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Hiring in Saudi Arabia
Background checks in Saudi Arabia
Hire employees in Saudi Arabia
Language requirements in Saudi Arabia
Payroll management in Saudi Arabia
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Employer or Record in Saudi Arabia
Expanding into Saudi Arabia presents a wealth of opportunities, but navigating the country’s complex employment landscape can be challenging. From stringent labour laws to localisation requirements under the Nitaqat system, businesses must comply with various regulations when hiring employees. This is where an employer of record (EoR) in Saudi Arabia can be a game-changer.
An EoR in Saudi Arabia is a third-party entity that legally employs workers on behalf of a business, managing payroll, compliance, and HR administration. This allows companies to hire talent quickly and efficiently without needing to establish a local legal entity. With evolving employment laws, including strict payroll regulations under the Wage Protection System (WPS), an EoR service in Saudi Arabia ensures that businesses remain compliant while focusing on their core operations.
One of the biggest advantages of using EoR and PEO services in Saudi Arabia is risk mitigation. Saudi employment laws include specific provisions for contract types, notice periods, and severance pay, all of which must be adhered to avoid legal complications. Additionally, social security contributions vary depending on the nationality of employees, requiring meticulous payroll management. An EoR handles these complexities, ensuring that businesses stay compliant with local laws while reducing administrative burdens.
Outsourcing employment to an EoR also supports businesses in attracting and retaining top talent. Whether hiring Saudi nationals or expatriates, an EoR facilitates visa processing, contract management, and employee benefits administration, making it easier for companies to build a strong workforce in the Kingdom.
For companies looking to expand or streamline their operations in Saudi Arabia, partnering with CXC, a reliable and seasoned EoR, is the right call. We provide the agility to scale quickly while ensuring full compliance with Saudi employment laws—allowing businesses to thrive in one of the Middle East’s most dynamic economies.
Hiring in Saudi Arabia
Recruiting employees in Saudi Arabia requires compliance with local employment laws, cultural considerations, and financial planning. Employers must navigate specific regulations and processes to ensure a smooth hiring experience while maintaining legal and operational efficiency.
Understanding employment regulations in Saudi Arabia
Employment laws in Saudi Arabia govern working hours, overtime, and employee entitlements. The standard workweek is 48 hours, with an 8-hour workday, which is reduced to 36 hours per week (6 hours per day) during Ramadan for Muslim employees. Overtime is compensated at 150% of the regular wage. Employees are entitled to regular breaks and a weekly rest day, usually on Friday. Termination and notice periods vary depending on contract type, with fixed-term contracts requiring 30 days’ notice and indefinite-term contracts requiring 60 days for monthly paid employees.
Cost of hiring in Saudi Arabia
The cost of job hiring in Saudi Arabia depends on factors such as the employee’s nationality, industry, and job role. Employers are responsible for payroll contributions, typically ranging from 2% to 12% of an employee’s salary. Additional expenses may include recruitment fees, work permits, visa processing, and relocation costs for expatriates. Companies also need to budget for End of Service Gratuity (EOSG), which is payable upon termination or resignation.
Cultural considerations in Saudi Arabia
Cultural awareness is essential for local hiring in Saudi Arabia. Saudi business culture is deeply rooted in Islamic traditions, emphasizing family values, hospitality, and respect for hierarchy. Employers should foster a respectful workplace that aligns with these cultural expectations. Additionally, gender-segregated work environments and adherence to dress codes are common in some industries.
Legal entities, social security, and taxation in Saudi Arabia
Employers must establish a legal entity or work with a local partner to hire employees. Social security contributions apply to all employees, with Saudi nationals contributing 10% and employers covering 12%, totalling a 21.5% rate. Foreign employees are exempt from social security contributions but may be subject to other levies.
For businesses looking to expand, partnering with a local Employer of Record (EoR) can streamline compliance and simplify the hiring process. Many companies hiring in Saudi Arabia use EoR services to manage payroll, contracts, and local employment requirements effectively.
Hiring in Saudi Arabia requires a strategic approach that balances legal, financial, and cultural factors. Employers that adhere to local laws and respect cultural norms can attract top talent while ensuring compliance and operational success.
Background checks in Saudi Arabia
Hiring the right candidate is crucial for business success, and conducting appropriate background checks can help employers mitigate risks. However, background checks in Saudi Arabia are subject to strict legal and cultural considerations. Employers must balance due diligence with compliance to ensure fair hiring practices.
Medical checks in Saudi Arabia
Medical examinations are a mandatory part of the hiring process for expatriate workers. Non-GCC nationals must undergo health screenings to confirm they are fit to work before being granted a work visa. These tests typically include screenings for infectious diseases and general fitness assessments. GCC nationals, who do not require work visas, are generally exempt from these requirements.
Employers should also be mindful of the Nitiqat programme, which mandates specific Saudisation quotas depending on the size and sector of the business. Hiring non-Saudis involves obtaining a work visa, for which medical clearance is a prerequisite.
Criminal record checks in Saudi Arabia
Conducting a criminal background check in Saudi Arabia is permissible but limited to specific job roles. Positions in financial services, government sectors, and other high-security industries may require formal criminal records check. However, these checks must be proportionate to the role and should not be used indiscriminately in the hiring process.
While employers may request reference and education verifications as a standard practice, access to official criminal records is restricted. Companies may rely on self-disclosures or require employees to obtain records from their home country. Additionally, credit reference checks are only allowed in particular industries, such as finance and banking.
Employers should ensure compliance with legal requirements when conducting background checks in Saudi Arabia to avoid violating privacy laws while safeguarding business interests.
Hire employees in Saudi Arabia
When businesses look to hire employees in Saudi Arabia, it is crucial to understand the different employment classifications. The Kingdom’s Labour Law sets out various employment arrangements, each with its own implications for contracts, benefits, and legal obligations.
Employee types in Saudi Arabia
Employees in Saudi Arabia can be engaged on indefinite, fixed-term, full-time, or part-time contracts.
- Fixed-term contracts are mandatory for non-Saudi employees, tied to the duration of their work permit or visa. If a fixed-term contract is renewed three times or the total employment period reaches four years, Saudi employees automatically transition to indefinite-term contracts.
- Part-time jobs in Saudi Arabia provide employees with rights similar to those of full-time workers, ensuring fair treatment under the law.
- Incidental work, which lasts no more than 90 days and is not part of an employer’s usual business activities, and seasonal work, tied to events such as Ramadan or National Day, follow the same employment protections as other contracts.
- Direct hiring jobs in Saudi Arabia are those where employers hire workers without intermediaries, making them responsible for compliance with labour laws and benefits.
Independent contractors in Saudi Arabia
The Saudi Labour Law allows businesses to engage independent contractors, but the arrangement must be genuine. If a contractor is subject to employer control, receives fixed recurring payments, and works exclusively for one entity, they may be misclassified as an employee, exposing the employer to legal risks.
Agency workers in Saudi Arabia
Agency work is permitted, provided that employers follow the hiring process in Saudi Arabia and adhere to immigration regulations for non-Saudi workers. Expat part-time jobs in Saudi Arabia are subject to strict visa and sponsorship requirements. Agency workers are entitled to equal treatment regarding pay and benefits, ensuring fair working conditions.
Employers should carefully determine the most suitable employment type for their workforce to maintain compliance and reduce legal exposure.
Language requirements in Saudi Arabia
Language plays a crucial role in business, legal, and administrative matters. Arabic is the official language in Saudi Arabia and is widely used in government, business, and legal proceedings. While other languages, particularly English, are commonly spoken in professional settings, employers must be mindful of the legal implications of language use in employment contracts and workplace communication.
In employment matters, it is common for contracts to be drafted in both Arabic and English. A bilingual contract, where both texts are included in a single document, ensures clarity for both parties. However, in the event of a dispute, the Arabic version will always take precedence. Saudi labour courts and administrative bodies conduct all proceedings in Arabic, and any supporting documents, including contracts and company policies, must be submitted in Arabic. While English may be used for interpretation purposes in cases of ambiguity, there is no obligation for officials or judges to rely on it.
For companies hiring in the country, ensuring compliance with language requirements is essential. Employers should provide employees with clear, legally valid Arabic versions of employment contracts and key policies. While English language jobs in Saudi Arabia are available, particularly in multinational companies and sectors such as finance, technology, and engineering, Arabic proficiency remains an asset for employees seeking long-term career growth in the Kingdom.
Employers should also be aware of language considerations in workplace policies, training materials, and official communications. While English may be used for internal operations, any legally binding documents or official records must adhere to Arabic language requirements. Companies that fail to comply with these requirements may face legal challenges or administrative delays.
Payroll management in Saudi Arabia
Managing payroll systems in Saudi Arabia requires businesses to comply with local labour laws, tax regulations, and the Wage Protection System (WPS). Whether handling payroll internally or outsourcing it to a professional provider, employers must ensure accurate and timely payment of salaries while meeting legal obligations.
How to set up payroll in Saudi Arabia
Only Saudi-registered entities can hire employees, whether local or expatriate. Non-GCC nationals require a work visa and sponsorship from their employer. Setting up payroll involves several key steps:
- Company Registration: Businesses must register with the Ministry of Commerce and Industry (MCI) and obtain a commercial registration (CR) to operate legally.
- Social Security and Labour Authorities: Employers must register with the General Organisation for Social Insurance (GOSI) and the Ministry of Human Resources and Social Development (MHRSD). These registrations ensure compliance with social security contributions and employment regulations.
- Wage Protection System (WPS) Compliance: The WPS mandates that all employee salaries be paid through approved banks, ensuring transparency and timely payments.
- Payroll Structure and Policies: Employers must define their payroll policies, including salary components, allowances, deductions, and end-of-service benefits. Payroll costs include basic salaries, social security contributions, and other mandatory benefits.
- Tax and Contribution Payments: Employers must contribute 12% to GOSI for Saudi nationals, while employees contribute 10%. For expatriates, contributions are lower but still mandatory. Employers should also factor in housing allowances, bonuses, and paid leave entitlements.
Outsourcing payroll in Saudi Arabia
Given the complexities of payroll processing in Saudi Arabia, many businesses choose to outsource their payroll operations. Outsourcing offers several advantages, including:
- Ensuring compliance with Saudi labour laws and WPS regulations.
- Reducing administrative burdens and HR workload.
- Minimising risks related to payroll errors and legal penalties.
- Streamlining salary payments for both local and expatriate employees.
CXC is a trusted payroll provider in Saudi Arabia, offering businesses end-to-end payroll management solutions. By leveraging CXC’s expertise, companies can focus on their core operations while ensuring full compliance with payroll regulations in the Kingdom.
Start building your global team with CXC
Expanding your business into Saudi Arabia presents significant growth opportunities, but it also comes with specific regulatory and operational challenges. Establishing a legal entity in the Kingdom can be a complex, time-consuming, and costly endeavour, and navigating the process alone may lead to compliance risks.
This is where CXC can support you. As a trusted Employer of Record (EoR) in Saudi Arabia, we simplify the hiring process, ensuring full compliance with local labour laws. From drafting employment contracts and managing payroll processing in Saudi Arabia to handling seamless onboarding and offboarding, we take care of every detail—so you can focus on scaling your business.
Looking to build your team in Saudi Arabia? Speak to our team today.
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With our EoR solution, you can engage workers anywhere in the world, without putting your business at risk. No more worrying about local labour laws, tax legislation or payroll customs — we’ve got you covered.
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