Private-sector employment is governed by the Labor Law administered by the Ministry of Human Resources and Social Development. Foreign staff need work permits and written fixed-term contracts, and the employer pays their recruitment, permit and residence costs. There is no personal income tax, but social insurance is payable, at much higher rates for Saudi employees than for expatriates, and end-of-service awards build up with every year of service.
Contracts, probation and termination
Probation must be written into the contract and cannot exceed 180 days in total. For indefinite-term contracts, ending the contract for a legitimate reason needs 30 days' written notice from the worker and 60 days' from the employer. Contracts for non-Saudi workers must be written and fixed-term; if no term is stated, the contract runs for one year.
Every worker who leaves builds up an end-of-service award: half a month's wage for each of the first five years and a full month for each later year, based on the last wage. A worker who resigns gets one third of the award after two to five years, two thirds after five to ten years and the full award after ten years. Budget for this liability from the first year.12345
Working time and leave
Normal working time is capped at eight hours a day or 48 a week, and six hours a day or 36 a week for Muslim workers during Ramadan. Overtime is paid at the hourly wage plus 50% of the basic wage. Friday is the paid weekly rest day, although another day can be substituted for some workers.
Annual leave is at least 21 days, rising to 30 after five years with the same employer. Sick leave is on full pay for 30 days, three-quarter pay for 60 days and unpaid for a further 30 days within a year.678910
Payroll costs and social insurance
There is no personal income tax on salaries. Social insurance is the main payroll cost: for Saudi employees covered before the new Social Insurance Law, contributions total 21.5% (9.75% from the employee and 11.75% from the employer); for expatriates the employer pays 2% for occupational hazards only. Contributions are calculated on basic salary plus housing, capped at SAR 45,000 a month.
Saudi employees who joined the system after the new Social Insurance Law took effect may be on different, phased rates. Confirm the current rates with GOSI before finalising payroll budgets.1112
Hiring foreign staff
A non-Saudi may work only with a work permit, which requires lawful entry, skills the country needs and a contract with the employer. The employer pays recruitment costs, residence and work permit fees and renewals, profession-change and exit and re-entry fees, and the return ticket when the employment ends. Labour services, including work permits and contracts, run through the Qiwa platform, and temporary staff can be placed through Ajeer.
Saudisation (Nitaqat) requirements also affect how many work permits a company can obtain. The current quotas were not confirmed, so plan Saudi hiring alongside expatriate hiring from the start.131415
| Topic | Rule | Labor Law article |
|---|---|---|
| Probation | Written in contract; maximum 180 days in total | Article 53 |
| Notice (indefinite contract) | 30 days from worker; 60 days from employer | Article 75 |
| Working time | 8 hours a day or 48 a week; Ramadan 6 or 36 for Muslim workers | Article 98 |
| Overtime | Hourly wage plus 50% of basic wage | Article 107 |
| Annual leave | 21 days; 30 days after five years | Article 109 |
| Sick leave | 30 days full pay, 60 days at three quarters, 30 days unpaid | Article 117 |
| End-of-service award | Half a month per year for five years, then one month per year | Article 84 |
How it works, step by step
- Open the establishment's labour file (created on incorporation) and set up access to the Qiwa platform1615Ministry of Human Resources and Social Development
- Register employees for social insurance and pay monthly contributions12General Organization for Social Insurance (GOSI)
- Obtain work permits for non-Saudi staff and issue written fixed-term contracts133Ministry of Human Resources and Social Development
- Accrue end-of-service awards monthly in the accounts4Employer
No timings or fees are shown unless an official source states them.
Documents usually needed
- Written employment contracts (fixed-term for non-Saudi staff)
- Work permits and residence permits for expatriate staff
- Social insurance registration for each employee
- Payroll records showing basic salary, housing and other allowances
- Internal work regulations and leave records
Common mistakes
- Using a probation period that is not written into the contract or that exceeds 180 days in total.
- Giving 30 days' notice on employer termination of an indefinite contract when 60 days is required.
- Charging recruitment, permit or exit and re-entry costs to expatriate workers, which the employer must bear.
- Budgeting expatriate payroll without end-of-service awards and work permit costs.
- Applying old social insurance rates to newly hired Saudi staff without checking the current scheme.
When the business crosses borders
- Expatriate staff are not in the Saudi pension scheme, so home-country social security or private pension arrangements need separate planning.
- There is no personal income tax in Saudi Arabia, but seconded staff may stay taxable in their home country.
- Contracts for foreign staff must be fixed-term, which affects global employment templates.
- Saudisation requirements can limit how many work permits a company can obtain, which affects the speed of any regional transfer of staff.
Questions businesses ask
Is there income tax on salaries?
No. Employment income is not subject to personal income tax. Social insurance contributions apply.1112
How much notice must an employer give?
For an indefinite-term contract with a monthly-paid worker, at least 60 days' written notice, and termination must be for a legitimate reason. A worker gives at least 30 days.2
Can a foreign employee have an open-ended contract?
No. Contracts for non-Saudi workers must be written and fixed-term. Without a stated term the contract runs for one year and renews if work continues.3
What this guide does not yet confirm
These points need checking with a qualified local professional in Saudi Arabia before you rely on them.
- Current social insurance rates under the new Social Insurance Law, including phased pension increases for new Saudi entrants, were not confirmed on an official GOSI page.
- The commencement date of the 2025 Labor Law amendments was not confirmed; the MHRSD text opened appears to reflect the amended provisions.
- Nitaqat Saudisation quotas by sector and size were not reviewed; they vary by activity and change over time.
- The monthly expatriate levy and dependant fees were not confirmed.
- Maternity leave provisions were not confirmed.
- Premium Residency options for investors and specialists were not reviewed.
Sources and review status
Each statement is numbered to the source it was checked against. We use official sources where we can, and each statement says whether it was checked against an official or a secondary source. Sources last checked on 19 October 2026. None of it has been professionally reviewed yet: it is research checked against official and secondary sources by WONE Global, not legal or tax advice.
A probationary period must be stated expressly in the employment contract and may not exceed 180 days in total. Private-sector employment under the Labor Law; probation may be used only once with the same employer, with narrow exceptions (Article 54).
The MHRSD page does not mark which text reflects the 2025 amendments to the Labor Law; the 180-day cap reflects the amended text published on the page.
For an indefinite-term contract with a monthly-paid worker, termination for a legitimate reason requires at least 30 days' written notice from the worker and at least 60 days' written notice from the employer. Indefinite-term contracts under the Labor Law.
A non-Saudi worker's employment contract must be written and fixed-term; if no term is stated, the contract runs for one year from the actual start date. Non-Saudi workers under the Labor Law; continued work after expiry renews the contract for a similar term.
The end-of-service award is half a month's wage for each of the first five years of service and one month's wage for each later year, calculated on the last wage received. Private-sector workers under the Labor Law, Saudi and non-Saudi.
A worker who resigns receives one third of the end-of-service award after two to five years of continuous service, two thirds after more than five and less than ten years, and the full award after ten years or more. Resignation by the worker; no award for less than two years of continuous service.
Working time may not exceed eight actual hours a day or 48 hours a week, reduced for Muslim workers during Ramadan to six hours a day or 36 hours a week. Private-sector workers under the Labor Law; exceptions exist for certain categories.
Overtime is paid at the hourly wage plus 50% of the basic wage, or by paid compensatory leave with the worker's consent. Hours worked beyond the Article 98 limits.
Friday is the paid weekly rest day of at least 24 consecutive hours, although the employer may substitute another day for some workers after notifying the labour office. Private-sector workers under the Labor Law.
Workers are entitled to at least 21 days of paid annual leave, rising to at least 30 days after five consecutive years with the same employer. Private-sector workers under the Labor Law.
Sick leave within one year is paid in full for the first 30 days, at three quarters of the wage for the next 60 days, and unpaid for the following 30 days. Private-sector workers under the Labor Law.
There is no personal income tax on employment income in Saudi Arabia. Individuals' employment earnings; social insurance contributions still apply.
Secondary source.
Social insurance contributions for Saudi employees total 21.5% of salary (9.75% employee, 11.75% employer), while for non-Saudi employees the employer pays 2% for occupational hazards only, on salary capped at SAR 45,000 a month. Contribution base is basic salary plus housing allowance; rates as reported for employees covered before the new Social Insurance Law.
Secondary source. The GOSI website did not render content when opened. The new Social Insurance Law (understood to apply to new Saudi entrants from 3 July 2024 with phased pension contribution increases) is not reflected on the PwC page and was not confirmed on an official page.
A non-Saudi may not work in Saudi Arabia without a work permit, which requires legal entry and authorisation to work, skills the country needs, and a contract with an employer. All non-Saudi workers under the Labor Law.
The employer bears the costs of recruiting a foreign worker, residence and work permit fees and their renewal, profession-change and exit and re-entry fees, and the worker's return ticket at the end of the relationship. Employers of non-Saudi workers under the Labor Law.
Qiwa is the main digital platform for Saudi labour-system services and Ajeer is the programme for organising temporary work. Private-sector employers.
On incorporation through the Saudi Business Center, the company's file is opened with the Ministry of Human Resources and Social Development and the company is registered with ZATCA, social insurance, the Saudi Post national address service and the chamber of commerce. Outputs of the Ministry of Commerce LLC incorporation service.
Questions on this topic
15 statements on employment, payroll and mobility in Saudi Arabia
