Saudi Arabia has emerged as one of the most strategically important hiring destinations in the Middle East. Vision 2030 is accelerating economic diversification, attracting foreign investment, and modernizing the workforce, which is driving global companies to increasingly focus on hiring in Saudi Arabia. However, expanding into the Kingdom comes with a critical responsibility: ensuring full compliance with employee benefits regulations.
Employee benefits in Saudi Arabia are not merely a tool for talent attraction. They are a legal obligation governed by Saudi Labor Law, social insurance regulations, and health insurance mandates. For global employers unfamiliar with the local framework, mismanaging benefits can result in penalties, employee disputes, and reputational risk.
This guide offers a comprehensive overview of employee benefits in Saudi Arabia in 2026, covering statutory requirements, optional benefits, expatriate considerations, and how Employer of Record services simplify compliant hiring without setting up a local entity.
Understanding the Saudi Employment Landscape in 2026
Saudi Arabia’s employment ecosystem is shaped by regulatory oversight, workforce nationalization goals, and a growing emphasis on employee welfare. For foreign employers, understanding this landscape is essential before designing compensation and benefits strategies.
Saudi Labor Law Framework Governing Employee Benefits
Employee benefits in Saudi Arabia are primarily governed by the Saudi Labor Law and enforced by the Ministry of Human Resources and Social Development (MHRSD). These laws clearly define minimum benefits that employers must provide, regardless of company size or industry.
Mandatory benefits are legally enforceable and apply to both Saudi nationals and expatriate employees, though contribution structures and coverage may differ. Failure to comply can result in fines, suspension of business operations, or restrictions on hiring foreign talent.
From a compliance perspective, employee benefits in Saudi Arabia should always be treated as statutory obligations rather than discretionary perks.
Workforce Composition: Saudization and Expat Employment
One of the defining features of hiring in Saudi Arabia is the Saudization (Nitaqat) program. This policy requires companies to maintain a certain percentage of Saudi nationals within their workforce, depending on industry and company size.
Benefits planning must therefore account for:
- Different social insurance requirements for Saudi nationals versus expatriates
- Competitive benefits needed to attract and retain local Saudi talent
- Compliance with Saudization quotas while maintaining operational flexibility
A well-structured benefits strategy supports both regulatory compliance and long-term workforce sustainability.
Statutory Employee Benefits in Saudi Arabia
Statutory benefits form the foundation of employment relationships in Saudi Arabia. These benefits are non-negotiable and must be provided by all employers.
Social Insurance (GOSI) Contributions
The General Organization for Social Insurance (GOSI) administers social security benefits in Saudi Arabia. Contributions are mandatory for Saudi nationals and partially applicable to expatriates.
For Saudi employees:
- Employers contribute to pension, disability, and unemployment insurance
- Employees also contribute a fixed percentage of their salary
For expatriates:
- Employers contribute to occupational hazard insurance only
Accurate payroll calculations and timely contributions are essential. Errors in GOSI compliance are among the most common violations faced by foreign companies hiring in Saudi Arabia.
Paid Annual Leave and Public Holidays
Saudi labor law mandates a minimum of 21 days of paid annual leave after one year of service, increasing to 30 days after five years with the same employer.
In addition to annual leave, employees are entitled to paid public holidays, including:
- Eid Al-Fitr
- Eid Al-Adha
- Saudi National Day
Leave entitlements are a key component of the benefits of working in Saudi Arabia and are closely monitored during labor inspections.
Sick Leave and Medical Leave Entitlements
Employees in Saudi Arabia are entitled to paid sick leave, structured as:
- Full pay for the first 30 days
- 75% pay for the next 60 days
- Unpaid leave for the remaining period up to 120 days
Employers must maintain proper medical documentation and payroll records to remain compliant.
End-of-Service Gratuity (EOSB)
End-of-Service Gratuity is one of the most significant employee benefits in Saudi Arabia. It functions as a statutory severance benefit and applies to both Saudi nationals and expatriates.
EOSB is calculated based on:
- Length of service
- Final basic salary
- Reason for termination (resignation vs employer-initiated)
Improper EOSB calculations can lead to costly disputes. Employers must provision for this liability throughout the employee lifecycle, not only at termination.
Mandatory Health Insurance and Medical Benefits
Health insurance is a cornerstone of employment compliance in Saudi Arabia.
Employer-Provided Health Insurance Requirements
All employers must provide health insurance coverage through a Council of Cooperative Health Insurance (CCHI)-approved provider. Coverage must extend to:
- Employees
- Eligible dependents (for expatriates)
Health insurance is directly linked to residency permits (Iqama), making it a non-negotiable requirement for legal employment.
Health Insurance Challenges for Global Employers
Foreign companies often struggle with:
- Selecting compliant local insurers
- Managing policy renewals
- Understanding minimum coverage standards
These challenges increase administrative burden and compliance risk, particularly for companies without a local HR presence.
Maternity, Paternity, and Family-Related Benefits
Saudi Arabia has introduced progressive reforms to support workforce participation, particularly for women.
Maternity Leave and Pay Regulations
Female employees are entitled to maternity leave, which includes paid and unpaid components depending on tenure and employer policy. Employers must ensure compliance with wage protection rules during maternity leave.
Paternity and Family Care Leave
Male employees are entitled to paternity leave following childbirth. While shorter in duration, this benefit reflects Saudi Arabia’s broader focus on family-friendly employment practices.
Optional and Competitive Employee Benefits in Saudi Arabia
Beyond statutory benefits, many employers offer additional perks to remain competitive.
Allowances and Cash Benefits
Common allowances include:
- Housing allowance
- Transportation allowance
- Education allowance for dependents
These allowances significantly enhance the benefits of working in Saudi Arabia, especially for expatriate employees, and are often structured as tax-efficient components of total compensation.
Bonuses, Incentives, and Performance Pay
Performance-based bonuses are widely used in sectors such as technology, finance, and consulting. While discretionary, they must be clearly documented to avoid disputes.
Employee Benefits for Expat Workers in Saudi Arabia
Expatriates form a significant portion of the Saudi workforce, particularly in specialized and leadership roles.
Visa-Linked Benefits and Sponsorship Obligations
Employers are responsible for:
- Work visa sponsorship
- Residency permit (Iqama) processing
- Medical insurance coverage
Benefits administration is therefore closely tied to immigration compliance.
Localization vs Global Benefits Strategy
Global employers must strike a balance between:
- Maintaining consistent global benefits frameworks
- Adapting benefits to local Saudi requirements
Over-standardization often leads to non-compliance, while excessive localization can increase costs without strategic benefit.
Common Compliance Mistakes Global Employers Make
Despite best intentions, many companies face compliance challenges when hiring in Saudi Arabia.
Common mistakes include:
- Misclassifying mandatory benefits as optional
- Underfunding End-of-Service Gratuity liabilities
- Offering non-compliant health insurance plans
- Mismanaging GOSI contributions
These issues highlight why many companies turn to Employer of Record services for risk mitigation.
How Employer of Record (EOR) Services Simplify Employee Benefits in Saudi Arabia
Employer of Record services provide a compliant, scalable solution for companies hiring in Saudi Arabia without establishing a local entity.
What an Employer of Record in Saudi Arabia Covers
An Employer of Record in Saudi Arabia legally employs workers on behalf of a foreign company and manages:
- Employment contracts
- Payroll and WPS compliance
- GOSI contributions
- Health insurance administration
- Leave, gratuity, and termination compliance
This model allows companies to focus on business operations while ensuring full regulatory adherence.
Why Global Companies Choose Asanify as Their EOR Partner in Saudi Arabia
Managing employee benefits in Saudi Arabia involves strict legal, payroll, and social security requirements. Asanify simplifies this process by acting as a trusted Employer of Record (EOR), enabling global companies to hire and manage employees in Saudi Arabia without setting up a local entity while staying fully compliant with Saudi labour laws.
With Asanify, employers can:
- Ensure accurate GOSI registration and ongoing social insurance contributions
- Manage statutory benefits such as annual leave, end-of-service benefits, and mandatory health insurance
- Offer optional benefits including allowances, performance bonuses, and learning programs
- Run fully WPS-compliant payroll with on-time salary disbursement
- Provide bilingual payslips in Arabic and English for local compliance
- Transition contractors to compliant employment models when required
By partnering with Asanify, employers minimize compliance risk, speed up hiring, and deliver a reliable, employee-friendly benefits experience in Saudi Arabia.
Employee Benefits in Saudi Arabia: Key Takeaways for Global Employers
Employee benefits in Saudi Arabia are deeply embedded in labor law and regulatory compliance. For global employers, success depends on understanding statutory obligations, offering competitive benefits, and maintaining accurate payroll and insurance administration.
Using an Employer of Record in Saudi Arabia allows companies to hire faster, remain compliant, and scale confidently without the complexity of local entity establishment. With Asanify, global employers gain a trusted partner that simplifies employee benefits while protecting both the business and its workforce.
Conclusion
Employee benefits in Saudi Arabia are a legal requirement, not a discretionary HR practice. Employers must comply with Saudi labor laws covering social insurance, health coverage, leave entitlements, and end-of-service gratuity to avoid penalties and disputes. For global companies, managing these obligations accurately is essential for compliant and sustainable hiring.
As hiring in Saudi Arabia expands, many foreign employers choose Employer of Record services to simplify benefits administration and reduce risk. Partnering with an experienced Employer of Record in Saudi Arabia like Asanify enables companies to hire quickly, remain fully compliant, and scale without establishing a local entity turning compliance into a competitive advantage.
FAQs
Mandatory benefits include annual leave, public holidays, health insurance (CCHI coverage), GOSI social insurance contributions, sick leave, maternity/paternity leave, and end-of-service gratuity (ESB). Employers must also comply with the Wage Protection System (WPS).
Employees are entitled to 21 days of paid annual leave per year, increasing to 30 days after five years of service. Public holidays such as Eid al-Fitr, Eid al-Adha, and Saudi National Day are granted separately.
Yes. Employers must provide compulsory health insurance covering both employees and their dependents under the Council of Cooperative Health Insurance (CCHI) regulations.
Employees receive a severance payout based on their tenure. ESB is calculated as half a month’s wage for each of the first five years of service, and one full month’s wage for each subsequent year.
Employees can take up to 90 days of sick leave per year. The first 30 days are with full pay, followed by 60 days at partial pay or unpaid, depending on the employer’s policy and insurance coverage.
Female employees are entitled to 10 weeks of maternity leave, with pay depending on length of service (50–100% of salary). Male employees are entitled to 3 days of paid paternity leave.
Employers must contribute around 12% of Saudi employees’ salaries to GOSI (covering pensions, unemployment, and occupational hazards). Expatriates are covered only for occupational hazard insurance at 2%. These contributions significantly impact total employment costs.
Not to be considered as tax, legal, financial or HR advice. Regulations change over time so please consult a lawyer, accountant or Labour Law expert for specific guidance.