Saudi Arabia Employment Law & Compliance Guide for Employers
Key employment laws in Saudi Arabia: what employers need to know
Private-sector employment in Saudi Arabia is governed by the Labor Law (Royal Decree M/51 of 1426H), whose 2025 amendments extended probation to 180 days, lengthened employer notice to 60 days and raised maternity leave to 12 weeks. Foreign employers are often surprised by Saudization (Nitaqat) quotas, the monthly expatriate levy and the need to document every contract on the Qiwa platform, while salaries carry no income tax. This page summarises the core employer rules with official sources.
Saudi Arabia employment rules at a glance
| Topic | What the rule is | Official source |
|---|---|---|
| Minimum wage | No statutory national minimum wage for the private sector. Under Nitaqat, a Saudi employee counts as one full Saudi toward Saudization quotas only when paid at least SAR 4,000 a month. | Ministry of Human Resources (HRSD) – Labor Law, Part Six |
| Standard working hours | 8 hours a day or 48 hours a week (Art. 98); 6 hours a day or 36 a week for Muslim workers in Ramadan. A break of at least 30 minutes after 5 hours. Friday is the default paid weekly rest day (Art. 104). | HRSD – Labor Law, Part Six (Working Conditions) |
| Overtime pay | Each overtime hour is paid at the hourly wage plus 50% of the basic wage (Art. 107). Work on rest days and public holidays counts as overtime. Paid time off may replace overtime pay only with the employee's consent. | HRSD – Labor Law, Part Six (Working Conditions) |
| Paid annual leave | At least 21 days a year, rising to 30 days after 5 consecutive years with the same employer (Art. 109). Leave pay is paid in advance, cannot be waived or cashed in during employment, and untaken leave is paid on exit. | HRSD – Labor Law, Part Six (Working Conditions) |
| Public holidays | Fully paid holidays set by regulation (Art. 112): Eid al-Fitr and Eid al-Adha (4 days each under the implementing regulations), Founding Day (22 February) and National Day (23 September). Work on a holiday is paid as overtime. | HRSD – Labor Law, Part Six (Working Conditions) |
| Sick leave | Within one year: first 30 days at full pay, next 60 days at 75%, then 30 days unpaid (Art. 117), with a medical certificate. An employee may not be dismissed for illness before these periods are used up. | HRSD – Labor Law, Part Six (Working Conditions) |
| Maternity and parental leave | 12 weeks fully paid maternity leave; the 6 weeks after birth are compulsory and the rest may start up to 4 weeks before the due date (Art. 151). Fathers get 3 paid days within 7 days of the birth (Art. 113). | HRSD – Labor Law, Part Nine (Women Employment) |
| Probation period | Must be stated in the contract; maximum 180 days in total (Art. 53). Either party may end the contract during probation without compensation or end-of-service award. Usually only one probation per employer. | HRSD – Labor Law, Part Five (Labor Relations) |
| Notice period | Indefinite contracts, monthly-paid staff: employee gives at least 30 days, employer at least 60 days written notice with a legitimate reason; 30 days either way for others (Art. 75). Unserved notice is paid in lieu (Art. 76). | HRSD – Labor Law, Part Five (Labor Relations) |
| Severance pay | End-of-service award: half a month's last wage per year for the first 5 years, one month per later year (Art. 84). On resignation: one-third after 2–5 years, two-thirds after 5–10, full after 10 (Art. 85). | HRSD – Labor Law, Part Five (Labor Relations) |
| Employer social contributions | Saudis: 11.75% (9% pension, 2% occupational hazards, 0.75% SANED) on basic wage plus housing, capped at SAR 45,000 a month; the pension rate is higher for Saudis first insured after 3 July 2024. Non-Saudis: 2% occupational hazards only. | PwC Worldwide Tax Summaries – Saudi Arabia other taxes |
| Employee social contributions | Saudis: 9.75% (9% pension, 0.75% SANED unemployment insurance) on basic wage plus housing, capped at SAR 45,000 a month; higher pension rate for those first insured after 3 July 2024. Non-Saudis: none. | PwC Worldwide Tax Summaries – Saudi Arabia other taxes |
| Income tax on salaries | No personal income tax on employment income for Saudis or foreign nationals, so there is no payroll tax withholding. Companies pay zakat or corporate income tax on profits, not on salaries. | PwC Worldwide Tax Summaries – Saudi Arabia individual |
| Mandatory bonuses and 13th-month pay | None required by law. Housing and transport allowances are contractual but common; housing allowance is part of the GOSI contribution base, and the end-of-service award uses the last wage. | HRSD – Labor Law, Part Five (Labor Relations) |
| Work permits for foreign nationals | A non-Saudi needs a work permit from the Ministry before starting (Art. 33). The employer obtains the work visa through Qiwa, then an iqama (residence permit) after arrival. Since July 2025 permits are classed as high-skilled, skilled or basic. | HRSD – Labor Law, Part Three (Employment of Non-Saudis) |
| Employment contract requirements | Written contract in two copies on the Ministry template, documented on Qiwa; the Arabic text prevails over any translation. Non-Saudi contracts must be fixed-term, and default to 1 year if no term is stated (Art. 37). | HRSD – Labor Law, Part Five (Labor Relations) |
Employer obligations in Saudi Arabia, topic by topic
Filter by primary service relevance
Does a Saudi employment contract have to be in writing, and how long can probation last?
What are the legal working hours and overtime rules in Saudi Arabia?
Is there a minimum wage in Saudi Arabia, and how must salaries be paid?
How much paid leave must employers give in Saudi Arabia?
What does an employer pay on top of salary in Saudi Arabia?
How can an employer end an employment contract in Saudi Arabia, and what is owed?
How does a company hire a foreign national in Saudi Arabia?
Can a company use independent contractors instead of employees in Saudi Arabia?
How do Saudization quotas affect a company hiring in Saudi Arabia?
Key employment laws in Saudi Arabia and official sources
- Labor Law, Royal Decree No. M/51 of 23/8/1426H (as amended, latest amendments in force 2025) — The main private-sector employment law: contracts, probation, working time, leave, wages, termination and end-of-service award.
- Labor Law – official consolidated text (Bureau of Experts) — Official Arabic text of the Labor Law and its amendments as published by the Bureau of Experts at the Council of Ministers.
- Social Insurance Law (new law in force 3 July 2024) — GOSI pension, occupational hazards and SANED contributions for Saudi and non-Saudi employees.
- Ministerial Resolution No. 4602 of 1447H on classification of work permits — Classifies expatriate work permits as high-skilled, skilled or basic from July 2025.
FAQs: hiring employees in Saudi Arabia
Can a foreign company hire employees in Saudi Arabia without a local entity?
Not directly. Work visas, iqamas, GOSI registration and Qiwa contracts all require a Saudi commercial registration, normally after licensing with the Ministry of Investment. A foreign company without an entity can hire through an Employer of Record, which employs the staff on its own registration and Nitaqat quota, or set up its own company. Engaging resident expatriates as contractors is generally not allowed under the sponsorship rules.
How much does an employee cost in Saudi Arabia on top of gross salary?
For a Saudi employee the employer pays 11.75% of basic wage plus housing to GOSI, capped at SAR 45,000 a month. For an expatriate, GOSI is only 2% for occupational hazards, but the employer pays the monthly expatriate levy, work permit and iqama fees, health insurance and the return ticket. There is no income tax. Accrue the end-of-service award of half a month’s wage per year for the first five years.
What is the minimum wage in Saudi Arabia in 2026?
Saudi Arabia has no statutory national minimum wage for the private sector. Under the Nitaqat Saudization programme, a Saudi employee counts as one full Saudi only when paid at least SAR 4,000 a month, so that figure works as a floor for Saudi hires. Expatriate wages are set by contract and must be paid monthly through a Saudi bank.
How much notice and severance does an employer owe when dismissing an employee in Saudi Arabia?
For an indefinite contract the employer needs a legitimate reason and at least 60 days’ written notice for monthly-paid staff, or pay in lieu. The employee also receives the end-of-service award: half a month’s last wage per year for the first five years and a full month per later year. If the dismissal is unfair, compensation is 15 days’ wages per year of service, at least two months’ wages.
Can a company hire a foreign national in Saudi Arabia, and what permit is needed?
Yes. The employer needs a Saudi entity with a Nitaqat rating that allows visas. It requests a work visa through Qiwa; after arrival the worker completes a medical check and receives an iqama and work permit, which the employer pays for and renews. Since July 2025 permits are classed as high-skilled, skilled or basic. Some professions are reserved for Saudi nationals.
Is it risky to engage contractors instead of employees in Saudi Arabia?
Yes, especially for resident expatriates, who may work only for their sponsoring employer; engaging them as contractors can lead to fines and loss of visa services. If a contractor is treated as an employee, they can claim the end-of-service award, leave, notice and GOSI registration. Saudi nationals can freelance under a freelance licence. Long-term roles you direct are safer through an entity or Employer of Record.
Related NNRoad resources for Saudi Arabia: Employer of Record in Saudi Arabia · Payroll in Saudi Arabia · Hiring foreign employees in Saudi Arabia · Contractors and on-demand talent in Saudi Arabia · Saudi Arabia employer cost calculator
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Regulation Updates in Saudi Arabia
Discover the latest employment and compliance updates in Saudi Arabia — helping you stay ahead in a changing regulatory landscape.
Ministry of Human Resources and Social Development Announces Higher Saudization Rates in Marketing and Sales Professions
What it is: The Ministry of Human Resources and Social Development announces higher Saudization rates in specified marketing and sales professions, including a minimum monthly wage requirement, creating new employer obligations on hiring compliance and minimum wage.
What it changes: This policy update raises mandated Saudization quotas for certain marketing and sales roles and adds a specified minimum monthly wage requirement for those positions, establishing employer obligations related to hiring compliance and wage standards.
Who is affected:
- Employers hiring for the specified marketing and sales professions
- Workers employed in the specified marketing and sales professions
What employers should do:
- Ensure hiring practices align with the new Saudization quotas for the affected roles
- Comply with the new minimum monthly wage requirement for the affected positions
- Review and adjust hiring policies and payroll practices to meet the updated obligations
Notes: Effective month: 2026-05.
Notarized Employment Contract is an Enforceable Instrument
What it is: The Notarized Employment Contract initiative has a second phase that requires employment contracts to be notarized or updated through the Qiwa platform and to obtain an execution number.
What it changes: Establishments must notarize or update employment contracts via the Qiwa platform and obtain an execution number, enabling employees to seek enforcement for unpaid wages and affecting payroll and contract documentation processes.
Who is affected:
- Workers or employers explicitly mentioned or clearly implied by the policy summary.
What employers should do:
- Notarize or update employment contracts through the Qiwa platform.
- Obtain an execution number for the notarized or updated contracts.
Notes: Effective month: 2026-05.
Human Resources Ministry Updates Qiwa Platform Compliance Rules for Employment Contracts
What it is: The Ministry updated Qiwa Platform compliance rules for Employment Contracts to raise the documentation compliance target to 85% and requires employers to document Employment Contracts via the Qiwa platform.
What it changes: Employers must document Employment Contracts through the Qiwa platform, and the documentation compliance target is now 85%. This change affects how work permits are recorded and classified within the Qiwa system.
Who is affected:
- Employers
What employers should do:
- Document Employment Contracts using the Qiwa platform to meet the new 85% compliance target.
Notes: Effective month: 2026-04.
Oct 2025: Kenya to streamline labour agreement with Saudi Arabia – International Labour Policy Update
Kenya to streamline labour agreement with Saudi Arabia – International Labour Policy Update
Update first published on NNRoad in Oct 2025. The current rules are summarised in the sections above.