How to hire in Saudi Arabia through an EOR

Saudi labor law requires all employment contracts to be in writing, in Arabic, and registered with the Ministry of Human Resources and Social Development. Fixed-term contracts are the default for most hires, especially non-Saudis, with strict limits on duration and renewals.

Most companies use fixed-term contracts. They're simpler to end without large payouts and they follow Saudi rules for expatriates, who can't hold indefinite contracts. If you label a non-Saudi's contract as indefinite, it's still treated as fixed-term under the law.

What has to be in the contract

Article 51 of the labor law sets out what you need to include: the employee's full name, job title, salary, work location, hours, rest days, leave policies, and termination terms. Contracts must be in Arabic. You can include a translation for non-Arabic speakers, but if there's a dispute, the Arabic version is what counts.

Probation can be up to 3 months and isn't renewable without mutual agreement. During that period, either side can end the relationship without notice or compensation. After probation, full rules apply: notice periods start at 60 days for contracts over a year, and end-of-service gratuity kicks in.

If you don't put the contract in writing, the employment relationship still exists under law. You just won't have anything to rely on if there's a dispute. Register contracts through the Qiwa platform to make them valid and enforceable.

Contractor vs employee

The legal test comes down to control. If you set the hours, supply the tools, or direct someone's daily work, Saudi courts are likely to treat them as an employee regardless of what the contract says. Substance matters more than labels here.

Getting it wrong is expensive. Misclassification can mean owing back wages, social insurance contributions, end-of-service gratuity, and potentially double pay for overtime. Ministry fines reach SAR 100,000 per violation, and reclassification can be applied retroactively across years.

Non-competes are enforceable if they're reasonable: up to 2 years, tied to your specific industry, and with compensation during the restriction period. IP assignment needs to be spelled out explicitly in the contract. If it's not, employees retain ownership of their inventions.

If you're hiring non-Saudis, stick to fixed-term contracts. If you're new to hiring in Saudi Arabia, working with an EOR is worth considering. They handle registration and compliance, which reduces the risk of making a costly mistake early on.

Saudi employees get 21 days of paid annual leave after one year, rising to 30 days after five years. That's relatively generous, but if you're hiring skilled locals, expect to go beyond the legal minimums to stay competitive.

Time off

Employees get 21 days of paid annual leave once they've completed one year of service, rising to 30 days after five years. Leave accrues monthly at 1.75 days for the first five years, or 2.5 days after that. Pro-rate it for partial years, so nine months worked equals 15.75 days, for example.

Pay vacation salary in advance, based on base pay plus fixed allowances like housing or transport. Employees notify you 30 days ahead, and you can set the timing to suit your operations, but you need to grant it within the same year. Carryover requires your approval, and any unused days get paid out on termination.

Public holidays shift if they fall on a weekend. Here's the 2025 list:

All leave types

Saudi labour law sets clear rules on duration, pay, and job protection for most leave types. All paid leaves protect the employee's role. Here's how it breaks down:

There's no separate parental leave beyond maternity and paternity. Unpaid leave for emergencies or study is at your discretion.

Mandatory benefits

You're required to enrol employees in GOSI, Saudi Arabia's social insurance scheme, which covers work injuries, unemployment, and disability. Employers pay 2% for work injuries; employees contribute 1% toward unemployment (Saudi nationals only). There's no traditional pension, but GOSI includes old-age benefits, with employers contributing 2% and Saudi employees contributing 9%.

Health insurance is also mandatory. You cover 100% of premiums for employees earning under SAR 400/month and their families. For higher earners, premiums are typically split by contract, though employers usually cover the larger share. End-of-service gratuity is another key obligation: half a month's pay per year for the first five years, then a full month's pay per year after that. It functions as a form of deferred compensation that builds over time.

What people actually expect

Legal minimums won't get you far when hiring skilled workers. Many locals treat 30+ days of annual leave as a baseline expectation, even early in their career. Private health insurance that covers family members is also standard, since GOSI coverage alone often falls short.

Housing and transport allowances are common and typically add up to 20-30% of salary. End-of-year bonuses and 13-month pay structures are widely offered. In cities like Riyadh, remote work flexibility or hybrid arrangements are increasingly expected, particularly among workers under 30 who also tend to value wellness perks or learning budgets. Check sites like Bayt.com to get a sense of current market rates before you set your package.

Terminating someone in Saudi Arabia without solid evidence of misconduct can result in a court case, reinstatement orders, or significant compensation payouts. The law leans heavily toward employees, so document everything carefully before you act.

Firing someone

You can terminate for valid reasons under Article 80, including repeated absenteeism, dishonesty, assault on colleagues, or misusing a position for personal gain. Each of these requires evidence and due process, including an internal investigation where the employee has a chance to respond. During probation (up to 180 days, if stated in the contract), you can terminate without notice or severance.

Unfair dismissal applies when you let someone go without a legitimate reason under Article 80 or 77, such as poor performance with no supporting documentation. Employees can challenge this in labor court within 21 days and may win compensation or reinstatement. Under Article 81, employees facing employer cruelty, safety hazards, or contract breaches can resign without notice and still claim their end-of-service benefits.

Indefinite contracts require justification and proper notice. Fixed-term contracts end naturally or for cause. All contracts must be registered through the Qiwa platform; unregistered contracts aren't legally valid.

Notice periods

Notice requirements depend on your contract type and how often the employee is paid. For indefinite contracts with monthly wages, you give 60 days' notice; the employee gives 30. For non-monthly pay, it's 30 days each way. Either side can end employment during probation with no notice required.

Severance

End-of-service benefits (ESB) apply to most terminations and are calculated on basic salary per year worked. The formula is half a month's pay per year for the first five years, then a full month's pay for each year after that. Employees who resign can also receive partial ESB: one-third for 2-5 years of service, two-thirds for 5-10 years, and the full amount after 10 years.

No ESB is owed if you terminate under Article 80 for gross misconduct. ESB also doesn't apply in cases of mutual consent, contract expiry, retirement (age 60 for men, 55 for women), or if an employee resigns early from a fixed-term contract without cause. If a fixed-term contract is breached, calculate the remaining term's pay separately.

Full ESB example: 3 years of service, 10,000 SAR basic salary = (½ x 10,000 x 3) = 15,000 SAR.

Work permits and visas

You can hire foreign nationals in Saudi Arabia through an EOR. The EOR acts as the legal sponsor for the work visa and permit. Most standard hires use the work visa (Iqama), which ties the employee to their sponsor. Premium Residency exists for high-skilled individuals, but for typical employment, EOR sponsorship is the practical route.

You'll need a job offer, medical test, skills attestation, and ABS accreditation. Processing goes through the Qiwa and Muqeem portals. Expect around 2-4 weeks for the visa, plus another 1-2 months for the Iqama after the employee arrives. There's no digital nomad visa. For terminations within the first two years, the Musaned service handles the final-exit process.

Saudization quotas apply by sector, so locals get hiring priority. An EOR can help you stay on the right side of those requirements.

A few other things worth knowing

Since 2025, all contracts must be registered electronically on Qiwa or they're unenforceable. Probation runs up to 180 days and can be ended without pay. Resignations must be submitted in writing; if you don't respond within 30 days, the resignation is automatically accepted. Employees can withdraw a resignation within 7 days of submitting it.

There are no strong trade unions or collective bargaining mechanisms in Saudi Arabia. Data protection falls under the PDPL (2023), which requires employee consent for data processing and breach notifications. No major regulatory shifts are expected between 2024-2026 beyond the ongoing push toward digital compliance.

Follow the process: written notices, documents registered on Qiwa, and clear evidence for any termination for cause. Using an EOR for visas and compliance helps you avoid fines that can reach 100,000 SAR per violation.