement in KSA is dependent on the employee’s length of service, as follows:
Employees may carry over any untaken leave with the employer’s written consent. Employees may request ten additional days of unpaid leave per year, subject to the employer’s approval.
The national minimum wage in KSA is 4,000 SAR per month.
The typical working week in KSA is 48 hours (eight hours per day, six days per week). The working day may decrease to six hours per day during Ramadan. Fridays are usually considered a rest day. All work exceeding the standard weekly working hours must be paid at an overtime compensation rate, which is typically 150% of the employee’s average salary rate. Daily working time cannot exceed 11 hours.
The payroll frequency is weekly or monthly. The employer must make the payment for weekly employees once a week and for monthly employees, at least once a month.
No personal income tax is payable in KSA.
Non-Saudi employees are required to contribute 10% Social Insurance Tax to cover occupational hazard, in addition to an employer contribution of 1.5%.
Similar to other countries, Saudi Arabia has strict rules on classifying individual contractors and full-time employees differently. Misclassifying your workers can put your business at risk of fines.
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