Payroll and Benefits Guide - Saudi Arabia

Saudi Arabia
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Currency

Saudi Riyal
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Capital

Riyadh
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Employer Taxes

12.00% to 14.00%

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Date Format

dd/mm/yyyy
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Fiscal Year

1 Jan – 31 Dec

Fun Facts

Saudi Arabia is the largest country in the Middle East, covering an area of about 2.15 million square kilometers.

It is home to the world’s largest continuous sand desert, the Rub’ al Khali (Empty Quarter).

Saudi Arabia is the birthplace of Islam and home to the two holiest cities in Islam, Mecca and Medina.

Every year, millions of Muslims from around the world travel to Saudi Arabia to perform the Hajj pilgrimage in Mecca.

The Saudi Arabian flag features a green background with the Shahada (Islamic declaration of faith) and a sword.

The official language of Saudi Arabia is Arabic.

Saudi-Arabia

Contributions

Employee Payroll Tax

Contribution TypeRate
Social Insurance Tax10.00%

Employer Payroll Tax

Contribution TypeRate
Social Insurance Tax2.00%
Social Insurance Tax12.00%

Payroll

Payroll Cycle

In Saudi Arabia, the payroll frequency is weekly or monthly.

13th Salary

13th-month payments are not mandatory. However, employers can pay performance-based bonuses at their discretion.

Work Hours and Week

The working week in Saudi Arabia is typically 48 hours, 8 hours per day, six days a week.

Overtime

From the 8th hour the worker must be paid at a rate of 150% salary.

Daily hours cannot exceed 11 hours.

Saudi-Arabia

Leave

Paid Time Off

  • 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

Public Holidays

There are 10 holidays.

Sick Days

  • Sick leave with full pay – First 30 days
  • Sick leave with 1/3 pay – 60 days after the first 30 days
  • Sick leave with no pay – Last 30 days

Maternity Leave

Female employees in Saudi Arabia are entitled to 10 weeks of paid maternity leave, starting four weeks before the expected due date, with compensation ranging from 50.00% to 100.00% of their regular pay based on their length of service.

Full maternity leave entitlement excludes concurrent payment of annual leave, whereas an employee receiving 50.00% maternity benefit can also utilize 50.00% of their annual leave entitlement in the same year.

Paternity Leave

The father/partner is entitled to 3 days of paid paternity leave after the child’s birth (Article 113 of the Labour Law).

Parental Leave

There are no provisions in the law regarding parental leave.

Termination

Termination Process

The termination process in Saudi Arabia depends on the employment and collective agreements, contract type, and reason for termination, requiring a valid reason from the employer; failure to provide lawful reasoning may result in compensation.

Notice Period

In Saudi Arabia, the notice period depends on the contract type in place.

For termination of an employee on open-ended contracts (with an indefinite term and paid monthly), 60 days’ notice is required. For fixed-term contracts, the notice period is 30 days.

During the probation period the notice period is 1 day.

Severance Pay

EOSG is not payable before the end of the employment relationship.

If the employer ends the employment, the benefit is calculated by adding ½ month’s wage for each of the first 5 years and 1 month’s wage for each of the subsequent years. For fractions of a year, the employee is entitled to proportionate EOSG. EOSG is calculated on the basis of the employee’s last salary.

If the employee resigns, they are entitled to 1/3 of the award after service of no less than 2 consecutive years and not more than 5 years. 2/3 if their service is in excess of 5 successive years, but less than 10 years; and to the full award if their service amounts to 10 or more years.

Probation Period

Probation Period

Probation periods in Saudi Arabia may vary based on the employment contract, but they usually last 90 days and can be extended up to 180 days with the employee’s written consent.

Immigration

For an employee to acquire a work visa in Saudi Arabia, a third-party 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.

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)

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.

For Work Permits

Work Visit Visa

Business Visit Visa

Temporary Work Visa

Transfer of Sponsorship Visa

Permanent Work Visa (Iqama) for Expatriates

Documents Required

  1. Valid passport with at least six months of validity
  2. Employment contract or offer letter from the Saudi Arabian employer
  3. Educational certificates
  4. Medical examination report
  5. Police clearance certificate

VAT

The standard rate of VAT in Saudi Arabia is 15%