KSA Employment, Benefit and Payroll Guide

Kingdom of Saudi Arabia (KSA) Employment, Benefit and Payroll Guide

Saudi Arabia offers a dynamic and rapidly evolving business environment, with a diversified economy, a large population, and a strategic location in the heart of the Gulf region. Expanding your business in Saudi Arabia can provide you with access to a range of opportunities in various sectors, from oil and gas and construction to healthcare and education. The government of Saudi Arabia has implemented a range of economic reforms to attract foreign investment and promote economic growth, including privatization, reducing bureaucratic procedures, and developing a digital infrastructure. Saudi Arabia is also home to a highly skilled and diverse workforce, with a strong focus on developing human capital through education and training. With its strategic location, diversified business environment, and skilled workforce, Saudi Arabia is an ideal destination for businesses looking to expand in the GCC region.
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Key Facts

Capital City: Riyadh
Currency:  Saudi Riyal (SAR)
National holiday: Saudi National Day, September 23rd
Language: Arabic (official)
Population: 34.8 million (2021 estimate)
Payroll Cycle: Monthly
VAT: 15%
Time zone: AST (Arabian Standard Time), UTC+3
International dialing code: +966
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Saudi Arabia Payroll and Labor Laws

Saudi Arabia has implemented measures to encourage the employment of its citizens, including the Nitaqat program, which encourages the employment of Saudi nationals in the private sector. Employers are required to meet certain quotas for the employment of Saudi nationals, which vary depending on the size and type of business.

Overall, having a good understanding of Saudi Arabia's payroll and labor laws is essential for companies looking to establish or expand their operations in the country. By complying with these laws and regulations, companies can ensure that they are providing their employees with fair and equitable treatment while avoiding any potential legal issues or penalties.



Social Insurance Tax for non-Saudi employees – occupational hazard (Minimum earnings 400 SAR, maximum earnings 45,000 SAR) (with effect from 1/2/2022, the General Organisation for Social Insurance (GOSI) confirmed that social insurance contributions must be calculated on a daily basis rather than a monthly basis)


Social Insurance Tax for Saudi employees – occupational hazard, pension, and unemployment) (Minimum earnings 1,500 SAR, maximum earnings 45,000 SAR) (with effect from 1/2/2022, the General Organisation for Social Insurance (GOSI) confirmed that social insurance contributions must be calculated on a daily basis rather than a monthly basis)

12.00% to 13.50% Total Employment Cost
Employee Payroll Contributions


Social Insurance Tax for No Saudi employees – occupational hazard

10.00% Total Employee Cost

Employee Income Tax

Since there is no individual income tax regime in Saudi Arabia, earnings from employment are not subject to income tax.

Minimum Wage

The national minimum wage in Saudi Arabia is 4,000 SAR per month.


Payroll Cycle
In Saudi Arabia, the payroll frequency is weekly or monthly. The employer must make the payment for weekly employees once a week and make payments for monthly paid employees at least once a month.
13th Salary
13th-month payments are not mandatory.

Working Hours

The working week in Saudi Arabia is typically 48 hours, 8 hours per day, and six days a week. The working day may decrease to 6 hours a day during the time of Ramadan. Typically, Fridays are a rest day.
All work exceeding the standard working hours a week is to be paid as overtime and is regulated by employment contract/collective agreements. Daily hours cannot exceed 11 hours.

All overtime hours in excess of 48 hours a week are paid at an overtime compensation rate; this rate is typically 150.00% of the employee’s average salary rate.


Paid Time Off
In Saudi Arabia, (Article 109 of the Labour Law), the annual leave entitlement is dependent on the employee’s seniority as follows: 

For employees with one to five years of service, the employee receives 21 days of annual leave. Employees with more than five years of service are entitled to 30 days of annual leave.

Employees may carry over any untaken leave to the following vacation leave with the employer’s written consent.

Employees may request ten additional days of unpaid leave per year, subject to the employer’s approval.
Public Holidays
There are 3 public holidays.
Sick Days
Employee is entitled to a sick leave provided they have a satisfactory medical report for:·      

The first thirty days of illness on full pay.      

The next sixty days on three-quarters pay.

Maternity Leave
Female employees are entitled to 10 weeks of paid maternity leave commencing four weeks before the expected due date. The payment of maternity leave is dependent on the employee’s seniority; employers will compensate employees with service of at least one year at 50.00% of the employee’s pay rate. Employees with at least three years of service receive compensation at the rate of 100.00% of the employees’ regular pay.  

An employee receiving full maternity leave entitlement may not also take the payment of annual leave in the same year. In contrast, an employee receiving 50.00% of their salary as a maternity benefit may also take an annual leave entitlement of 50.00% in the same year.
Paternity Leave
A father is entitled to 3 days of paid paternity leave for a birth of a child.
Parental Leave
There are no provisions in the law regarding parental leave.
Compassionate Leave
Employees are entitled to 5 days of paid leave following the death of their parents or children.

Female Muslim employees whose spouse dies are entitled to 4 months and 10 days of compassionate leave. Non-Muslim female employees receive 15 days of compassionate leave
Other Leave
Depending on the Collective Agreement/Employment Contract terms, an employee may be allowed additional leave types, once approved between the employer and employee, for the following:

Bereavement leave: In the event of the death of an immediate member, an employee is entitled to two days of bereavement leave.  

Marriage leave: An employee is entitled to 3 days of leave in the event of their wedding.  

Hajj leave/Pilgrimage leave:
As per Article 114 of the Labour Law, an employee is entitled between 10 to 15 days (including the Eid Al-Adha holiday) to perform Hajj if the employee has completed at least 2 consecutive years of service with the employer. However, this entitlement arises only if the employee has not performed Haj previously.  


Termination Process
The termination process varies according to how the employment agreement and collective agreement are in place and is based on the type of contract and reason for termination. The employer must give a valid reason for the dismissal of an employee; if an employer cannot provide lawful reasoning, compensation may be issued.  

If an employee resigns, the employer must issue their final wages immediately.
Notice Period
In Saudi Arabia, the notice period is dependent on the type of contract in place; for employees on monthly employment contracts, the notice period is 30 days and 15 days of notice for any other type of employment contract.

Article 75 is amended to increase the notice period for terminating indefinite term contracts from 30 to 60 days for employees paid on a monthly basis and from 15 to 30 days for all other employees.
End of Service Payment
If the service period is below two years – No gratuity is paid.

If the service period is above two and below five years – one-third of accrual.

If the service is above five years but less than ten years – two-thirds of accrual.

If the service period is above ten years – full accrual.
Probation Period
In Saudi Arabia, the probation periods may vary depending on the employment contract in place. However, the probation period is typically 90 days however this period may be extended subject to the employees written consent but cannot exceed 180 days.


For an employee to acquire a work visa in Saudi Arabia, a foreign national must be sponsored by an employer. The employer must be registered with the Ministry of Interior, and a file is opened with all the information on the employer’s foreign employees.   ​Saudi Arabia’s quota system and nationalization program can make the process of employing a foreign national relatively complex and restrictive. Applicable procedures involve a home-country consular process, followed by several post-arrival steps before final residency rights are granted.

Business travelers typically apply for a Business Visit Visa at a Saudi consular post once they receive a government-approved letter of invitation from a sponsor in Saudi Arabia. Business Visit Visas are usually valid for three months (single-entry) or 12 months (multiple-entry), or up to five years (multiple-entry) for citizens of countries that signed bilateral visa agreements with Saudi Arabia. The maximum allowable duration of stay under a single-entry visa for three and six months is 30 days; for visas with other validities, it is 90 days.

There is no longer a short-term work option in Saudi Arabia; for long-term work, foreign nationals can apply for a Work Permit and Resident ID Card, which is valid for up to one year with the possibility of extensions.​​​​​​​

This does not apply to citizens from Bahrain, United Arab Emirates, Kuwait, and Oman. Citizens from these countries may enter with their ID.

Value Added Tax (VAT)

The standard of VAT in Saudi Arabia is 15.00%

Employ Your Staff Compliantly in the GCC with Auxilium's Expert Guidance

Are you planning to expand your business in the GCC region and looking to employ staff compliantly?

Look no further than Auxilium! Our team of experts can provide you with guidance on the complex payroll and labor laws in the GCC countries, ensuring that you are fully compliant with local regulations.

We can help you with everything from setting up payroll and social security contributions to navigating the various labor laws and regulations in the GCC countries.

With our expert guidance, you can focus on growing your business while we take care of the compliance. Contact us today to learn more about how we can help you employ your staff compliantly in the GCC region and ensure peace of mind.
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