Hire Employees in Saudi Arabia: 2026 EOR, Payroll and Employment Guide

A foreign-owned entity needs a MISA investment licence before commercial registration, which together run two to four months. GOSI, Qiwa and Mudad registrations follow.

The binding constraint is not incorporation but Saudisation: your Nitaqat band determines how many expatriate visas you can sponsor, and a new entity starts with none.

EOR to hire before a licence exists, or to test the market. Entity once tendering or government contracting requires a local presence.

Contractors are not a practical route. Work requires a sponsored residence permit, so independent contracting is limited to freelance-permit holders and is narrow in scope.

Two things make the Saudi calculation different from everywhere else.

The base is narrow. GOSI applies to basic salary plus housing allowance only — not transport, not other allowances, not total package. A typical Saudi package puts 55% to 65% into basic and housing, so the effective rate against gross is lower than the headline suggests.

Which system applies depends on a date, not on the hire. Saudi nationals first registered with GOSI before 3 July 2024 stay on the old system at 11.75% employer. Anyone first registering after that falls under the new law, at 12.25% for the first half of 2026 and 12.75% from 1 July 2026, rising half a point every July through 2028. A newly hired Saudi with prior contribution history stays on the old system.

Expatriates are covered only for occupational hazards, at 2% employer and nothing from the employee. They receive no pension and no unemployment cover.

Four representative expatriate profiles. Salaries are illustrative market midpoints, not GX operating data. The percentage is very low because GOSI applies at 2% to basic plus housing only — assumed here at about 64% of package — and covers occupational hazards alone. The end-of-service award accrues separately and is not shown. A Saudi national at the same base costs 12.75%. For real market data on your roles, ask for a costing.

Salaries must be paid through the Wage Protection System via the Mudad platform. GOSI, Mudad and Qiwa data are cross-checked automatically, and discrepancies produce retroactive assessments plus penalties.

Late GOSI payment carries a 2% monthly penalty, and failing to register a new employee carries SAR 10,000 per person.

There is no personal income tax on employment income for nationals or expatriates. Gross and net are the same for an expatriate beyond the 2% GOSI the employer pays.

Corporate tax is 20% on foreign ownership, zakat 2.5% on Saudi and GCC ownership, and VAT 15%. None touches payroll.

Contracts must be in Arabic and registered on Qiwa. For expatriates they must be fixed-term, since the term is tied to the residence permit, and renew with it.

Probation may not exceed 90 days, extendable to 180 by written agreement. Either party may terminate during probation without award or notice.

Forty-eight hours a week and eight a day, reduced to 36 hours a week during Ramadan for Muslim employees — a reduction that applies for a full month each year and is frequently missed in planning.

Overtime is paid at 150% of the basic hourly rate. Friday is the weekly rest day, and most private-sector employers now run a Friday-Saturday weekend.

Twenty-one days of paid annual leave a year, rising to 30 days after five years of continuous service with the same employer.

Leave is paid in advance of taking it, and untaken leave is paid out on termination.

Public holidays follow the Islamic calendar: Eid al-Fitr and Eid al-Adha, each running several days, plus Saudi National Day on 23 September and Founding Day on 22 February.

Eid dates are confirmed only days ahead by moon sighting, which affects operational planning more than the number of days does.

Maternity: 12 weeks at full pay, funded by the employer, with the option to take up to four weeks before the expected date. An additional month of unpaid leave is available.

Paternity: three days of paid leave.

Sick leave: generous by regional standards — the first 30 days at full pay, the next 60 at three quarters, and a further 30 unpaid, within any single year.

Termination of a fixed-term contract before its end requires a lawful reason, and doing so without one entitles the employee to the remaining salary or a statutory indemnity. Article 80 lists the grounds for summary dismissal without award.

End-of-service award is the main exit cost: half a month of pay per year for the first five years and a full month per year thereafter, on final pay. Where the employee resigns, the award is reduced — nothing below two years, a third between two and five, two thirds between five and ten, and the full amount beyond ten.

For expatriates the employer must also cancel the residence permit and fund repatriation.

Every expatriate needs a block visa allocated against the employer’s Saudisation status, then a work visa, then a residence permit (iqama) renewed annually.

Premium Residency offers longer-term status without a sponsor for qualifying individuals. Allow one to three months, and note that visa availability depends on the company’s Nitaqat band rather than on the individual.

The recurring exposures are classifying a Saudi employee under the wrong GOSI system, calculating contributions on total package instead of basic plus housing, missing the SAR 10,000 late-registration penalty, and letting the Saudisation ratio slip.

Qiwa, Mudad and GOSI data are cross-referenced automatically. A mismatch between the registered contract, the paid salary and the declared contribution base produces a retroactive assessment.

Register the contract on Qiwa and enrol the employee with GOSI before the start date, and route salary through the Wage Protection System via Mudad from the first payment.

Confirm before the offer: whether the candidate is Saudi or expatriate, since cost differs sixfold; if Saudi, whether they first registered with GOSI before or after 3 July 2024; and whether your Nitaqat band supports another expatriate visa.