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How to hire and pay employees in Saudi Arabia
Slasify
Jun 21, 2025
| Key Takeaways |
|---|
| 1. No personal income tax for employment income, with monthly minimum wage of SAR 4,000 for Saudi nationals in private sector. |
| 2. Employer GOSI contributions total 11.75% for Saudi nationals including annuities (9%), unemployment insurance (0.75%), and occupational hazards (2%). |
| 3. 60-day notice period required for monthly-paid employees with severance pay of 0.5-1 month's wage per year of service. |
| 4. Annual leave increases from 21 to 30 days after 5 years of service, with 10 weeks paid maternity leave and 3 days paternity leave. |
| 5. Standard work week is 45 hours reduced to 35 hours during Ramadan for Muslim employees, with Friday as mandatory weekly rest day. |
Discover the global hiring and employment landscape in Saudi Arabia – undergoing significant transformation under Vision 2030. The kingdom's efforts to diversify its economy open new sectors for hiring, creating dynamic opportunities for businesses looking to enter a market on the brink of extensive growth.
Personal Income Tax
There are no taxes on employment income in Saudi Arabia.
Local Tax
There are no local taxes on employment income in Saudi Arabia.
Statutory Contributions
The following contributions, as administered by the General Organization for Social Insurance (GOSI), shall be calculated based on the employee's monthly salary of up to SAR 45,000.
These contributions apply to Saudi nationals, non-Saudi GCC nationals and non-GCC nationals differently—those made by non-Saudi GCC nationals shall be determined by the social security regulations of their respective countries.
Employer Contributions
| Contribution Rate for Saudi Nationals | Contribution Rate for Non-GCC Foreign Nationals | |
|---|---|---|
| Annuities | 9% | - |
| Unemployment Insurance (SANED) | 0.75% | - |
| Occupational Hazards | 2% | 2% |
| Health Insurance | Varies | Rates vary by insurance provider. |
Employee Contributions
| Contribution Rate for Saudi Nationals | Contribution Rate for Non-GCC Foreign Nationals | |
|---|---|---|
| Annuities | 9% | - |
| Unemployment Insurance (SANED) | 0.75% | - |
Payment of Wages
Employees who are paid on a daily basis shall be paid at least once a week and those who are paid on a monthly basis shall be paid once a month. In all other cases, employees shall be paid at least once a week.
If the work is done by the piece and requires a period of more than 2 weeks, the employee shall receive a payment each week commensurate with the completed portion of the work. The balance of the wage shall be paid in full during the week following delivery of the work.
Minimum Wage
The minimum wage for Saudi nationals in the private sector is set at SAR 4,000 per month.
Statutory Bonus
There is no statutory bonus to be paid in Saudi Arabia.
Termination
Both the employer and employee may unilaterally terminate an indefinite-term contract with a written notice given to the other party, provided that they have a valid reason for doing so and follow the proper procedure.
Aside from unilateral termination, the fulfillment of certain conditions may result in the deemed termination of an employment contract, including the mutual agreement of both parties to terminate the contract in writing.
Notice Period
The termination of an employment contract requires the observance of the following notice period or a payment in lieu of notice:
| Notice period | |
|---|---|
| Monthly-paid employees | 60 days |
| Others | 30 days |
In certain cases, the employment contract can be rightfully terminated without notice or payment in lieu.
| Circumstances warranting immediate dismissal | Circumstances warranting immediate resignation |
|---|---|
| If the employee assaults the employer, the manager in-charge or any of their superiors | If the employer, a family member or the manager in-charge commits a violent assault or an immoral act against the employee or their family members |
| If the employee fails to perform their essential obligations arising from the work contract, or to obey legitimate orders | If the employer fails to fulfill their essential contractual or statutory obligations towards the employee |
| If the employee deliberately fails to observe the instructions related to the safety of work and workers as may be posted by the employer in a prominent place in spite of written warnings | |
| If it is established that the employee has committed a misconduct or an act infringing on honesty or integrity | If the treatment by the employer or the manager in-charge is characterized by cruelty, injustice or insult |
| If the employee deliberately commits any act or default with the intent to cause material loss to the employer, provided that the latter reports the incident to the appropriate authorities within 24 hours from being aware of such occurrence | If the employer assigns the employee, without their consent, to perform work which is essentially different from the work agreed upon, except in cases of necessity dictated by transient circumstances and for a period not exceeding 30 days per year |
| If it is established that the worker has committed forgery to obtain the job | If the employer or their representative resorts to fraud at the time of contracting with respect to the work conditions and circumstances |
| If the employee is absent without valid reason for more than 30 days in a year or for more than 15 consecutive days, provided that the dismissal be preceded by a written warning if the employee is absent for 20 days in the first case and for 10 days in the second | If the employer or their representative, through their actions and particularly their unjust treatment or violation of the terms of the contract, causes the employee to appear as the party terminating the contract. |
| If it is established that the employee has unlawfully taken advantage of their position for personal gain | If there exists in the workplace a serious hazard threatening the safety or health of the employee, provided that the employer is aware but fails to take measures indicating its removal |
| If it is established that the employee discloses work-related industrial or commercial secrets |
During the notice period, dismissed employees shall be entitled to a day of paid leave per week to seek other employment. The employee shall notify their employers of their intentions to take this leave a day in advance.
Note: In any case, the employer may relieve the employee from attending work during the notice period without affecting their term of service or entitlements for such period.
Severance Pay
Upon the end of the work relation, employees shall be entitled to receive as severance an amount equivalent to 0.5 month's wage for each of their first 5 years of service, and a month's wage for each of the following years.
Where the employee resigns, they shall be entitled to a reduced severance, as follows:
| Length of service | Severance pay |
|---|---|
| 2–5 years | 1/3 of the severance they would be entitled to otherwise |
| 6–9 years | 2/3 of the severance they would be entitled to otherwise |
| 10 years and over | Regular severance entitlement |
However, the reduced severance does not apply if the employee resigns due to force majeure or if a female employee resigns within 6 months from the date of their marriage or 3 months from the date of giving birth.
In any case, severance shall be calculated based on the employee's last wage and they shall be entitled to severance for the portions of the year in proportion to the time spent on the job.
Note: Employees who are rightfully dismissed without notice shall not be entitled to receive any severance.
Probationary Period
Probationary period is subject to a maximum duration of 90 days, exclusive of Eid al-Fitr and Eid al-Adha holidays and sick leaves. This can be extended by written agreement between the employee and employer, provided that it does not exceed 180 days.
Each party shall have the right to terminate the contract during this period unless the contract contains a provision giving the right to terminate the contract to only one of them. If the contract is terminated during the probationary period, neither party shall be entitled to compensation nor shall the employee be entitled to advance notice and end-of-service awards.
An employee may not be placed on probation more than once by the same employer. As an exception, the employee may, with the written approval of the contracting parties, be subjected to another probation period if such period involves another profession or work, or if at least 6 months have lapsed since the termination of the work relationship between the employee and the employer.
Work Time Rules
Standard Working Hours
Standard working hours are subject to a maximum of 9 hours per day and 45 hours per week.
During the month of Ramadan, standard working hours for Muslims shall be reduced to a maximum of 7 hours per day and 35 hours per week.
Break Period
Employees shall not work for more than 5 consecutive hours without break. Each break period shall be at least 30 minutes long, and no employee shall remain at the workplace for more than 12 hours per day.
Break periods shall not be included in the employee's actual working hours, provided that the employee is not required to work or remain at the workplace during the period.
In addition to the aforementioned break period, female employees who return from their maternity leave shall also be entitled to an additional paid break amounting to an aggregate of an hour per day to nurse their infant for 24 months from their date of delivery.
Overtime
Employees required to work overtime shall be paid an amount equivalent to their hourly wage, plus 50% of their basic wage for each hour of overtime worked.
If the firm is operated on the basis of weekly working hours, the hours in excess of those taken as the criterion shall be deemed overtime hours.
Note: All working hours performed during holidays shall be deemed overtime hours.
Weekly Rest Days
Employees shall be entitled to 2 fully paid rest days per week, one of which shall be on Friday.
An employer may, upon notifying the relevant labor office, substitute Friday with any other day of the week for some of their employees , provided that they are allowed to still observe their religious duties.
In remote areas and in jobs where the nature of work and operational conditions require continuous work, weekly rest periods accruing to the employee may be consolidated for up to 8 weeks if the parties have an agreement to that effect, subject to the Ministry's approval.
Holiday and Leave Entitlements
Public Holidays
Employees are entitled to be fully paid on days off taken during public holidays. There are 11 days of public holidays in Saudi Arabia for 2025.
| Holiday | Date |
|---|---|
| Founding Day | February 22 |
| Eid al-Fitr | March 31–April 3 |
| Arafat Day and Eid al-Adha | June 5–9 |
| National Day | September 23 |
Employees required to work on public holidays shall be paid the same as if they are working overtime.
Annual Leave
Employees are entitled to at least 21 days of prepaid annual leave, which shall be increased to 30 days if they have at least 5 consecutive years of service.
Annual leave shall be taken in the year it is due, and at the time set by the employer according to work requirements or by rotation. The employer shall notify their employees of the date 30 days in advance.
The employee may choose to carry over their leave to the following year with the employer's consent. On the other hand, employers may postpone, for a period of not more than 90 days, the employee's leave after the end of the year it is due only if required by work conditions.
Sick Leave
Employees whose illness have been proven shall be entitled to up to 120 days of sick leave per year, which shall be paid as follows:
| Sick leave pay | |
|---|---|
| Day 1–30 | 100% of the wage |
| Day 31–90 | 75% of the wage |
| Day 91–120 | Unpaid |
Maternity Leave
Employees shall be entitled to 10 weeks of paid maternity leave, which can be taken from up to 4 weeks prior to the expected date of delivery. This leave can be extended by 2 months with no pay.
In the event of giving birth to a sick child or a child with special needs whose health condition requires a constant companion, the employee shall be entitled to an additional month of leave with full pay after the end of their maternity leave, plus another month with no pay.
Paternity Leave
Employees shall be entitled to 3 days of paid leave in the event of childbirth.
Other Leave
| Leave | Paid/Unpaid | Duration | Note |
|---|---|---|---|
| Bereavement Leave | Paid | 5 days | This leave can be taken in the event of the death of the employee's spouse, ascendant or descendant. |
| Iddah Leave | Paid | Varies |
This leave is exclusively for female employees in the event of their husbands' death. Muslim employees shall be entitled to 4 months and 10 days of leave. This leave can be further extended without pay for employees who are pregnant until their delivery. However, the employee may not, following childbirth, use the remainder of the leave. Non-Muslims shall only be entitled to 15 days of leave. |
| Hajj Leave | Paid | 10–15 days |
This leave, which may include Eid Al-Adha holidays, can be taken by employees with at least 2 consecutive years of service to perform Hajj if they have not performed it before. This can only be taken once throughout the employee's entire service period, and the employer may determine the number of employees granted this leave annually. |
| Leave for taking exams | Both | - |
For employees enrolled in an educational institution to sit for an exam. This leave shall be paid if it is for an exam of an unrepeated year and unpaid otherwise. If the employee's enrollment in the institution is not approved by the employer, this leave shall be taken from the employee's annual leave or be unpaid. Employees shall apply for this leave 15 days in advance and provide any requested proof to the employer. |
| Marriage Leave | Paid | 5 days | - |
| Personal Leave | Unpaid | 20 days per year | This leave can be taken with the employer's approval. The employment contract shall be deemed suspended if the leave taken exceeds 20 days unless the parties agree otherwise. |
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