How to Hire in Saudi Arabia: EOR Guide for the GCC’s Largest Economy

Saudi Arabia is the Gulf Cooperation Council’s largest economy and one of the world’s most significant energy, infrastructure, and technology investment markets. Vision 2030 is driving a structural diversification of the economy at a pace that is creating substantial demand for international talent across financial services, tourism, entertainment, healthcare, technology, and engineering. Riyadh has accelerated its emergence as a genuine global business city, with Neom, the Red Sea Project, and a wave of megaprojects anchoring long-term workforce requirements. For global employers, compliant hiring in Saudi Arabia requires navigating the Saudi Labour Law (Royal Decree M/51 of 2005 and its amendments), the Nitaqat (Saudisation) programme administered by the Ministry of Human Resources and Social Development (MHRSD), GOSI social insurance contributions, the Qiwa digital labour platform, and the Wage Protection System (WPS) for salary disbursement.

An Employer of Record Saudi Arabia provider registers with MHRSD and the General Organization for Social Insurance (GOSI), manages Iqama (residency permit) and work permit sponsorship for expatriates, processes WPS-compliant payroll, maintains Qiwa platform compliance, and handles the full employment lifecycle without requiring you to establish a Saudi LLC or branch office. Global Deployments provides Employer of Record services in Saudi Arabia through its vetted in-country partner network, covering employment, payroll, Iqama sponsorship, and compliance under one engagement, with no local entity required on your side.

The Legal Framework for Hiring in Saudi Arabia

Private sector employment in Saudi Arabia is governed by the Saudi Labour Law (Royal Decree M/51 of 2005), with enforcement and administration by the MHRSD. Employment contracts for foreign nationals must be in Arabic and registered on the Qiwa platform within 10 days of signing. The Qiwa platform is now the single system of record for all employment contracts, labour dispute filings, Saudisation data, and employee transfers in the private sector.

Fixed-term contracts are the standard contract type under Saudi Labour Law. Indefinite-term contracts are also permitted and, in practice, convert from fixed-term after repeated renewal without objective justification. All expatriate employees require a valid Iqama (residency permit) and work permit sponsored by the registered employer. The employer is responsible for Iqama issuance, renewal, and cancellation throughout the employment relationship.

Key Compliance Obligations for 2026

• Qiwa Platform Registration and Contract Management: From 15 April 2026, only Saudi nationals with contracts documented on the Qiwa platform count toward Nitaqat (Saudisation) calculations. All employment contracts, service transfers, and labour dispute filings must be managed through Qiwa. Non-registered Saudi employees no longer qualify for Nitaqat compliance credit.
• WPS (Wage Protection System): All private sector employers must pay employee salaries through WPS-approved financial channels on the agreed payment date. MHRSD monitors WPS transactions in real time. Late or non-payment triggers immediate restrictions on new work permit issuance and Nitaqat band demotion. From 2026, WPS data flows are integrated directly with GOSI reporting and the Najiz judicial portal, making wage compliance fully transparent to enforcement authorities.
• GOSI Registration and Contributions: All employers must register with GOSI before hiring. Contribution rates differ by employee nationality and, for Saudi nationals, by the date of GOSI registration (see table below). For non-Saudi employees, only the employer contributes, at a rate of 2% of the contributable wage for occupational hazard insurance. Contributions are calculated on basic salary plus housing allowance, capped at SAR 45,000 per month.
• Nitaqat (Saudisation) Compliance: All private sector employers are required to meet sector-specific Saudi national hiring quotas under the Nitaqat programme. Compliance is classified into bands: Platinum, Green (High, Medium, Low), Yellow (being phased out from 2026), Red, and Extreme Red. The band determines the employer’s ability to sponsor new work visas, renew existing permits, and access government services. As of April 2026, the Yellow band has been eliminated, meaning employers previously in Yellow are now in Red with immediate compliance obligations.
• Profession-Specific Saudisation Quotas (2026): The MHRSD has tightened sector-level quotas across multiple professions. Marketing and sales roles now require 60% Saudisation (minimum SAR 5,500 monthly salary per qualifying Saudi national). Engineering roles require a 30% quota with a minimum salary of SAR 8,000. Procurement roles require 70%. Sixty-nine administrative role categories are subject to 100% Saudisation. Accounting is on a trajectory to 70% by 2030.
• Iqama and Work Permit Management: Every expatriate employee must hold a valid Iqama issued under the employer’s MHRSD file. Iqama renewal is the employer’s responsibility. Allowing an Iqama to lapse exposes the employer to fines and restrictions across all MHRSD services.
• Minimum Salary Thresholds: There is no universal statutory minimum wage for expatriate employees in Saudi Arabia. For Saudi nationals, a minimum of SAR 4,000 per month is the Nitaqat compliance threshold for a national to be counted as a qualifying Saudisation hire in most sectors. Sector-specific minimums apply (engineering: SAR 8,000; marketing and sales: SAR 5,500).

Tax Framework

Saudi Arabia does not impose personal income tax on employment income for either Saudi nationals or expatriate employees. There is no PAYE system and no employee income tax withholding obligation.

2026 GOSI Contribution Rates

The new GOSI contribution system (for nationals registered from July 2024) is part of a phased reform running to 2028, with rates increasing incrementally each July. The 12.75% employer and 10.75% employee rates reflect the July 2026 phase of that schedule.

Work Standards and Leave Entitlements

The Saudi Labour Law sets a standard working week of 8 hours per day and 48 hours per week. During Ramadan, working hours are reduced to 6 hours per day and 36 hours per week for Muslim employees. Overtime beyond contractual hours is compensated at 150% of the ordinary hourly rate.

• Annual Leave: Employees with less than five years of continuous service are entitled to 21 calendar days of paid annual leave per year. Employees with more than five years of continuous service are entitled to 30 calendar days. Unused annual leave must be paid out upon termination.
• Sick Leave: Employees are entitled to up to 120 days of sick leave per year (continuous or intermittent): the first 30 days at full pay, the next 60 days at 75% pay, and the final 30 days unpaid. A medical certificate is required to access sick leave entitlements.
• Maternity Leave: Female employees are entitled to 12 weeks of paid maternity leave at full pay. A minimum of six weeks must be taken after the date of delivery. Employers are prohibited from dismissing or giving notice of dismissal to a female employee during pregnancy or maternity leave.
• Paternity Leave: Male employees are entitled to 3 days of paid paternity leave on the birth of a child.
• Hajj Leave: Employees who have not previously performed Hajj are entitled to unpaid Hajj leave of up to 10 working days once during the employment relationship.
• Public Holidays: Saudi Arabia observes Eid Al-Fitr (4 days) and National Day (1 day) as gazetted public holidays. Work performed on public holidays is compensated at 150% of the ordinary daily wage.

Termination and End of Service

• Notice Period: For indefinite-term contracts, 60 days’ written notice is required from the employer. For employees on other contract types, a minimum of 30 days’ notice applies. Payment in lieu of notice is permitted by mutual agreement.
• End of Service Award (EOSA): The Saudi Labour Law mandates an End of Service Award for all employees on termination, regardless of reason. For employer-initiated termination, the EOSA is calculated at 0.5 months’ final wage per year of service for the first five years, and 1 month’s final wage per year for each subsequent year. For employee-initiated resignation, reduced EOSA rates apply depending on the length of service (from one-third entitlement at 2 to 5 years to full entitlement after 10 years of service).
• Termination for Cause: The Saudi Labour Law sets out specific grounds for dismissal without EOSA or notice, including gross misconduct, assault, repeated absence, and others listed in Article 80. Employers must follow a prescribed disciplinary process before dismissal for cause.
• Labour Court and MHRSD Dispute Process: Labour disputes must first be referred to MHRSD for conciliation. Where conciliation fails, the case proceeds to the Labour Courts. Foreign employers who terminate employees without following due process face significant compensation claims and restrictions on their MHRSD account.

Why Use an Employer of Record in Saudi Arabia

Establishing a Saudi legal entity requires a commercial registration, MHRSD employer account, GOSI registration, and active Nitaqat compliance from day one. For companies that need to hire expatriate talent for a project or build a small Saudi team quickly, an EOR removes the entity requirement and delivers immediate GOSI, WPS, Qiwa, and Iqama compliance under one provider.

Global Deployments provides Employer of Record services in Saudi Arabia through its vetted in-country partner network, managing employment contracts registered on Qiwa, WPS-compliant payroll, GOSI contributions, Iqama and work permit sponsorship, EOSA accrual, and Nitaqat compliance tracking under one engagement.

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Conclusion

Hiring compliantly in Saudi Arabia in 2026 requires simultaneous management of Qiwa platform contract documentation, WPS-compliant salary transfers, updated GOSI contribution rates under the phased new system, profession-specific Nitaqat quotas with tightened salary thresholds, Iqama and work permit sponsorship for all expatriate hires, and End of Service Award accrual from the first day of employment. The Ministry of Human Resources and Social Development (MHRSD) at hrsd.gov.sa is the definitive regulatory authority governing private sector employment in Saudi Arabia. An Employer of Record partner with in-country expertise and active MHRSD registration manages the full compliance stack, so your Saudi Arabia team is onboarded, sponsored, paid, and legally protected from day one.