Problems we solve

Services

Solutions

Why CXC

Resources

Connect

Global Hiring Contact us

OUTLINE

Minimum wage in Saudi Arabia

Payroll structure in Saudi Arabia

Statutory benefits in Saudi Arabia

Additional employee benefits in Saudi Arabia

Seamless and compliant payroll in Saudi Arabia

Payroll in Saudi Arabia

Managing payroll in Saudi Arabia requires a thorough understanding of local labour laws, statutory benefits, and compliance requirements. Employers must adhere to strict payroll regulations, including timely salary payments and social security contributions. Payroll frequency is typically weekly or monthly, ensuring employees receive their wages in accordance with legal requirements. While a 13th-month salary is not mandatory, some companies offer performance-based bonuses as an incentive.

Employers must also factor in various deductions and contributions. Saudi nationals are enrolled in the General Organisation for Social Insurance (GOSI), with both employers and employees contributing a percentage of salaries toward pensions, disability coverage, and unemployment benefits. Expatriates, however, are not covered under the standard pension scheme but are subject to occupational hazard insurance. Additionally, companies are responsible for providing medical insurance to employees and their dependents, which is a legal requirement.

To streamline payroll operations, many businesses rely on payroll services in Saudi Arabia or partner with payroll service providers in Saudi Arabia to ensure compliance. Outsourcing payroll functions helps organisations manage salaries, tax filings, and benefits while reducing administrative burdens. Companies offering corporate payroll service in Saudi Arabia assist with automating payments, handling payroll calculations, and maintaining accurate employee records.

For multinational companies, payroll outsourcing in Saudi Arabia provides a cost-effective solution to navigate complex regulations and maintain compliance with local labour laws. Businesses looking to optimise workforce management often engage HR payroll outsourcing in Saudi Arabia, allowing them to focus on growth while ensuring payroll accuracy.

A trusted provider like CXC offers a comprehensive payroll solution in Saudi Arabia, ensuring businesses stay compliant while streamlining payroll processing. With expertise in local labour laws and global payroll management, CXC helps employers mitigate risks, enhance efficiency, and provide employees with reliable compensation and benefits.

Minimum wage in Saudi Arabia

The minimum wage in Saudi Arabia varies based on nationality and sector, with distinct regulations for Saudi nationals, expatriates, and public sector employees.

In 2025, Saudi Arabia’s minimum wage for Saudi nationals in the private sector is 4,000 Saudi Riyals (SAR) per month. This increase from the previous 3,000 SAR aims to boost local employment and encourage workforce participation among Saudis.

For foreigners in the private sector, there is no officially mandated minimum wage in Saudi Arabia. Their salaries are typically negotiated based on qualifications, experience, and industry standards. However, some sectors or specific labour agreements may establish minimum thresholds for foreign workers.

Public sector employees, regardless of nationality, are entitled to a minimum wage in Saudi Arabia per month of 3,000 SAR. This ensures a baseline salary for government employees across different roles and departments.

While there is no mandated minimum wage specifically for domestic workers in Saudi Arabia, the new guidelines for residential support workers, including housemaids, stipulate a minimum monthly salary of 1,500 SAR.

There is no official minimum wage in Saudi Arabia per hour. However, monthly salaries can be broken down based on standard working hours to estimate an approximate hourly rate.

For employers, ensuring compliance with wage regulations is essential to maintain fair labour practices and avoid legal complications. Understanding the nuances of wage policies helps businesses attract and retain talent while adhering to Saudi labour laws.

Payroll structure in Saudi Arabia

Managing Saudi Arabia payroll requires a clear understanding of local regulations, including salary payments, taxes, and mandatory benefits for employees.

Payroll cycle in Saudi Arabia

The payroll rules in Saudi Arabia mandate that salaries be paid either weekly or monthly. Employees on a weekly payroll must be compensated at least once per week, while those on a monthly payroll must receive their wages at least once per month. Timely salary payments are crucial to meeting Saudi Arabia’s payroll rules and labour law requirements and maintaining employee satisfaction.

Payroll taxes and benefits in Saudi Arabia

Unlike many other countries, there is no personal income tax on salaries in Saudi Arabia, meaning employees do not need to file tax returns. However, employers and employees must contribute to the General Organization for Social Insurance (GOSI), which provides pensions, disability, unemployment, and occupational hazard insurance.

Employer contributions: 12% of the employee’s salary for Saudi nationals (9% for pensions, 2% for unemployment insurance, and 1% for occupational hazards).
Employee contributions: 10% of their salary towards GOSI for pension and unemployment insurance.
Expatriate workers: Employers contribute 2% for occupational hazard insurance, but there are no pension obligations for foreign employees.

Additionally, employers must provide health insurance for employees and their dependents and ensure end-of-service gratuity payments, calculated based on the employee’s tenure.

13-month salary in Saudi Arabia

There is no statutory requirement for a 13th-month salary in Saudi Arabia. However, some employers offer performance-based bonuses or annual incentives at their discretion to reward employees and enhance retention.

Understanding deductions on payroll in Saudi Arabia and ensuring compliance with labour laws is essential for businesses operating in the Kingdom. Employers should stay updated on payroll regulations to avoid financial and legal risks.

Statutory benefits in Saudi Arabia

Employers in Saudi Arabia need to follow a range of statutory benefits to ensure the welfare of their employees. These benefits cover the country’s social security, health insurance, pensions, and other mandatory protections designed to support workers during their employment and beyond.

Social security contributions in Saudi Arabia

The social security system in Saudi Arabia is overseen by the General Organisation for Social Insurance (GOSI). Employers and employees contribute to GOSI to cover pensions, disability, unemployment, and occupational hazard insurance.

For Saudi nationals, the total social security contributions in Saudi Arabia amount to 22% of the employee’s salary, with 10% deducted from the employee’s wages and 12% paid by the employer. These contributions help fund retirement pensions, disability insurance, and survivor benefits for employees and their families.

For non-Saudi employees, a 2% contribution is required from the employer for occupational hazard insurance, but there are no pension contributions. This ensures workplace protection for expatriates in case of work-related injuries or illnesses.

Employees from Gulf Cooperation Council (GCC) countries follow the social security rates set by their home countries, meaning the contribution percentage can vary based on their nationality. Employers must ensure they comply with these regulations to avoid legal penalties and maintain a smooth payroll process.

Health insurance in Saudi Arabia

Under Saudi Arabia’s social security law, employers are legally obligated to provide health insurance to all employees. The coverage extends to their dependents, including male children under 25 years old and unmarried female dependents until they marry or transfer their sponsorship.

The health insurance system ensures access to essential medical care, with policies typically covering outpatient services, hospitalisation, emergency care, and maternity services. Insurance policies must comply with regulations set by the Council of Cooperative Health Insurance (CCHI).

Mandatory pension in Saudi Arabia

Pension benefits in Saudi Arabia apply exclusively to Saudi and GCC nationals. Employers contribute to GOSI to provide retirement benefits, which ensure financial stability for employees after their working years.

Saudi employees contribute 10% of their salary to the pension fund, while employers contribute 12%. These contributions fund retirement benefits, disability pensions, and survivor benefits for dependents. Expatriates, however, are not entitled to pension benefits under the Saudi social security system.

Other statutory benefits in Saudi Arabia

Saudi labour laws mandate additional benefits to provide financial security and workplace protection for employees:

End-of-service gratuity (EOSG): Employers must provide a severance payment upon an employee’s termination, calculated based on years of service. Employees with over five years of service are entitled to higher compensation.
Work injury insurance: Covers financial support and medical treatment for employees who suffer from work-related injuries or illnesses.
Unemployment insurance (Saned): Provides temporary financial support to Saudi employees who become unemployed through no fault of their own.
Paid leave benefits: Employees are entitled to annual leave, sick leave, maternity leave, and public holidays as per Saudi labour laws.

Understanding Saudi Arabia social security benefits is essential for businesses operating in the Kingdom. Employers must ensure compliance with social security laws, health insurance mandates, and pension contributions to provide a fair and legally compliant work environment. By staying up to date with Saudi labour regulations, businesses can attract and retain talent while avoiding legal risks. For the latest regulations, employers should refer to the official guidelines provided by the Ministry of Human Resources and Social Development and GOSI.

Additional employee benefits in Saudi Arabia

Providing competitive employee benefits in Saudi Arabia is crucial for attracting and retaining top talent. While statutory benefits such as social security and health insurance are mandatory, many employers offer additional perks to enhance employee satisfaction and well-being. These benefits often help expatriates adjust to life in the Kingdom and support Saudi employees in achieving a better work-life balance.

Additional health insurance in Saudi Arabia

While health insurance in Saudi Arabia is a legal requirement for all employees and their dependents, many employers go beyond the basic coverage. Companies often provide supplementary health plans that include dental care, optical services, and extended medical coverage for family members. These additional benefits help employees feel valued and secure, reducing financial burdens related to healthcare costs.

Housing allowances in Saudi Arabia

The housing allowance in Saudi Arabia is a widely offered benefit, particularly for expatriates who relocate to the Kingdom for work. Employers may either provide company-owned accommodation or offer a monthly housing stipend to cover rental costs. The amount varies based on job position, salary level, and employer policies, but it significantly eases the financial strain of securing housing in major cities like Riyadh and Jeddah.

Transportation allowances in Saudi Arabia

Many companies provide a transportation allowance in Saudi Arabia to help employees manage commuting expenses. This can take the form of a fixed monthly stipend, reimbursement for fuel costs, or even a company-provided vehicle. Some businesses also arrange shuttle services for employees, particularly in industrial or remote areas, ensuring reliable transport to and from work.

Education allowances in Saudi Arabia

For expatriates and senior-level employees, an education allowance in Saudi Arabia is a significant perk. Given the high cost of international schooling, some employers offer financial support for tuition fees, school transportation, and other educational expenses. This benefit helps families maintain educational continuity for their children while working in the Kingdom.

Other supplemental benefits in Saudi Arabia

Beyond the core allowances, many employers offer additional perks to enhance job satisfaction and retention:

Annual airfare allowance: Many companies cover round-trip airfare for expatriates to visit their home country, ensuring they can stay connected with their families.
Mobile phone and internet stipend: Some organisations provide mobile devices or reimburse employees for network and data costs.
Performance bonuses: While a 13th salary is not mandatory, performance-based bonuses are common in various industries.
Home ownership loans: Large employers, such as Saudi Aramco, may offer housing loans to help employees buy property.
End-of-service benefits: Employees are entitled to severance pay based on their years of service, providing financial security upon leaving the company.

A well-structured employee benefits package in Saudi Arabia plays a crucial role in enhancing employee satisfaction and productivity. Offering competitive benefits beyond the statutory requirements helps businesses attract skilled professionals, improve retention rates, and maintain a motivated workforce. Employers should assess their compensation strategies to ensure they align with industry standards and employee expectations, creating a positive work environment that fosters long-term commitment.

Seamless and compliant payroll in Saudi Arabia

Handling payroll and employee benefits in Saudi Arabia goes beyond compliance—it is about ensuring your compensation packages align with local market expectations. With distinct workplace norms and statutory requirements, offering competitive benefits is essential for attracting and retaining top talent.

At CXC, we simplify payroll and benefits management in Saudi Arabia. From GOSI contributions to end-of-service benefits and performance bonuses, we take care of the complexities, allowing you to focus on growing your business with confidence.

Want to learn more? Explore our Employer of Record (EoR) solutions or speak to our team today.

Compliantly hire employees anywhere with CXC

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.

Our EoR solution

DISCLAIMER: The information contained on this website is provided for general informational purposes only and should not be construed as legal, tax, or other professional advice on any subject matter. While we endeavor to ensure that the content is accurate and up to date, we make no warranties or representations of any kind regarding the completeness, accuracy, reliability, suitability, or availability of the information contained herein. The content on this site is not intended to be a substitute for professional advice. Users should not act or refrain from acting based on any information on this website without seeking the appropriate legal, tax, or other professional advice tailored to their specific circumstances from qualified professionals. We expressly disclaim all liability in respect to actions taken or not taken based on any or all of the contents of this website. Use of the information on this site does not create an attorney-client, tax advisor-client, or any other professional-client relationship between the user and the website or its authors.

BLOG

Helping businesess to compliantly engage talent since 1992