Hire employees in Saudi Arabia
What a foreign company needs to know before employing people in Saudi Arabia: whether you need an entity, how Saudization quotas decide who you can hire, what Saudi nationals and expatriates actually cost once GOSI, the expat levy and the end of service award are added, and how the 2025 Labour Law amendments changed notice, probation and resignation. Written for CHROs, CFOs, General Counsel and founders.
Quick answers
The questions leadership teams ask first.
Do I need a Saudi entity to hire?
No. There are three routes:
- Employer of Record. Dryft Global employs the person through a Saudi entity with a commercial registration, documents the contract on Qiwa, sponsors expatriates, runs payroll through Mudad and registers the employee with GOSI. You direct the work.
- Direct Saudi entity. You register with the Ministry of Investment (MISA), obtain a commercial registration, set up Qiwa, Mudad, GOSI and Muqeem accounts and build your own Nitaqat file: commonly 2 to 4 months before your first visa.
- Independent contractor. Only Saudi nationals with a Freelance Document can work this way. Expatriates cannot lawfully freelance.
When should I use an EOR instead of setting up an entity?
Use an EOR for your first hires and for mixed teams of Saudis and expatriates. You skip MISA registration, avoid building a Nitaqat file from zero, and the EOR carries sponsorship, government fees and the end of service award. Your own entity earns its keep when you bid for government contracts, which since 2024 generally require a regional headquarters in the Kingdom, or when the team grows large.
What does an employee actually cost beyond salary?
There is no income tax, so the cost sits elsewhere. For a Saudi national, GOSI is the main line: 11.75% employer for those insured before 3 July 2024, 12.75% for those first insured after. For an expatriate, GOSI is only 2%, but you pay the expat levy of SAR 700 to 800 a month, the iqama and permit fees, and usually a home ticket. Both accrue the end of service award and need medical insurance. Plan for about 11% to 17% for expatriates and 16% to 20% for Saudis.
How difficult is termination in Saudi Arabia?
Predictable but not free. Indefinite contracts need a valid reason and 60 days' notice from the employer for monthly-paid workers. Ending a contract without a valid reason costs at least two months' wages under Article 77, on top of the end of service award, which is half a month's total wage per year for the first five years and a full month after. Summary dismissal is limited to the grounds listed in Article 80.
Can Dryft Global legally employ my team in Saudi Arabia?
Yes. Dryft Global acts as the legal employer and sponsor in Saudi Arabia. We document contracts on Qiwa, sponsor and process expatriate visas and iqamas, register employees with GOSI, run monthly payroll through Mudad, arrange mandatory medical insurance, accrue the end of service award, and handle Ajeer permits and the manpower licence position when staff work at your premises.
Hiring routes compared
Speed, sponsorship, Saudization exposure and liability differ by route.
| Factor | Direct Saudi entity | Dryft Global EOR | Independent contractor |
|---|---|---|---|
| Time to first hire | 2 to 4 months to first visa | Days for Saudis; visa timelines for new expatriates | Saudi freelancers only |
| MISA registration | Required | Not required | Not required |
| Nitaqat file | Yours from hire one | Held by Dryft's entity | Not applicable |
| Sponsorship and fees | Your responsibility | Handled by Dryft Global | Not available for expatriates |
| Statutory liability | Direct corporate exposure | Assumed by Dryft Global | High if reclassified |
| Best fit | Government contracts, large teams | First hires, mixed teams | Short projects |
What an employee costs in Saudi Arabia
Salaries are quoted as basic plus housing (commonly 25% of basic) plus transport (commonly 10%). GOSI is charged on basic plus housing, capped at SAR 45,000 a month; the end of service award is based on the total wage. The model below is an engineer on SAR 25,000 basic, SAR 33,750 a month in total, in 2026.
| Component | Employer share | Notes |
|---|---|---|
| GOSI, Saudi national | 11.75% or 12.75% | Rate depends on first GOSI registration date; base is basic plus housing |
| GOSI, expatriate | 2% | Occupational hazards only; no pension or unemployment cover |
| End of service award accrual | ~4.2% | Half a month's total wage a year for 5 years, then a full month |
| Expat levy | SAR 700 to 800 a month | Expatriates only; depends on the entity's Saudi ratio |
| Iqama, work permit, exit and re-entry | ~SAR 1,250 a year | Expatriates only; employer cost by law |
| Statutory subtotal | ~9% to 17% | Expatriate at the low end, Saudi at the high end |
| Medical insurance | ~1.5% | Mandatory; about SAR 6,000 a year employee only |
| Annual home ticket | ~1% | Customary for expatriates |
| Total employer on-cost | ~11% to 20% | Above gross pay including allowances |
On the model salary, an expatriate costs about SAR 450,000 a year all-in against SAR 405,000 gross pay (about 11%), and a Saudi national about SAR 472,000 to 476,000 (16.5% to 17.5%), before the EOR fee. After year five the end of service accrual doubles. Ask us for a cost model with your salary structure.
Payroll and tax
Monthly-paid staff are paid monthly by bank transfer. Every private employer must upload its payroll file to Mudad, the Wage Protection System, within 30 days of the wage due date. Late salaries trigger escalating notices and, at two months, suspension of most government services. GOSI contributions are due by the 15th of the following month, and new hires must be registered by the 15th of the month after they start. Expatriates cannot be registered retroactively.
No personal income tax
Saudi Arabia does not tax employment income, for Saudis or expatriates, and there is no payroll withholding of income tax. Corporate income tax of 20% applies to the foreign-owned share of a Saudi company and to permanent establishments; zakat of 2.5% applies to the Saudi-owned share. Payments abroad for services carry 5% withholding tax, management fees 20%.
Saudization sets the floor
There is no general minimum wage and none for expatriates. A Saudi employee must earn at least SAR 4,000 a month to count as one full Saudi in your Nitaqat rate, and some professions demand more: engineering SAR 8,000, dentistry SAR 9,000, pharmacy SAR 7,000, accounting SAR 6,000. Profession quotas now range from 30% for engineers to 100% for customer service, HR and administration roles, so check the role before you plan an expatriate hire.
Leave and mandatory benefits
- Annual leave. 21 days paid, rising to 30 days after five consecutive years with the same employer. No cash-out during employment; unused leave is paid on exit.
- Public holidays. 10 days: four for Eid al-Fitr, four for Eid al-Adha, Founding Day (22 February) and National Day (23 September). Eid dates follow the lunar calendar and are confirmed shortly beforehand.
- Sick leave. In each year, 30 days on full pay, the next 60 days at 75%, then 30 days unpaid.
- Maternity. 12 weeks fully paid since February 2025, six of them after the birth, plus an optional unpaid month. Dismissal during pregnancy or maternity leave is prohibited.
- Other leave. Paternity 3 days, marriage 5 days, bereavement 5 days (3 for a sibling), and Hajj leave of 10 to 15 days once after two years' service.
- No 13th month. No statutory bonus. Performance bonuses and an annual home ticket for expatriates are customary.
- Working time. 8 hours a day, 48 a week; 6 hours a day for Muslim workers during Ramadan. Overtime is paid at the hourly wage plus 50% of basic, or as time off by written agreement. Friday and Saturday weekend.
- Medical insurance and housing. Health cover under the Council of Health Insurance is mandatory. Employers must provide housing and transport or cash allowances.
Termination and notice periods
Probation can last up to 180 days, during which either side may leave without notice or award. After that, indefinite contracts end only for a valid reason, with notice, and every exit except an Article 80 dismissal triggers the end of service award. Expatriate contracts are always fixed-term; if no term is written, the contract runs one year and renews automatically.
| Situation | Requirement |
|---|---|
| Employer notice, monthly-paid worker | 60 days |
| Employer notice, other workers | 30 days |
| Employee notice | 30 days, resignation filed via Qiwa |
| End of service award | Half a month per year for 5 years, then one month per year |
| Termination without valid reason | 15 days' wage per year (or remaining fixed term), minimum 2 months |
- Resignation reduces the award. Nothing under 2 years, one third at 2 to 5 years, two thirds at 5 to 10 years, the full award after 10 years.
- Compensation stacks. Article 77 compensation is payable on top of notice pay and the end of service award, and has a two-month floor.
- Summary dismissal is narrow. Article 80 lists the grounds, including serious misconduct and prolonged absence after written warnings. The worker must have a chance to respond.
- Resignations run through Qiwa. A resignation is deemed accepted after 30 days if you do not respond, and the worker can withdraw within 7 days if not yet accepted.
Can I use independent contractors?
Only in narrow cases. Saudi nationals can work independently with a Freelance Document from HRSD. Expatriates cannot lawfully freelance while sponsored by an employer, and a business that lets them work for their own account faces fines and Anti-Concealment Law exposure. A foreign company paying a Saudi resident as a contractor also risks reclassification where there is control, integration and exclusivity, and may create a permanent establishment. Staffing models carry their own rules: since February 2025 supplying workers to work under another party's supervision requires an HRSD manpower licence, with fines of SAR 200,000 to 500,000 without one, and since 26 January 2026 every expatriate placed with a client needs an Ajeer permit before work starts. For anyone who works like an employee, a licensed EOR is the compliant route.
The legal framework in brief
Saudi employment law is a single national code, administered almost entirely through government platforms. The instruments you will hear most:
- Labour Law (Royal Decree M/51), amended February 2025. Contracts, probation, working time, leave, notice, the end of service award and termination compensation.
- Social Insurance Law (Royal Decree M/273), July 2024. GOSI pension, unemployment and occupational hazards contributions, with higher rates for Saudis first insured after 3 July 2024.
- Nitaqat and Saudization resolutions. Entity-level Saudi quotas, counting thresholds and profession-specific quotas, measured on Qiwa.
- Ajeer outsourcing rules, January 2026. Permits for expatriates working at another establishment, capped at three years.
- Personal Data Protection Law. Fully enforced since September 2024 by SDAIA, with rules on transfers abroad and 72-hour breach reporting.
- Investment Law and the RHQ programme. MISA registration replaced the investment licence in 2025; government contracts generally require a Saudi regional headquarters.
- Authorities. HRSD (with Qiwa and Mudad), GOSI, ZATCA, MISA, the Passports Directorate through Muqeem, and SDAIA.
Where the talent is
About 35 million people, 56% of them Saudi, and an employed workforce of about 18 million, three quarters expatriate. Saudi unemployment fell to 6.5% in mid-2026 and female participation has climbed to about a third, so Saudization quotas are increasingly met by a young, educated domestic workforce in finance, engineering, IT, HR and customer roles. Senior technical and specialist roles still rely heavily on expatriates. Vision 2030 projects and the regional headquarters rule have made Riyadh the region's main destination for new corporate teams. Arabia Standard Time (UTC+3) overlaps a full morning with Europe. The working week runs Sunday to Thursday, and Ramadan shortens hours for Muslim staff for a month each year, so plan launches and deadlines around the Hijri calendar. Arabic is the official language and contracts are bilingual with Arabic prevailing, but English is the working language in most multinational offices.
| Region | Talent and industry concentration |
|---|---|
| Riyadh | Government, finance, regional headquarters, technology and consulting; King Abdullah Financial District |
| Jeddah | Commerce, Red Sea port, logistics, retail and tourism |
| Dammam, Al Khobar, Dhahran | Oil and gas, petrochemicals, engineering and industrial services |
| NEOM and Red Sea projects | Construction, engineering, hospitality and project management |
Saudi Arabia Implementation Kit
This page tells you the rules. The kit tells you what to do, in what order, and what goes wrong when you skip a step.
- Step-by-step checklist, from route selection to first Mudad payroll
- Saudization and Nitaqat checker by profession, with counting thresholds
- Salary structuring worksheet: basic, housing, transport, GOSI base and end of service accrual
- Expatriate cost calculator: visa, iqama, work permit, expat levy and medical insurance
- GOSI rate guide for legacy and post-July 2024 Saudi employees
- Notice, Article 77 compensation and end of service award calculator
- Every official Saudi authority and platform with direct links
This guide is general information, not legal, tax or immigration advice. GOSI rates for new Saudi entrants rise each July, Saudization quotas and counting thresholds change by profession, and government fees are revised periodically. Confirm current figures with a qualified adviser or with Dryft. Last reviewed November 2026.
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