Guide to employment, payroll and benefits in

Saudi Arabia

Rivermate offers complete payroll, benefits and compliance services for

Saudi Arabia

01. Overview

Last updated: 

August 19, 2021

Currency
Saudi Riyal
Capital
Riyadh
Ease of doing business
71.6
Language
Arabic
Population
34813871
GDP growth
-0.86%

02. Grow your team in

Saudi Arabia

with Rivermate

Payroll, benefits, taxes, and compliance can be difficult to manage in

Saudi Arabia

, particularly if you don't have established local relationships. You can hire employees in

Saudi Arabia

effectively, conveniently, and in full compliance with all relevant labor laws using Rivermate's global employment solution. We handle the responsibilities and legal risks associated with foreign employment so you can concentrate on growing your company.

03. Summary

Saudi Arabia, officially the Kingdom of Saudi Arabia, is a Western Asian nation that occupies the majority of the Arabian Peninsula. Saudi Arabia is the largest sovereign state in Western Asia, the second-largest in the Arab world, the fifth-largest in Asia, and the 12th-largest in the world, with a land area of approximately 2,150,000 km2. Jordan and Iraq to the north, Kuwait to the northeast, Qatar, Bahrain, and the United Arab Emirates to the east, Oman to the southeast, and Yemen to the south; the Gulf of Aqaba separates Saudi Arabia from Egypt and Israel to the north-west. Saudi Arabia is the only country in the world with coasts on both the Red Sea and the Persian Gulf, and its landscape is mostly made up of arid desert, lowland, steppe, and mountains. Saudi Arabia's economy was the largest in the Middle East and the 18th largest in the world as of October 2018. Saudi Arabia also has one of the world's youngest populations, with about half of its 34.2 million people under the age of 25. The land that now makes up Saudi Arabia was once home to a number of ancient cultures and civilizations. Saudi Arabia's prehistory contains some of the world's earliest evidence of human activity. Modern-day Saudi Arabia is the birthplace of Islam, the world's second-largest religion. The Islamic prophet Muhammad brought the people of Arabia together and established a single Islamic religious polity in the early seventh century. Following his death in 632, his followers quickly spread Muslim rule beyond Arabia, capturing vast and unparalleled swaths of land in a matter of decades. The Rashidun, Umayyad, Abbasid, and Fatimid caliphates, as well as various other dynasties in Asia, Africa, and Europe, were established by Arab dynasties originating in modern-day Saudi Arabia. The area of modern-day Saudi Arabia was previously divided into four distinct historical regions: Hejaz, Najd, parts of Eastern Arabia, and Southern Arabia. King Abdulaziz founded the Kingdom of Saudi Arabia in 1932. Through a series of conquests, he unified the four regions into a single state, starting in 1902 with the capture of Riyadh, the ancestral home of his ancestors, the House of Saud. Since then, Saudi Arabia has become a authoritarian absolute monarchy ruled by an Islamist hereditary dictatorship. The Wahhabi religious movement within Sunni Islam has been dubbed "the dominant characteristic of Saudi culture," with its global expansion largely funded by the oil and gas trade. The two holiest mosques in Islam, Al-Masjid al-Haram and Al-Masjid an-Nabawi, are often referred to as "the Land of the Two Holy Mosques." Arabic is the state's official language. On March 3, 1938, petroleum was found, followed by several other discoveries in the Eastern Province.

04. Public holidays

05. Types of leave

Paid time off

Employees who have worked for one year are entitled to 15 days of paid vacation every year. This entitlement is enhanced to 21 days per year after ten years of service.In addition, the employee is entitled to 10 days of unpaid leave each year, subject to the agreement of the employer.

Public holidays

Saudi Arabia recognizes three public holidays.

Sick days

Sick leave in Saudi Arabia is 90 days per year, with the first 30 days paid in full and the following 60 days reduced to 75%. The employee must be able to present a medical certificate in order to take sick leave.Employers with more than 20 workers are subject to sick leave legislation.

Maternity leave

Maternity leave lasts for ten weeks and can start as early as four weeks before the projected delivery date. Maternity leave is compensated at 50% of regular salary if the lady has worked for the company for at least a year. Maternity leave is compensated at 100% of regular salary if the mother has worked for the company for at least three years.If maternity leave is taken within the same year as full pay for maternity leave, a woman will not be paid for normal annual leave and will only be given 50 percent of annual leave pay while maternity leave is also at 50 percent of regular pay.

Paternity leave

Fathers in Russia are entitled to 2 days of paid leave for the birth of a child.

Parental leave

There are no provisions in Saudi Arabian law regarding parental leave.

Other leave

Marriage leave – 3 days’ unpaid leave Death of a family member – 2 days’ paid leave

06. Employment termination

Termination process

In Saudi Arabia, employers must provide a valid reason for terminating an employee; otherwise, the company may be obliged to pay compensation established by the labor commission or to reinstate the employee.


If the termination is initiated by the employee, the employee's final earnings must be paid immediately.

Notice period

For employees on monthly employment contracts, the notice period is 30 days; for employees on other types of employment contracts, the notice period is 15 days.

Severance pay

Severance pay is calculated differently depending on the length of employment and the manner in which the employment relationship ends. If the employer initiates the termination or an employee resigns due to marriage or childbirth, military service, or force majeure, the employee is entitled to half a month's salary for the first five years of employment and one month's salary for each subsequent year. If the employee resigns, they are entitled to one-third of the aforementioned compensation for the first two years of service and two-thirds for each year thereafter. The employee is eligible for the full benefit after ten years of service. To be eligible, the employee must have provided a written notice of at least 30 days. There are, however, exceptions to the rule regarding mandatory severance. These include instances in which an employer assaults their employer or supervisor, when an employee violates the terms of their employment contract despite being warned in writing, when the employee acts negligently or with the intent to cause harm to the employer, when the employee is on probation, when the employee is absent from work for more than 20 days in a year or 10 consecutive days, and when the employee is on diversion.

Probation period

Probationary periods usually last 90 days in Saudi Arabia.

07. Working hours

General

The standard workweek is 48 hours long and eight hours long each day. However, Muslims' working hours are reduced to 36 hours per week and six hours per day during the month of Ramadan. Female employees are not permitted to work evening shifts.


On Fridays, the employee is entitled to 24 hours of rest. A rest period of at least half an hour per day is required during the workday, provided the employee does not work more than five consecutive hours without a break. Additionally, the employee is entitled to additional breaks for prayer and lunch that are not included in the half-hour rest period.

Overtime

Daily working hours are limited to 11 hours. Overtime pay is compensated at 150 percent of the basic rate for hours worked beyond the regular working hours and during holidays.

08. Minimum wage

General

Saudi Arabia does not have a minimum salary for the private sector, however as of April 2021, public sector workers must earn at least 4,000 Saudi Arabian Riyal (SAR) each month.

09. Employee benefits

General

Saudi nationals have access to free medical and hospital treatment via the state system. Supplemental health insurance is usually given as a benefit to expatriate workers.

Supplemental health insurance, vacation tickets home, school costs, retirement plans, mobile phones, housing allowances, and transit allowances are all typical perks.

10. Why Rivermate as your Employer of Record / PEO?

Establishing an entity in

Saudi Arabia

to hire a team takes time, money, and effort. The labor law in

Saudi Arabia

has strong worker employment protection, requiring great attention to details and a thorough awareness of local best practices. Rivermate makes expanding into

Saudi Arabia

simple and effortless. We can assist you with hiring your preferred talent, managing HR and payroll, and ensuring compliance with local legislation without the hassle of establishing a foreign branch office or subsidiary. Our PEO and Global Employer of Record solutions in

Saudi Arabia

give you peace of mind so you can focus on running your business.

Please contact us if you'd like to learn more about how Rivermate can help you hire employees in

Saudi Arabia

via our Employer of Record / PEO solution.

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