EOR Saudi Arabia: A Detailed Guide on Employer of Record 2025

If you are planning to expand your business into the Middle East, navigating the unique regulatory framework of Saudi Arabia can be a challenging undertaking. The Kingdom’s evolving labor laws, Saudization policies, and tax norms require in-depth understanding and precision. To ensure smooth operations without legal hiccups, relying on a trusted third-party platform is a strategic move. Partnering with an Employer of Record (EOR) provider in Saudi Arabia can streamline your market entry while mitigating compliance risks. It allows you to onboard local and expat talent quickly without the need to set up a legal entity. Additionally, it ensures that your business stays compliant with GOSI contributions, income tax regulations, and local employment mandates. Read through this blog to learn more about Employer of Record Services in Saudi Arabia and how choosing the right EOR partner can reduce costs and complexity as you grow your presence in this dynamic economy.

Table of Content

• Overview about Saudi Arabia
• What is an Employer of Record in Saudi Arabia
• Employer of Record vs Legal Entity
• What are the Use Cases for Availing of Services Under Employer of Record Saudi Arabia?
• Laws and Compliance Best Practices to Hire Employees in Saudi Arabia
• Best EOR Companies in Saudi Arabia
• What are EOR Services in Saudi Arabia
• How to Hire Employees Through an EOR Saudi Arabia Partner
• Taxes in Saudi Arabia
• CTC Calculator for Hiring Employees in Saudi Arabia
• Key Considerations While Hiring Employees Through EOR in Saudi Arabia
• Terminations in Saudi Arabia
• How to Choose the Right EOR Saudi Arabia Services?
• Benefits of Working With an Employer of Record Service Provider in Saudi Arabia
• Visa Types in Saudi Arabia
• Risks or Drawbacks of EOR Saudi Arabia
• How Does Employer of Record Saudi Arabia (EOR) Services Differ From Usual HR Software?
• How Much Does It Cost to Avail Services Under EOR Saudi Arabia?
• Conclusion: EOR Saudi Arabia
• FAQs

Overview about Saudi Arabia

Saudi Arabia, as the largest economy in the Middle East, offers tremendous opportunities for international businesses aiming to tap into a rapidly modernizing market. With a young, educated population, ongoing economic diversification under Vision 2030, and significant government support for foreign investment, the Kingdom is a promising destination for global expansion. However, managing employment under Saudi labor laws, Saudization quotas, and regional tax regulations can be challenging. This makes Employer of Record (EOR) services an effective and efficient solution for companies entering the Saudi market.

What is an Employer of Record in Saudi Arabia

An Employer of Record (EOR) in Saudi Arabia is a third-party entity that serves as the official employer for your workforce in the Kingdom. It assumes full responsibility for hiring, onboarding, payroll processing, compliance with local employment regulations, and handling interactions with authorities like the General Organization for Social Insurance (GOSI). This enables companies to swiftly and compliantly hire talent in Saudi Arabia without the need to establish a local entity.

Employer of Record vs Legal Entity

Criteria	Legal Entity	Employer of Record (EOR)
Definition	A legal entity is a locally registered business that can directly employ staff and operate in Saudi Arabia.	An EOR is a third-party provider that legally employs workers on your behalf, handling all local HR, legal, and payroll duties.
Ownership	Fully owned by the foreign company or local investors, registered with the Saudi Ministry of Commerce.	The EOR is the legal employer; however, the client business retains functional supervision of the employees.
Employment Contracts	Contracts are issued and managed by the legal entity, in line with Saudi labor laws.	The EOR issues contracts under Saudi labor law, ensuring full compliance.
Compliance Responsibility	The company is responsible for meeting all local compliance including GOSI, Saudization, and end-of-service benefits.	The EOR assumes full responsibility for all legal and statutory compliance requirements.
Payroll & Benefits Management	Must be handled internally or through local payroll providers, including bonuses, social contributions, and vacation pay.	The EOR processes payroll, manages benefits, and files all mandatory contributions like GOSI.
Tax Liabilities	The company is liable for any applicable taxes such as Zakat or VAT and employee-related levies.	The EOR assumes and manages tax obligations for employees on behalf of the client.
Time to Set Up	Requires licensing, registration with GOSI and Mudad platforms, and bank account setup—typically taking several weeks.	The EOR setup can be completed in a few days, as they have existing infrastructure.
Employee Onboarding	Requires internal HR setup, contracts in Arabic, visa sponsorships, and MOL registration.	The EOR handles the entire onboarding process including sponsorships and employment documentation.
Employment Law Expertise	Requires in-house or outsourced legal experts familiar with Saudi labor and immigration law.	The EOR provides in-depth knowledge of Saudi employment law, reducing compliance risk.
Risk & Liability	All liabilities regarding labor disputes, fines, or misclassification fall on the company.	The EOR assumes these legal risks and shields the client from direct liabilities.
Control Over Workforce	Full control over recruitment, contracts, and employee supervision.	Operational control remains with the client, while the EOR ensures legal compliance.
Flexibility	Limited flexibility—difficult to scale down quickly due to strict termination laws and fixed costs.	Highly flexible—enables rapid hiring or downsizing without long-term commitments.
Cost & Investment	Requires upfront investment for office space, licenses, legal fees, and HR infrastructure.	Cost-efficient—no need for physical presence or large local investment.
Global Expansion	Involves significant time and resources for each country.	Enables fast market entry and exits without setting up local entities.

Suggested Read: EOR- A Detailed Guide on Employer of Record 2024

Choose Between an EOR Saudi Arabia Partner and a Legal Entity

Legal Entity in Saudi Arabia

Establishing a legal entity in Saudi Arabia involves navigating complex regulatory procedures, including company registration with the Ministry of Commerce, obtaining SAGIA/MISA licenses, and adhering to Saudization and labor law requirements. While this provides full operational autonomy, it demands considerable time, capital investment, and in-depth knowledge of local employment and tax rules.

On the other hand, partnering with an EOR Saudi Arabia provider allows businesses to enter the Kingdom with minimal administrative overhead and legal risk. EOR services in Saudi Arabia help streamline hiring, manage payroll, and ensure full compliance with labor laws and government policies such as GOSI and expat visa regulations.

What are the Use Cases for Availing of Services Under Employer of Record Saudi Arabia?

1. Business Expansion Without a Legal Entity

Entering the Saudi Arabian market can be complex due to the country’s distinct legal framework, Saudization policy, and local sponsorship requirements. An Employer of Record (EOR) enables foreign companies to operate in Saudi Arabia without the need to establish a local legal entity. The EOR serves as the legal employer, handling payroll, GOSI contributions, employment contracts, and regulatory compliance while the business focuses on strategic growth.

This is especially beneficial for:

• Startups testing business potential in the GCC.
  
• Enterprises executing short-term or pilot projects in Saudi Arabia.
  
• Organizations seeking a lean, cost-effective market entry method.
  

2. Offering Full-time Employment to Contractors or Freelancers

Businesses often begin by working with Saudi-based freelancers or consultants for flexibility. However, converting contractors into compliant full-time employees can be challenging under local employment laws. An EOR facilitates this transition by issuing formal employment contracts, managing visa sponsorships, and offering statutory employee benefits aligned with Saudi labor law.

3. Recruiting Talent Globally

Saudi Arabia is becoming a hub for regional talent in sectors such as engineering, construction, finance, and technology. For global companies looking to hire Saudi nationals or expatriates, an EOR partner streamlines recruitment and ensures compliance with labor regulations and Saudization targets. This allows companies to scale global teams without setting up legal infrastructure locally.

Laws and Compliance Best Practices to Hire Employees in Saudi Arabia

Saudi Arabia enforces structured labor laws and regulatory frameworks that companies must follow to remain compliant. Non-compliance can lead to heavy fines or even license revocation. Below are essential laws and practices to observe:

• Understanding Saudi Labor Law: Businesses must align with the Saudi Labor Law, which covers employment terms, termination, Saudization, and dispute resolution mechanisms.
  
• GOSI and Payroll Deductions: Employers are required to register employees with GOSI (General Organization for Social Insurance) and contribute to social security and pension schemes.
  
• Employee Benefits in Saudi Arabia: Employees are entitled to benefits such as annual leave, sick leave, end-of-service gratuity, and health insurance. An EOR ensures all entitlements are fulfilled.
  
• Visa and Sponsorship Compliance: Foreign employees must be sponsored under a company’s Iqama (residency permit), and the EOR handles all necessary immigration paperwork.
  

Best practices include monitoring legislative updates, maintaining audit-ready records, and working with an EOR for localized compliance support.

Best EOR Companies in Saudi Arabia

Selecting the right EOR partner is critical to long-term success in Saudi Arabia. A reliable provider will manage end-to-end employment services, from onboarding to benefits administration, while ensuring full compliance with local labor laws. Explore the top EOR companies in Saudi Arabia to identify partners with experience, legal expertise, and operational transparency that align with your business goals.

What are EOR Services in Saudi Arabia

Payroll Management

Payroll Management is a cornerstone of EOR services in Saudi Arabia. Employers must comply with local wage protection systems (like Mudad), manage allowances, overtime pay, end-of-service benefits, and GOSI (social insurance) contributions. EOR providers ensure accurate salary processing, handle tax-free salary structures for expats, and submit GOSI payments on time. This ensures regulatory compliance while maintaining punctual employee compensation, thereby preventing payroll-related legal or reputational risks.

Employee Onboarding

Employee Onboarding is a vital function of EORs in Saudi Arabia. The process involves issuing compliant employment contracts in Arabic, handling Iqama sponsorships, document verification, and medical insurance registration. EORs simplify onboarding for foreign businesses unfamiliar with Saudi hiring norms, enabling faster integration of employees while ensuring full legal compliance with the Saudi Labor Law.

HR Administration

HR Administration through EORs includes managing employment records, tracking attendance, managing leave entitlements, and responding to employee queries. This support helps reduce HR burdens, especially for businesses without a local HR team. Additionally, many EORs provide digital Employee Portals that allow staff to access payslips, update personal details, and request time off—creating a more organized and transparent HR experience.

Equipment Procurement and Management

Equipment Procurement and Management is particularly important for remote employees or field-based teams. EOR providers in Saudi Arabia help procure, deliver, and track laptops, mobile devices, and other tools necessary for job roles. This ensures employees are well-equipped to meet their responsibilities from day one, regardless of location.

EOR Saudi Arabia Services

Compliance and Legal Support

Compliance and Legal Support is a critical service, especially due to Saudi Arabia’s unique labor regulations, Saudization quotas, and MOL (Ministry of Labor) requirements. EOR providers ensure that businesses remain compliant with local laws such as the Labor Law and Wage Protection System (WPS), while also handling all government reporting and legal paperwork.

Taxation and Statutory Compliance

While personal income tax does not apply in Saudi Arabia, EORs play a key role in managing corporate obligations like Zakat (religious tax), GOSI contributions, and employee levy charges for foreign hires. They ensure that all statutory contributions and documentation are timely and accurate, keeping companies in full regulatory compliance.

Employee Insurance and Benefits Administration

Employee Insurance and Benefits Administration is a core service of EORs in the Kingdom. EOR providers ensure that employees are enrolled in mandatory health insurance plans and receive benefits such as paid leave, sick leave, and end-of-service gratuity. These services not only meet legal requirements but also contribute to employee retention and satisfaction.

Risk Management and Insurance

Risk Management and Insurance services help protect companies from unexpected liabilities such as employment disputes, occupational injuries, or wrongful dismissal claims. EORs ensure the client company operates within the legal boundaries, shielding them from legal exposure and reputational damage.

Self-Serve Employee Portal

A Self-Serve Employee Portal enhances HR accessibility for employees in Saudi Arabia. Through this portal, employees can view salary slips, manage leave, access benefit information, and update personal data independently. This reduces HR overhead for businesses and empowers employees with transparent and real-time access to their employment data.

Employee Tax Optimization

While Saudi Arabia has no personal income tax, Employee Tax Optimization services provided by EORs focus on structuring compensation packages for foreign employees to align with legal expatriate levy policies and local allowances. These structures help employees retain more income and stay compliant with Saudi labor expectations.

Employee Retirement

Employee Retirement services ensure employees receive their legally entitled end-of-service gratuity, which is mandatory under Saudi labor laws. EORs manage the accrual, calculation, and disbursal of these payments upon resignation or termination, ensuring fairness and legal compliance for both parties.

Offboarding & Recovery

Offboarding and Recovery services facilitate seamless exits in compliance with local regulations. EORs handle final settlements, Iqama cancellations, exit interviews, and the recovery of company assets. This reduces administrative hassle for employers while ensuring that offboarding is dignified, compliant, and secure.

How to Hire Employees Through an EOR Saudi Arabia Partner

Hiring employees through an EOR Saudi Arabia Partner offers businesses a fast, compliant way to establish a workforce in the Kingdom without incorporating a legal entity. By partnering with an EOR provider, companies can sidestep the complexities of Saudization rules, GOSI contributions, and immigration compliance.

EOR Saudi Arabia Partner

An EOR Saudi Arabia Partner is a third-party organization that becomes the legal employer of your local and expatriate employees in the Kingdom. The EOR handles all employment responsibilities, including labor law compliance, payroll, immigration procedures, benefits administration, and GOSI contributions. This allows foreign companies to focus on business strategy, recruitment, and project delivery while staying fully compliant with Saudi regulatory standards. EOR partners also shield companies from risks such as Saudization penalties or work permit violations, ensuring lawful and seamless HR operations.

Select the Best EOR Service Provider in Saudi Arabia for Your Business

Choosing the right EOR partner is essential for a successful expansion into Saudi Arabia. An ideal provider should demonstrate deep knowledge of local labor regulations, experience managing Saudi and expatriate employment, and strong government liaison capabilities. Evaluate providers based on their expertise in payroll processing, visa handling, Saudization compliance, and benefits management. Also, ensure the EOR offers scalable and customizable services that meet your specific industry needs and workforce goals.

Hire & Onboard Your New Employees

After selecting your EOR Saudi Arabia partner, you can begin hiring. The EOR supports your recruitment process by publishing job roles, coordinating interviews, and issuing compliant contracts. The EOR also manages onboarding steps including work visa applications, employment registration with the Ministry of Labor, and setting up payroll. This creates a smooth hiring experience for both the employer and employee while ensuring full compliance with Saudi law.

Remote EOR Employee Onboarding Checklist for Saudi Arabia

Onboarding Step	Responsibility	Details
Before Offer Letter
Collect Employee Details	Company	Obtain full name, nationality, previous employer details, contact info, and required documentation.
After Offer Letter
Draft Employment Contract	EOR	Create Arabic and English contracts compliant with Saudi Labor Law.
Background Verification	EOR	Conduct background checks and verify employment history.
Welcome Email	Company & EOR	Company sends welcome email; EOR initiates onboarding documentation.
On Joining Day
Employment Documentation	EOR	Finalize contracts, NDAs, visa records, GOSI registration.
Payroll Setup	EOR	Set up employee in Mudad system and configure payroll details.
Policy Briefing	Company	Introduce workplace norms, code of conduct, and business practices.
Account Setup	EOR	Assist with bank account setup for salary deposits.
Introduction to Systems	EOR	Guide employees through HRIS and payroll portals.
IT Setup	Company/EOR	Equip employee with laptop, tools, and communication software.
Mentor Assignment	Company	Assign a colleague or supervisor to help new joiners settle in.
Post-Onboarding
Payroll Explanation (First Paycheck)	EOR	Clarify payslip components like GOSI contributions and allowances.
Ongoing Support	Company	Hold regular check-ins and performance reviews.
HR Operations	EOR	Continue payroll, visa renewals, benefits, and compliance oversight.

Processing Payroll

Payroll processing in Saudi Arabia involves various mandatory elements such as GOSI, end-of-service benefits, and salary structuring aligned with local laws. An EOR partner ensures timely and compliant payroll operations while maintaining transparency for employers and employees.

Key components of payroll management in Saudi Arabia include:

• Salary and Wages: Includes base salary, housing and transport allowances, bonuses, and any hardship or relocation allowances based on job roles.
  
• Statutory Deductions: Saudi nationals require GOSI deductions for social security; expatriates may need expat levies paid by the employer.
  
• End-of-Service Gratuity: Mandatory for all employees under Saudi law and calculated based on years of service and final salary.
  
• Other Benefits: Includes mandatory health insurance and optional allowances (e.g., education or phone reimbursements).
  

The payroll process in Saudi Arabia typically involves three stages:

1. Payroll Calculation: Involves determining gross pay, statutory deductions (GOSI), and allowances. Performance bonuses and annual increments may also apply.
   
2. Tax and Regulatory Compliance: Although there’s no personal income tax, the EOR ensures correct GOSI contributions and payment of applicable levies.
   
3. Salary Disbursement: Final salaries are paid via the Wage Protection System (Mudad), ensuring compliance with wage transparency and timeliness.

Suggested Read: Hire Employees in India Through EOR

Taxes in Saudi Arabia

Taxes play a significant role in corporate operations in Saudi Arabia, although the tax landscape differs substantially from countries like India. For individuals, there is currently no personal income tax. However, both local and foreign businesses must comply with various corporate taxation rules, including Zakat, Withholding Tax (WHT), Value Added Tax (VAT), and GOSI contributions. Understanding these tax obligations is essential for maintaining compliance and avoiding penalties.

Tax Structure in Saudi Arabia (Individuals and Employers)

Personal Income Tax:
Saudi Arabia does not levy personal income tax on salaries and wages. This makes it a highly attractive destination for expatriate workers and multinational employers.

GOSI Contributions:
While income is not taxed, employees and employers are subject to mandatory contributions to the General Organization for Social Insurance (GOSI):

• Saudi nationals:
  
  • Employee: 9%
    
  • Employer: 9%
    
  • Total: 18% on the basic salary + housing allowance
    
• Non-Saudi employees:
  
  • Employer: 2% (Occupational Hazards Insurance only)
    
  • Employee: 0%
    

Corporate Tax Regime in Saudi Arabia

Category	Tax Type	Rate
Zakat (Saudi/ GCC nationals)	Religious levy	2.5% of Zakat base
Corporate Tax (foreign companies)	Income Tax	20% on net profit
Withholding Tax (WHT)	Payments to non-residents	5%–20% depending on service
Value Added Tax (VAT)	Sales of goods and services	15% (standard rate)

Tax Due Dates in Saudi Arabia

Companies must adhere to strict tax filing and payment deadlines. Failure to do so can lead to heavy fines and legal issues:

• Monthly: GOSI contributions must be paid by the end of each month.
  
• Quarterly/Annually: Corporate income tax and Zakat filings are typically due within 120 days of the fiscal year-end.
  
• VAT: Filed monthly or quarterly, depending on company size.
  
• Withholding Tax: Due by the 10th of the following month after payment to the non-resident.
  

GOSI Thresholds in Saudi Arabia

For Saudi employees, GOSI applies to salaries up to SAR 45,000 per month. Contributions above this threshold are not mandatory, making it important for employers to track eligible income carefully. For non-Saudis, the flat 2% Occupational Hazard contribution is required on all gross earnings, regardless of salary amount.

Withholding Tax (WHT)

Withholding Tax in Saudi Arabia applies to certain payments made by resident entities to non-resident entities. These include royalties, interest, technical services, rent, and dividends. Tax rates vary by service type and treaty agreements, ranging from 5% to 20%. Companies must deduct the appropriate WHT at the time of payment and remit it to the Zakat, Tax and Customs Authority (ZATCA).

Professional Licenses & Municipal Fees

Saudi Arabia requires businesses and professionals to obtain municipal licenses and renew them periodically. These licenses are subject to inspection fees, training levies, and occasionally Saudization fines if employment quotas are not met. These fees are not deducted from employee salaries but are business operating expenses.

Deductions and Allowances

Even though there is no personal income tax, employers often offer structured compensation packages that include non-taxable allowances like:

• Housing allowance (typically 25% of base salary)
  
• Transportation allowance
  
• Telephone and utility reimbursements
  
• Education allowance for dependents
  

These allowances improve employee satisfaction and retention, and EORs help structure them within legal frameworks.

Provident Fund Equivalent (End-of-Service Gratuity)

Saudi Arabia mandates End-of-Service Benefits (ESB) for all employees completing at least two years of continuous service:

• Half a month’s wage for each of the first five years.
  
• One full month’s wage for each additional year thereafter.
  

Employers are responsible for calculating and disbursing ESB upon contract termination or resignation. This obligation functions similarly to a retirement benefit.

Health Insurance (Medical Coverage)

Under the Cooperative Health Insurance Law, it is mandatory for employers to provide private health insurance for all employees and their dependents. This covers medical treatment in approved hospitals and clinics across Saudi Arabia. Premiums are typically paid by the employer and managed by the EOR provider.

Asanify’s Support for Employee Tax Compliance in Saudi Arabia

Asanify, as a trusted global EOR partner, offers end-to-end tax and compliance support for companies hiring in Saudi Arabia. While personal tax planning is limited due to the absence of income tax, Asanify helps employers handle GOSI registrations, WHT deductions, VAT filings, and end-of-service benefit calculations. The platform also ensures accurate payroll processing, seamless onboarding, and transparent allowance structuring to optimize employer and employee satisfaction. With Asanify’s expertise, businesses can operate in Saudi Arabia with full confidence in legal and tax compliance.

CTC Calculator for Hiring Employees in Saudi Arabia

When hiring employees in Saudi Arabia, understanding the total employment cost is essential for strategic budgeting and workforce planning. While the concept of Cost to Company (CTC) is not commonly used in local employment contracts, businesses—especially international employers—still need to evaluate the Total Compensation Cost. This includes gross salary, housing and transport allowances, employer GOSI contributions, visa and Iqama fees, health insurance, and any additional benefits provided.

To simplify this process, businesses can use a Saudi Arabia CTC Calculator to break down all compensation components and estimate the actual cost of hiring a local or expatriate employee. This helps employers understand the full financial commitment, including statutory contributions and recurring administrative costs, while giving employees clarity on their net take-home benefits. For more information on salary structuring, allowances, and GOSI obligations, check out our blog!

Key Considerations While Hiring Employees Through EOR in Saudi Arabia

Employee Agreements in Saudi Arabia

Employee agreements are a fundamental part of hiring employees in Saudi Arabia. An EOR partner ensures that all employment contracts adhere to Saudi Labor Law and include essential clauses such as job description, compensation package, probationary terms, confidentiality, Saudization requirements, and termination conditions. Employment contracts in Saudi Arabia must be issued in Arabic, and in some cases, a bilingual format is preferred. These agreements are legally binding and crucial for protecting both the employer and the employee, ensuring clarity around rights and obligations.

Work Hours and Probation

In Saudi Arabia, the standard workweek is 48 hours, typically distributed over 6 days, with a maximum of 8 hours per day. During Ramadan, Muslim employees are entitled to reduced working hours (maximum of 6 per day). Probation periods are generally up to 90 days, extendable to 180 days with mutual consent. During the probationary period, either party may terminate the contract with minimal notice, unless otherwise specified. An EOR ensures that contracts clearly define probation terms to prevent disputes and ensure proper employee evaluation.

Leave Policies

Saudi employment law mandates specific leave entitlements that must be included in employment contracts. EOR partners help structure compliant leave policies and communicate them clearly to employees.

Standard Leave Policy in Saudi Arabia

Leave Type	Description	Duration
Annual Leave	Paid vacation leave	21 days/year (30 after 5 yrs)
Sick Leave	Paid leave for illness with medical proof	Up to 120 days/year
Maternity Leave	Paid leave for childbirth and recovery	10 weeks
Paternity Leave	Paid leave for fathers at childbirth	3 days
Bereavement Leave	Paid leave due to loss of a close family member	5 days
Hajj Leave	For Muslim employees who haven’t performed Hajj before	10–15 days (once in service)

Leave policies in Saudi Arabia must comply with the Labor Law, and proper record-keeping is essential. Many companies also offer public holiday leave aligned with Islamic and national holidays.

Types of Leave in Saudi Employment Law

• Annual Leave: 21 paid days annually, increased to 30 days after 5 years of service.
  
• Sick Leave: 30 days at full pay, 60 days at 75% pay, and 30 days unpaid, within a calendar year.
  
• Maternity Leave: Female employees are entitled to 10 weeks of paid leave, 4 before and 6 after childbirth.
  
• Paternity Leave: 3 days of paid leave for new fathers.
  
• Bereavement Leave: 5 days of leave in the event of death of a spouse or close relative.
  
• Marriage Leave: 5 days of paid leave upon marriage.
  
• Hajj Leave: Employees who have completed 2 years of service can take 10–15 days of paid leave to perform Hajj, once during their employment tenure.
  

Public Holidays in Saudi Arabia – 2025 (Tentative)

Date	Occasion	Type
9 April 2025	Eid al-Fitr (1st day)	Public Holiday (dependent on moon sighting)
10–11 April 2025	Eid al-Fitr (continuation)	Public Holiday
15 June 2025	Arafat Day	Public Holiday
16–18 June 2025	Eid al-Adha	Public Holiday
23 September 2025	Saudi National Day	Public Holiday

Note: Islamic holidays are based on lunar observations and may vary by region and moon sighting.

Gratuity Payments

In Saudi Arabia, End-of-Service Benefits (ESB) are mandatory for all employees completing at least 2 years of continuous service. The payment is calculated as:

• Half a month’s salary for each of the first 5 years
  
• One month’s salary for each year thereafter
  

Gratuity is based on the final wage (including fixed allowances), and paid upon resignation, termination, or retirement. EOR partners are responsible for calculating and disbursing these benefits accurately, ensuring full compliance with local laws.

Termination Policies

Termination policies in Saudi Arabia are regulated under the Labor Law and must be handled with procedural fairness. Common grounds for termination include poor performance, redundancy, misconduct, or contract expiration. Key points include:

• Notice period: Typically 30 to 60 days, based on contract type.
  
• Final settlements: Include unpaid wages, unused leave, and end-of-service benefits.
  
• Termination during probation: Allowed with minimal notice.
  
• Arbitrary dismissal: May result in compensation claims.
  

An EOR ensures that all legal procedures are followed during terminations, minimizing risks of labor disputes.

Bonus Payments in Saudi Arabia

Saudi Arabia does not have a statutory bonus law. However, many employers offer performance-based bonuses, annual incentives, or 13th-month salary as part of the compensation package. These discretionary bonuses should be defined in the employment contract. EOR partners help structure bonus schemes and ensure they are delivered in compliance with contractual obligations and local customs.

Health Insurance in Saudi Arabia

Health insurance is mandatory for all private sector employees and their dependents under the Cooperative Health Insurance Law. Employers must enroll employees with a registered insurance provider, covering:

• Inpatient and outpatient services
  
• Emergency treatment
  
• Maternity care
  
• Prescription drugs
  

EOR providers manage the enrollment process and ensure continued coverage for all employees, including renewals and documentation for dependents.

Suggested Read: PEO vs EOR Differences- All That You Need to Know 

List of General Public Holidays in Saudi Arabia – 2025 (Tentative)

Date	Occasion	Category
9 April 2025	Eid al-Fitr (start)	General Public Holiday
10–11 April 2025	Eid al-Fitr (continued)	General Public Holiday
15 June 2025	Arafat Day	General Public Holiday
16–18 June 2025	Eid al-Adha	General Public Holiday
23 September 2025	Saudi National Day	General Public Holiday
Lunar dependent	Islamic New Year, Prophet’s Birthday, etc.	Optional

Note: Dates are based on lunar sightings and may vary.

Gratuity Payments

Gratuity in Saudi Arabia is governed by the Labor Law’s End-of-Service Benefit (ESB) clause. Employees who complete at least 2 years of service are entitled to:

• Half-month wage for each of the first 5 years
  
• One-month wage for each year thereafter
  

Calculations are based on final basic salary and must be paid upon termination, resignation, or retirement. An EOR manages accurate computation and disbursal of ESB in compliance with Saudi regulations.

Termination Policies

Termination policies in Saudi Arabia must follow due process. Acceptable grounds include redundancy, contract expiry, misconduct, or performance issues. Employers must:

• Provide written notice (typically 30 days)
  
• Settle unpaid dues, benefits, and ESB
  
• Justify terminations clearly, especially during probation or early contract termination
  

EORs ensure the termination process is legally compliant, fairly executed, and well-documented, reducing legal risk for client companies.

Bonus Payments in Saudi Arabia

Saudi Arabia does not mandate statutory bonuses. However, companies may offer performance-linked bonuses or incentives to reward and retain top talent. Common bonus practices include:

• Annual performance bonuses
  
• Completion-of-project incentives
  
• Sales commissions
  

An EOR helps structure, document, and administer bonuses in line with employment contracts and corporate policy.

Health Insurance in Saudi Arabia

Health insurance is mandatory under the Cooperative Health Insurance Law. Employers must enroll all employees and their dependents in approved plans that cover:

• Outpatient and inpatient care
  
• Maternity services
  
• Emergency care
  
• Surgeries and prescriptions
  

EORs manage employee registrations, renewals, and claims processes to ensure continuous and compliant health coverage.

Terminations in Saudi Arabia

Terminating employment in Saudi Arabia involves distinct procedures for local (Saudi) and expatriate employees, governed by the Saudi Labor Law. While employment contracts may be fixed-term or open-ended, terminations—whether for cause or due to redundancy—must comply with local regulations. Employers are required to document all actions and ensure proper financial settlements, including end-of-service benefits.

Notice Periods in Saudi Arabia

In Saudi Arabia, the notice period is the length of time an employer or employee must give before ending the employment relationship. According to Article 75 of the Saudi Labor Law, the standard notice period is 30 days for monthly-paid employees and 15 days for others—unless the contract specifies a longer duration. Employers must provide written notice or equivalent compensation if termination is without cause.

Severance Pay in Saudi Arabia

Severance pay, known as End-of-Service Benefits (ESB), is a statutory right for employees completing at least two years of continuous service. It is calculated as:

• Half a month’s wage for each of the first 5 years
  
• One month’s wage for each additional year
  

This applies to both local and expatriate employees. ESB is based on the last drawn basic salary, and employers are legally required to pay it upon resignation, termination, or retirement.

Key points:

• Legal Compliance: Employers must comply with Article 84 of the Labor Law regarding end-of-service entitlements.
  
• Documentation: All terminations must be documented, including reasons, settlements, and employee acknowledgments.
  
• Employment Contracts: Contracts should clearly define notice periods, ESB, and permissible grounds for termination.
  
• Employee Rights: Employees are entitled to unpaid wages, unused leave encashment, and ESB during separation.
  

Types of Termination

Termination for Cause

Termination for Cause refers to the dismissal of an employee due to serious violations like theft, workplace misconduct, fraud, harassment, or gross negligence. As per Article 80, employers can terminate without notice or ESB if the employee:

• Assaults the employer
  
• Commits dishonesty or breach of trust
  
• Is frequently absent without valid reason
  
• Fails to fulfill essential contractual obligations
  

However, employers must present valid evidence and allow the employee to respond before dismissal.

Termination Without Cause

This type of termination involves dismissing an employee due to restructuring, budget cuts, or strategic realignment, without any fault of the employee. In such cases, the employer must:

• Provide proper notice or pay in lieu
  
• Disburse full ESB
  
• Document the business justification for termination
  

EOR partners help ensure this process is handled legally and respectfully to minimize liability.

Collective Termination

Collective Termination involves laying off a group of employees at once, typically due to business closure or downsizing. While Saudi law does not mandate prior government approval, employers are encouraged to:

• Notify the Ministry of Human Resources
  
• Ensure timely payment of ESB and all dues
  
• Provide valid economic justification
  

This is especially sensitive under Saudization policies, and EORs help navigate local compliance and communication.

Voluntary Termination (Resignation)

Resignation occurs when an employee chooses to terminate their contract voluntarily. Employees must:

• Submit a written resignation
  
• Serve the notice period as per contract
  
• Be eligible for partial or full ESB, depending on years of service
  

Employers must process full and final settlements and may conduct exit interviews to gather feedback.

What Are the Key Steps Involved in Terminating Employees in Saudi Arabia?

1. Serve Notice Period

As per Saudi Labor Law, both parties must respect the agreed-upon notice period—typically 30 days. Termination without this notice must involve payment in lieu. EOR partners ensure proper calculation and communication of notice compliance.

2. Termination for Cause

When dismissing an employee for cause under Article 80, the employer must:

• Present documented evidence
  
• Offer the employee a chance to respond
  
• Maintain written records of the process
  

EORs handle this process while minimizing legal risk.

3. Full and Final Settlement

After termination or resignation, the employer must process final dues, including:

• Unpaid salary
  
• Accrued leave compensation
  
• End-of-Service Benefit (ESB)
  
• Bonuses or commissions (if applicable)
  
• Statutory deductions (GOSI or WHT, if required)
  

EORs manage these calculations and ensure prompt disbursal to maintain compliance and reputation.

4. Documentation

Proper documentation is essential to avoid future legal disputes. Employers must maintain:

• Termination letters stating reasons and effective dates
  
• ESB and severance records
  
• Signed acknowledgment from the employee
  
• Copies of final payroll and benefit settlements
  

EORs maintain legal audit trails and employee records to ensure transparency and adherence to Saudi Labor Law.

Recommended Read: How to Hire in India Easily- 10 Key Considerations

How to Choose the Right EOR Saudi Arabia Services?

Expertise and Local Knowledge

When selecting an EOR Saudi Arabia partner, it’s crucial to choose a provider with in-depth expertise in the Saudi labor market. The provider must understand the intricacies of Saudi Labor Law, GOSI contributions, Saudization requirements, visa sponsorship, and payroll regulations. This local knowledge ensures full legal compliance and protects your business from regulatory risks and potential penalties.

Comprehensive Service Offerings

An ideal EOR service provider in Saudi Arabia should offer a wide array of services, including payroll management, Iqama processing, visa and immigration handling, benefits administration, and compliance support. A comprehensive solution ensures that all aspects of hiring, managing, and offboarding employees are seamlessly handled—allowing you to focus on business operations and market growth.

Scalability and Flexibility

Business conditions and workforce needs can evolve quickly in the GCC region. A reliable EOR partner must offer scalable solutions that support everything from a single hire to large team deployments. Whether you’re testing market entry or expanding rapidly, your EOR should provide flexible service models tailored to your organizational goals.

Technology and Data Security

In an increasingly digital HR environment, data security is non-negotiable. Choose an EOR Saudi Arabia provider that operates on a secure, cloud-based platform for managing payroll, HR records, and immigration documentation. The provider should comply with local data protection standards and international best practices to safeguard employee information and business-sensitive data.

Compliance and Risk Management

A key benefit of working with an EOR Saudi Arabia partner is minimizing the risk of non-compliance with Saudi labor laws. Your EOR should have a proven track record of managing regulatory compliance, including GOSI contributions, Wage Protection System (WPS) reporting, Saudization tracking, and Iqama sponsorship. A reliable partner helps ensure that employment audits, government inspections, and legal filings are handled accurately—reducing potential penalties and operational risks.

Reputation and Client References

Evaluate the reputation of the EOR provider by reviewing case studies, testimonials, and client references—especially from businesses operating in the GCC. A reputable EOR Saudi Arabia partner will demonstrate successful experience supporting international companies and offer evidence of reliability, strong communication, and effective workforce management.

Expertise in Saudi Employment Regulations

An EOR must possess deep knowledge of Saudi labor law, including employment contracts, leave entitlements, termination clauses, end-of-service benefits (ESB), and occupational hazard insurance. Their understanding of local legal frameworks ensures that your employment lifecycle—from hiring to offboarding—is fully compliant with government mandates.

Service Offerings and Scalability

Your EOR provider should offer comprehensive services such as payroll processing, visa and Iqama handling, health insurance registration, WPS compliance, and HR administration. Additionally, they should support your business as it grows, scaling services up or down based on hiring demands, project timelines, or budget considerations.

Reputation and Client References

Seek client feedback and examine the EOR’s presence in the Saudi market. Positive reviews from companies with similar goals signal reliability. Request references or case studies that highlight their ability to manage Saudi-based employment smoothly and legally.

Data Security and Privacy Compliance

Due to the sensitivity of employee records, the EOR must guarantee compliance with data protection standards applicable in Saudi Arabia and international benchmarks. Their systems should securely manage payroll, identification documents, and healthcare data while ensuring access control and encryption protocols are in place.

Transparent Pricing and Contractual Agreements

Ensure the EOR’s pricing model is transparent and predictable. Contracts should clearly outline service inclusions, billing methods, penalties, and SLAs. A well-drafted agreement minimizes ambiguity and protects you from hidden costs or unexpected service limitations.

Local Network and Support

Your EOR partner should maintain strong connections with local authorities, legal consultants, and immigration offices. This local presence helps resolve issues swiftly—whether it’s a delay in work permit issuance, a compliance question, or a labor dispute—without reliance on external firms. This enhances reliability and streamlines service delivery on the ground.

Benefits of Working With an Employer of Record Service Provider in Saudi Arabia

Compliance and Legal Expertise

The biggest advantage of partnering with an EOR in Saudi Arabia is gaining access to local employment law expertise. Saudi labor policies and Saudization quotas are subject to frequent changes. An experienced EOR helps you stay compliant with GOSI, WPS, Iqama regulations, and leave entitlements—reducing the risk of costly fines, visa cancellations, or business disruptions.

Time and Cost Efficiency

Hiring employees through an EOR in Saudi Arabia saves considerable time and money. Since you don’t need to establish a legal entity, you avoid costs associated with company registration, bank account setup, and local licensing. The EOR manages administrative tasks like payroll, compliance filings, and employee onboarding, allowing you to focus on core functions.

Swift Market Entry

Setting up an entity in Saudi Arabia can take several weeks or months. An EOR enables immediate market entry by serving as the legal employer on your behalf. You can hire and operate locally without delays, making this an ideal solution for market testing, project-based expansion, or launching new business units.

Local HR Support

An EOR provides local HR expertise, ensuring your employees are onboarded, supported, and managed in accordance with Saudi work culture and labor expectations. From language support to resolving HR queries and grievances, the EOR enhances employee engagement while freeing your internal teams from daily HR tasks.

Flexibility and Scalability

Working with an EOR allows you to quickly scale your team up or down based on business needs. Whether you’re hiring for a short-term project or growing your permanent headcount, the EOR provides flexible solutions for recruitment, payroll, and terminations, without the burden of long-term infrastructure investments.

Risk Mitigation

Saudi labor laws mandate specific processes for hiring, termination, and employee benefits. Missteps can result in penalties or employee disputes. An EOR assumes the legal burden by managing contracts, compliance, and liabilities—shielding your company from employment-related risks and safeguarding your local reputation.

Cost Efficiency

Using an EOR eliminates the need to hire full-time HR, payroll, or legal teams in Saudi Arabia. The provider consolidates all employment services, significantly reducing operational costs while improving process efficiency. This makes it an ideal option for businesses seeking lean yet compliant international expansion.

Mitigating Cultural and Language Barriers

Saudi Arabia’s unique business culture and Arabic language requirements can create communication challenges for foreign employers. An EOR bridges this gap, ensuring employee communications, documentation, and compliance processes are culturally appropriate and linguistically accurate—leading to higher employee satisfaction and retention.

Focus on Core Business Activities

By outsourcing HR, legal, and payroll functions to an EOR Saudi Arabia partner, your team can focus on growth-driven initiatives like business development, client acquisition, and product innovation. The EOR acts as an extension of your operations—handling all administrative aspects so you can stay focused on performance.

Visa Types in Saudi Arabia

Asanify simplifies the process of hiring foreign employees in Saudi Arabia by offering comprehensive support for obtaining the necessary work visas and residence permits (Iqamas). Our experienced team manages the entire lifecycle—handling paperwork, document attestation, GOSI registration, and liaison with Saudi government portals like Muqeem, Qiwa, and MOL. This ensures full compliance with local labor and immigration laws, allowing you to focus on your core business activities.

If you prefer to manage the visa and work permit process independently, here’s a detailed step-by-step guide:

Visa Application Process

The visa application process for foreign nationals wishing to work in Saudi Arabia starts with the employer initiating a work visa request through the Ministry of Human Resources and Social Development (MHRSD). The steps typically include:

1. Job Offer: The employer must issue a job offer and contract, approved by MHRSD.
   
2. Visa Authorization: The employer applies for a visa block and work visa approval via Qiwa.
   
3. Attestation: The employment contract and degree certificates must be attested by the Saudi Embassy and relevant authorities in the employee’s home country.
   
4. Visa Stamping: Once approved, the employee visits the Saudi Embassy/Consulate in their home country for visa stamping.
   
5. Travel & Iqama: After arrival in Saudi Arabia, the employer initiates the Iqama (residency permit) process.
   

This structured process ensures the employee has legal authorization to live and work in the Kingdom.

Work Permit (Iqama) Requirements

A Work Visa and Iqama are mandatory for foreign nationals seeking employment in Saudi Arabia. The core requirements include:

• A valid passport (minimum six-month validity).
  
• A confirmed job offer from a Saudi-registered company.
  
• Educational and professional documents, attested by local authorities and the Saudi Embassy.
  
• An employment contract matching the job title approved by the visa block.
  
• Medical clearance from an authorized clinic.
  
• The Saudi employer must provide a letter of introduction, commercial registration, GOSI registration, and Chamber of Commerce certificate.
  

Work visas are typically issued for one year and are renewable based on employment status, Saudization quota, and company compliance.

Foreigner Registration (Iqama Issuance)

Upon arrival in Saudi Arabia, foreign workers must obtain their Iqama (residency permit) within 90 days. The Iqama is issued by the General Directorate of Passports (Jawazat) and includes the employee’s job title, sponsor (employer), and personal details.

Key points include:

• Biometric data collection is mandatory.
  
• Health insurance registration is required for Iqama issuance.
  
• Iqamas must be renewed annually and must be valid for performing any official transactions (e.g., opening a bank account, renting property).
  
• Employers are responsible for the issuance and renewal of the Iqama.
  

Failure to comply with Iqama registration or renewal can result in fines, visa suspension, or deportation.

Risks or Drawbacks of EOR Saudi Arabia

1. Limited Control

One of the main drawbacks of using an EOR in Saudi Arabia is the limited direct control over employees. Since the EOR is the legal employer on record, it manages payroll, visas, compliance, and HR matters. This arrangement may limit a foreign company’s ability to enforce internal performance metrics, policies, or organizational culture. It can create challenges in aligning local employees with broader company values or long-term strategies.

2. Potential Cultural Differences

Saudi business culture, rooted in Islamic traditions and local customs, may be very different from a foreign company’s home country. Despite EOR assistance in onboarding and local adaptation, international businesses may still face challenges in navigating language nuances, religious holidays, gender-specific workplace practices, or hierarchical organizational norms, all of which can impact integration and communication.

3. Cost

While an EOR in Saudi Arabia reduces the need to register a local entity, it still involves service fees. These may be higher than directly employing staff, especially for smaller teams or long-term hiring. For some companies, particularly startups or budget-conscious firms, it is important to carefully assess whether the cost of outsourcing administrative and compliance services offers adequate return on investment.

4. Data Security and Confidentiality

Using an EOR means sensitive employee and company data—such as passport information, payroll details, and visa records—is shared with a third party. This increases data exposure risks. Though reputable Saudi EOR providers maintain strong cybersecurity and compliance with local and international data laws, companies must vet their partners carefully to ensure proper data protection, especially under Saudi data localization regulations.

5. Scalability Challenges

While EOR providers offer flexible hiring solutions, rapid scaling can pose challenges. If a company plans to quickly onboard a large workforce, the EOR may face strain in managing multiple visas, payroll setups, or Iqama issuances simultaneously. It’s essential to confirm that your chosen EOR can handle the projected growth without compromising service quality or compliance standards.

6. Communication Challenges

Time zone differences, Arabic-language documentation, and cultural business practices may result in communication issues between foreign companies and their EOR partners. Delays in updates or misunderstandings around policies (e.g., Saudization or WPS reporting) can affect operations. Effective communication protocols and dedicated account management are crucial for smooth collaboration.

How Does Employer of Record Saudi Arabia (EOR) Services Differ From Usual HR Software?

1. Employer of Record (EOR)

An EOR in Saudi Arabia is a legally recognized third party that acts as the official employer for your workforce. It manages all legal, HR, and compliance responsibilities on your behalf, including visa processing, Iqama issuance, GOSI registration, and end-of-service benefits. EOR services are vital for foreign companies that do not have a local presence but want to hire and manage employees in the Kingdom compliantly.

Key responsibilities of an EOR include:

• Payroll management and compliance with WPS
  
• Work visa and Iqama processing
  
• GOSI contributions and health insurance registration
  
• Ensuring compliance with labor laws and Saudization quotas
  
• Managing contract terminations and end-of-service settlements
  

An EOR provides a full-service solution for operating legally in Saudi Arabia without forming a local entity.

2. HR Software

HR software is a digital tool used to manage internal HR operations like employee data, performance tracking, and recruitment workflows. While it streamlines HR tasks and enhances efficiency, HR software does not handle compliance with Saudi labor law, nor does it offer legal employment support such as visa sponsorship or payroll registration with Mudad or Jawazat.

Key features of HR software include:

• Employee record management
  
• Time and attendance tracking
  
• Talent acquisition and onboarding workflows
  
• Performance reviews and training
  
• Internal HR analytics
  

While valuable for internal HR teams, HR software alone cannot replace the legal and compliance functions offered by an EOR—making it insufficient for foreign businesses entering Saudi Arabia without a registered entity.

How Much Does It Cost to Avail Services Under EOR Saudi Arabia?

Scope of Services

EOR pricing in Saudi Arabia depends on the level of service you require. Basic services may include visa sponsorship and payroll, while comprehensive packages offer health insurance, WPS management, Saudization support, and HR advisory services. More extensive offerings naturally incur higher costs.

Employee Strength

Most EOR providers charge on a per-employee-per-month (PEPM) basis. Larger headcounts may qualify for discounted rates. However, services for expatriates often involve additional expenses due to visa, Iqama, and housing support requirements.

Complexity of Employment Regulations

Industries such as healthcare, oil & gas, and education in Saudi Arabia are subject to sector-specific rules and Nitaqat (Saudization) quotas. If your workforce involves complex job roles or regulatory nuances, the EOR may charge additional fees to maintain compliance and manage legal risk.

Customization and Additional Services

Premium EOR providers may offer custom HR packages, such as managing expat family sponsorships, housing allowances, or relocation services. These tailored offerings are valuable but may increase the overall cost of EOR services.

Technology Infrastructure

EORs with robust platforms that integrate payroll automation, visa dashboards, WPS tracking, and employee self-service portals often charge a premium. However, the technological efficiency and risk reduction often justify the added expense.

Pricing Models and Contract Terms

EOR Saudi Arabia services are offered through various models:

• PEPM (Per Employee Per Month) fees
  
• Flat monthly retainers for bundled services
  
• Project-based pricing for short-term needs
  

Longer contracts typically offer better pricing. Some providers may also charge onboarding/setup fees or exit/termination processing fees, depending on the service agreement.

Conclusion: EOR Saudi Arabia

The Employer of Record (EOR) model is a powerful solution for companies aiming to hire and operate in Saudi Arabia without forming a legal entity. It simplifies compliance with labor and immigration regulations, facilitates faster hiring, and reduces the administrative burden of managing payroll, visas, and benefits.

For businesses expanding into Saudi Arabia or managing distributed teams in the Middle East, an EOR partner offers a legally compliant, cost-efficient, and operationally streamlined solution. Whether you’re testing the market or scaling rapidly, partnering with an EOR allows you to focus on your growth strategy while experts manage all local employment complexities.

FAQs

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.