Saudi Arabia Employment Guide 2026 — Labour Law
Saudi Arabia is undergoing the fastest economic transformation in the Middle East under Vision 2030. This guide covers everything employers need to navigate KSA labor law, Saudization requirements, payroll contributions, and end-of-service benefits.
Why Hire in Saudi Arabia
Saudi Arabia is the Middle East's powerhouse — with a GDP exceeding $1 trillion, massive infrastructure investment under Vision 2030, and a rapidly growing private sector. Key sectors hiring aggressively include construction, technology, healthcare, retail, hospitality, and financial services. The government's reforms have significantly streamlined business setup and employment processes since 2020.
Vision 2030 impact on HR: The KSA government is actively incentivizing private sector employment, improving ease of doing business, and pushing digital government services. MoHRSD's (Ministry of Human Resources and Social Development) Qiwa platform now handles all employment-related processes digitally.
Business Setup
Foreign companies can establish a presence in Saudi Arabia through several structures. The most common for operational businesses is a Limited Liability Company (LLC) registered with the Ministry of Investment (MISA).
Foreign investors apply through the MISA portal. Most commercial activities are open to 100% foreign ownership; some sectors require a Saudi partner.
Register the commercial name and articles of association with the Ministry of Commerce (MoC). Digital process via Maroof portal.
Obtain a municipal license from the local municipality for the business premises. Requires a lease agreement registered with Ejar.
Mandatory registration with the General Organization for Social Insurance (GOSI) to process contributions for Saudi national employees (and Saudization tracking).
Create employer accounts on Qiwa (HR management portal) and Mudad (WPS payroll portal) to process employment contracts and salary transfers.
Required for Mudad WPS salary transfers. Saudi banks typically take 2–4 weeks for business account opening.
Hiring & Saudization (Nitaqat)
The Nitaqat program requires private sector employers to maintain minimum percentages of Saudi national employees, based on company size and industry. Companies are classified into Platinum, High Green, Low Green, Yellow, or Red zones based on compliance.
| Nitaqat Zone | Saudization % | Privileges |
|---|---|---|
| Platinum | Exceeds target significantly | Premium visa services, no restrictions |
| High Green | Meets or exceeds target | Full access to government services |
| Low Green | Near target | Normal services |
| Yellow | Below target | Restricted visa issuance |
| Red | Significantly below target | Cannot issue new visas; fines apply |
Expat work visas: Expatriate employees require a work visa sponsored by the employer. The employer is responsible for visa fees, medical tests, and Iqama (residence permit) issuance. The Iqama must be renewed annually and must be carried by the employee at all times.
Employment Contracts
Saudi Labor Law requires written contracts for all employees. Contracts must be in Arabic (bilingual is acceptable but Arabic prevails). Key requirements:
- Probation period: Maximum 90 days (extendable to 180 days with mutual written agreement)
- Contract types: Fixed-term or indefinite (both are permitted in KSA)
- Contracts must be registered on the Qiwa platform within 90 days of the employment start date
- Amendments require both parties' written consent and must be re-uploaded to Qiwa
Qiwa contracts: All employment contracts in KSA must be registered on the Qiwa platform. The employee receives a notification and must confirm/sign digitally. Unregistered contracts create compliance risk and may affect Nitaqat scoring.
Leave & Benefits
| Leave Type | Entitlement | Notes |
|---|---|---|
| Annual Leave | 21 days/year (first 5 years); 30 days thereafter | Carry-over allowed; encash on exit |
| Sick Leave | 120 days/year | First 30 days: full pay; next 60: 75% pay; remaining: unpaid |
| Maternity Leave | 10 weeks | Full pay; can start 4 weeks before due date |
| Paternity Leave | 3 days | Paid; within 1 week of birth |
| Hajj Leave | 10 days (once per career) | Paid for Saudi nationals; unpaid for expats |
| Bereavement Leave | 3–5 days | 5 days for spouse/child; 3 days for parents |
| Public Holidays | ~10 days/year | Eid Al-Fitr, Eid Al-Adha, National Day, Founding Day |
Working Hours
Standard hours are 8 hours/day, 48 hours/week (6 days). During Ramadan, hours are reduced to 6 hours/day for Muslim employees. Friday is the official weekly rest day; many companies use Thursday–Friday or Friday–Saturday weekends.
Overtime: Overtime is payable at 150% of the basic hourly wage for all hours beyond the standard working day. Unlike UAE, there is no separate night-time premium — the rate is 150% throughout. Maximum overtime is generally limited by health and safety regulations.
Payroll & GOSI
Saudi Arabia's Wage Protection System (Mudad) requires all employers to pay salaries electronically and report transfers to the Ministry of Human Resources. Salaries must be paid within 10 days of the agreed payday.
GOSI Contributions
| Category | Employee | Employer | Total |
|---|---|---|---|
| Saudi nationals — Pension | 9.75% | 9.75% | 19.5% |
| Saudi nationals — Occupational Hazards | 0% | 2% | 2% |
| Expatriates — Occupational Hazards only | 0% | 2% | 2% |
GOSI calculation base: Contributions are calculated on basic salary plus housing allowance. Other allowances (transport, food, etc.) are excluded. GOSI must be filed and paid by the 15th of the following month.
Termination & End-of-Service Benefits (EOSB)
Saudi Labor Law provides strong employee protections around termination. End-of-service benefits are mandatory and calculated as follows:
| Scenario | EOSB Rate |
|---|---|
| Resignation after 2–5 years | 1/3 month per year of service |
| Resignation after 5–10 years | 2/3 month per year of service |
| Resignation after 10+ years | 1 month per year of service |
| Termination by employer (without cause) | 1 month per year (full tenure) |
| Less than 2 years service (resignation) | No EOSB entitlement |
Notice Periods (KSA Labor Law)
- Indefinite contract: 60 days' notice by either party
- Fixed-term contract: mutual agreement required to terminate early; penalty = remaining contract value
- During probation: no notice required by either party
- Immediate dismissal grounds: theft, assault, intoxication, repeated serious violations
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- All employment contracts registered on Qiwa within 90 days of start date
- GOSI contributions filed and paid by 15th of each month
- Salaries processed through Mudad WPS on time
- Nitaqat Saudization percentage maintained (Green zone or above)
- Iqama (residence permits) renewed before expiry for all expat employees
- Annual leave records accurate and encashment paid at exit
- EOSB calculated and paid within final pay upon separation
- Ramadan working hours reduced to 6 hours/day for Muslim employees
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