An Employer of Record (EOR) is the legal employer for workers. It handles HR responsibilities like payroll, taxes, and compliance while the company directs the employees’ day-to-day tasks. This setup allows businesses to hire globally without establishing a local entity.
Hiring workers from Saudi Arabia offers benefits due to the country’s growing economy and young workforce. Saudi Arabia is known for its strong talent in oil and gas, finance, and technology. The country’s Vision 2030 initiative also drives diversification and creates new industry opportunities.
Employment in Saudi Arabia has been growing, with the government’s Saudization policy encouraging the employment of Saudi nationals in the private sector. According to the General Authority for Statistics, the unemployment rate among Saudi citizens decreased to 9.7% in Q4 2023, indicating a positive trend in the job market.
To use an EOR in Saudi Arabia, there are 6 basic steps to ensure you are set up properly:
- Find talent to hire in Saudi Arabia
- Compare using an EOR to setting up a legal entity in Saudi Arabia
- Get the information needed from your talent
- Choose an EOR provider with expertise in Saudi Arabia
- Communicate your hiring needs to the EOR
- Have the EOR set up the contracts and hiring procedure
An EOR manages payroll, taxes, and benefits administration, ensuring compliance with local laws and regulations, thus simplifying the employment process for companies.
Different labor laws in Saudi Arabia, such as those governing work hours, termination processes, and mandatory benefits, must be considered when hiring remotely. The hiring process in Saudi Arabia involves identifying talent, ensuring compliance with local employment laws, and executing contracts, typically facilitated by an EOR for companies without a local presence.
1. Find talent to hire in Saudi Arabia
Businesses should leverage a combination of local and international platforms to find talent to hire in Saudi Arabia. LinkedIn remains a crucial tool for talent acquisition, allowing companies to search for candidates actively seeking opportunities and to headhunt passive candidates.
Local job boards such as Bayt.com and GulfTalent are popular among Saudi job seekers and offer extensive listings across various industries. These platforms are particularly useful for finding candidates with specific skills and experience relevant to the Saudi market.
Industry-specific job boards and professional associations can be valuable resources for specialized roles. For example, the Saudi Council of Engineers is a good platform for finding engineering talent.
Recruitment agencies with expertise in the Saudi market, such as Michael Page and Robert Half, can provide tailored solutions for companies seeking to navigate the complexities of hiring in Saudi Arabia, especially in light of the Saudization policy.
2. Compare using an EOR to setting up a legal entity in Saudi Arabia
When working with employees in Saudi Arabia, you need to consider working with an EOR to set up your own legal entity. An Employer of Record offers a quicker, less complex route to hiring local staff, bypassing the need for a formal company presence. This approach suits companies looking to test the Saudi market or expand quickly without significant upfront investment.
An EOR manages all local employment laws, tax, and compliance issues, assuming responsibility for hired employees. This setup allows companies to start operations in weeks, compared to the months required to establish a legal entity.
On the other hand, setting up a legal entity in Saudi Arabia offers greater control and the ability to customize business operations and policies. However, establishing a legal entity involves complex registration processes, significant upfront fees, and a deeper understanding of local laws and tax regulations.
Here’s a comparison of key factors:
| Factor | Employer of Record | Setting Up Legal Entity in Saudi Arabia |
|---|---|---|
| Setup Time | 1-2 weeks | 2-3 months |
| Initial Cost | Low (typically only employee costs) | High (SR 500,000+ for LLC setup) |
| Ongoing Cost | Moderate (EOR fees + employee costs) | Variable (operational costs, compliance, etc.) |
| Complexity | Low (EOR handles most administrative tasks) | High (requires understanding of Saudi business laws) |
| Control over Operations | Limited (company directs daily work, EOR handles employment) | Full (complete control over all aspects of business) |
| Compliance Management | Handled by EOR (payroll, taxes, social security) | Company Responsibility (requires local expertise) |
| Scalability | Highly Flexible (easy to add or remove employees) | Less Flexible (changes may require legal procedures) |
| Local Expertise Required | Minimal (EOR provides guidance) | Extensive (need for local legal and tax advisors) |
| Suitable for | Market entry, testing Saudi market, short to medium-term projects | Long-term presence, full operations, strategic expansion |
| Risk | Lower (EOR assumes employer liabilities) | Higher (company bears all legal and financial risks) |
3. Get the information needed from your talent
To hire employees in Saudi Arabia, you need some information about them. Typically, you’ll need the following essential personal information:
- Employee’s full name
- Saudi national ID number (for Saudi nationals) or Iqama number (for expatriates)
- Address
- Date of birth
- Bank account details for salary payments
Additionally, you’ll need a comprehensive job description, including title, duties, and place of work. Employment contracts in Saudi Arabia should detail the contract type, start date, salary, work hours, and other employment conditions.
You’ll also need expatriate employees’ passport details and visa information. Employment contracts must be in Arabic to be legally binding, although a dual-language contract (Arabic and English) is common practice.
4. Choose an EOR provider with expertise in Saudi Arabia
When choosing an EOR provider to work with in Saudi Arabia, selecting one with deep expertise in the Saudi market and a strong understanding of local labor laws to ensure compliance and smooth business operations is crucial.
Evaluate the provider’s experience managing employee onboarding, payroll, and legal compliance in Saudi Arabia. Look for a provider with a proven track record of working successfully with companies similar to yours, and check their reputation through client case studies or reviews.
Assess the range of services offered to see if they align with your needs, such as visa and work permit support, employee benefits management, and payroll processing. It’s important to choose a provider that offers comprehensive employment services and is flexible enough to adapt to changes in Saudi labor laws.
Consider the provider’s technology and platforms, ensuring they offer secure, user-friendly systems with strong data protection measures. Evaluate their pricing models, look for transparency in fees, and assess the cost-effectiveness of your business.
What are the best EOR providers to use in Saudi Arabia?
Here’s a table listing the top EOR providers for Saudi Arabia and why each was selected:
| EOR Provider | Why It’s a Good Fit for Taiwan |
|---|---|
| Deel | Extensive experience in Asian markets, strong compliance support for Taiwanese labor laws, and expertise in managing tech industry hires |
| Remote | Strong presence in Saudi Arabia, offers tailored solutions for different industries and provides robust compliance support for Saudi labor laws |
| Multiplier | Specializes in Middle East expansion, offers dedicated support for navigating Saudi Arabia’s complex regulatory environment, and provides competitive pricing |
| Atlas | Strong presence in Saudi Arabia, offers tailored solutions for different industries, and provides robust compliance support for Saudi labor laws |
| Oyster HR | User-friendly platform for managing employees in Saudi Arabia, offers detailed guidance on Saudi employment regulations, and provides support for equity compensation |
These EOR providers all offer services tailored to the unique challenges of hiring in Saudi Arabia, including compliance with Saudization policies, managing work visas for expatriates, and navigating the complex Saudi labor laws.
5. Communicate your hiring needs to the EOR
It is important to clearly communicate your hiring needs to the EOR to ensure the process aligns with your company goals and legal requirements. Provide a detailed job description, including the title, responsibilities, required qualifications, and skills.
Specify the job’s expected start date, location (including whether it’s remote or onsite), and any specific requirements related to Saudization policies. Outline the proposed salary, bonuses, commission structures, and other compensation benefits, keeping in mind the cultural norms and expectations in Saudi Arabia.
Clarify the contract terms, including whether it’s a full-time or part-time position, and detail the working hours, including any flexibility or shift requirements. Discuss your company culture, growth plans, and how the position fits into future expansion in the Saudi market.
By accurately representing these aspects, the EOR can find the right talent and ensure legal and administrative compliance with Saudi Arabian labor laws.
6. Have the EOR set up the contracts and hiring procedure
Once you have chosen which provider to work with and communicated all of your hiring needs, the EOR will set up the contracts and hiring procedure, ensuring compliance with Saudi labor laws and employment practices.
The EOR drafts employment contracts that comply with Saudi labor laws, including specific terms regarding job details, working hours, and termination procedures. They’ll also manage the necessary documentation for tax, social security, and payroll setup, adhering to mandatory withholdings and reporting requirements.
The EOR assists in obtaining work visas and residence permits (Iqamas) for expatriate employees, collects personal and bank account information for payroll, and outlines the onboarding procedures by Saudi employment laws. They’ll ensure your company complies with Saudization requirements and other local regulations, adjusting contracts and practices as laws change.
Additionally, the EOR administers benefits and handles formal onboarding, including the introduction to company systems and culture, ensuring a smooth start for your new Saudi-based employees.
What help does an EOR provide in Saudi Arabia’s payroll, taxes, and benefits administration?
The EOR will support all of Saudi Arabia’s payroll, taxes, and benefits administration, ensuring compliance with complex local laws. It calculates and processes employee salaries, withholds the correct tax amounts, and handles social security contributions.
For payroll, the EOR manages regular pay periods (typically monthly in Saudi Arabia), calculates end-of-service benefits, and ensures compliance with Saudi wage protection system requirements. They handle year-end reporting and maintain all payroll-related documentation per Saudi labor law.
Regarding taxes, while Saudi Arabia doesn’t impose personal income tax on employees, the EOR manages the General Organization for Social Insurance (GOSI) contributions. This includes pension contributions for Saudi nationals, while for expatriates, it covers work-related injury insurance.
For benefits, the EOR typically administers health insurance plans, which are mandatory for all Saudi Arabian employees. They may also manage other benefits such as housing allowances, transportation allowances, and annual leave entitlements, which are common in Saudi employment packages.
What labor laws do you need to consider when hiring in Saudi Arabia?
When hiring in Saudi Arabia, a few key labor laws must be considered. Saudi Arabia’s approach to labor laws generally protects employee rights, emphasizing promoting employment opportunities for Saudi nationals.
Employment contracts
The Labor Law governs employment contracts in Saudi Arabia and must be in writing and in Arabic. Key elements that must be included are:
- Job title and description
- Compensation details, including basic salary and allowances
- Contract duration (if fixed-term)
- Probation period (if applicable)
- Work location and hours
It’s important to note that indefinite-term contracts are the default in Saudi Arabia unless explicitly stated otherwise.
Working hours and paid holidays
The standard work week in Saudi Arabia is 48 hours, typically eight hours per day for six days a week. During Ramadan, working hours for Muslim employees are reduced to six hours per day.
Saudi Arabia observes several public holidays, including Eid Al-Fitr and Eid Al-Adha. Employees are entitled to paid time off during these holidays.
Taxes
While Saudi Arabia doesn’t impose personal income tax, employers must contribute to the General Organization for Social Insurance (GOSI). The rates vary for Saudi nationals and expatriates.
Severance pay
Saudi Arabian employees are entitled to end-of-service benefits, calculated based on their length of service. These benefits are typically half a month’s salary for each of the first five years of service and a full month’s salary for each subsequent year.
Saudization
Saudization is a key policy in Saudi Arabia, requiring companies to employ a certain percentage of Saudi nationals. The required percentage varies by industry and company size.
Here’s a summary of these key labor laws:
| Labor Law | Key Points |
|---|---|
| Employment Contracts | Must be written in Arabic, include job details, compensation, and duration |
| Working Hours | 48-hour standard work week, reduced during Ramadan for Muslim employees |
| Paid Holidays | Several public holidays observed, including Eid Al-Fitr and Eid Al-Adha |
| Taxes | There is no personal income tax, but GOSI contributions are required |
| Severance Pay | End-of-service benefits based on length of service |
| Social Insurance | No personal income tax, but GOSI contributions are required |
How does the hiring process work in Saudi Arabia?
When hiring staff in Saudi Arabia, employers typically follow a structured process while adhering to local labor laws and cultural norms. The process usually involves:
- Defining the job requirements and creating a job description
- Advertising the position through various channels, including local job boards and LinkedIn
- Reviewing applications and resumes
- Conducting initial screenings, often via phone or video calls
- Holding in-person or virtual interviews with shortlisted candidates
- Performing background checks and contacting references (with the candidate’s permission)
- Making a job offer to the selected candidate
- Negotiating terms and finalizing the employment agreement
- Obtaining necessary work visas and permits for expatriate employees
- Completing required documentation, including registering the employee with GOSI
- Onboarding the new employee
Employers must ensure compliance with Saudization requirements and other local labor regulations throughout this process. They must also be aware of cultural sensitivities and norms in Saudi Arabia, such as gender segregation in some workplaces and respect for Islamic practices.
Is Saudi Arabia a relatively easy country to hire employees remotely through an EOR?
Yes, Saudi Arabia is becoming an increasingly accessible country for hiring employees remotely through an Employer of Record (EOR). The government’s Vision 2030 initiative has led to several reforms that have made the business environment more conducive to foreign investment and employment.
Here are five pros and three cons for hiring employees in Saudi Arabia:
Pros
Cons
Despite these challenges, the benefits of accessing the Saudi talent market often outweigh the complexities, especially when working with an experienced EOR provider who can navigate the intricacies of Saudi employment laws and practices.
