Blogs

Saudi Arabia – Employer of Record

EWS helps you to hire an international workforce quickly and compliantly, without setting up a legal entity locally. If you’d like to get in touch about our employer of record solution in Saudi Arabia, click here

Introduction – Kingdom of Saudi Arabia

Capital – Riyadh
Currency – Saudi Arabian Riyal (SAR)
Population – 34.81 Million
GDP – $700.1 Billion
Language – Arabic
Major Religions – Islam

The Kingdom of Saudi Arabia is located in the Middle East. Saudi Arabia is a young country that is heir to a rich history. In its western highlands, along the Red Sea, lies the Hejaz, which is the cradle of Islam and the site of that religion’s holiest cities, Mecca and Medina. In the country’s geographic heartland is a region known as Najd (“Highland”), a vast arid zone. To the east, along the Persian Gulf, are the country’s abundant oil fields that, since the 1960s, have made Saudi Arabia synonymous with petroleum wealth.

Saudi Arabia is the most dominant economy in the Middle East, 80% of the working population is made up of foreigners. 45% of the local population is under 25 years of age. The government are on a drive to increase employment of locals (Saudisation) in line with their vision 2030 where the government also wants to reduce the countries dependency on oil. Saudi Arabia is considered one of the richest countries in the world.

Contract of Employment

Employment contracts in Saudi Arabia must be issued in Arabic and in-line with the ministry of labour. The employment contract must set out the terms of employment and has to define the notice period, salary breakdown in SAR along with the probation period. Employment contracts for expatriates should be fixed term and for local nationals can fixed or unlimited duration.

Probation Period

90 days by default and up to a maximum of 180 days only after mutual consent.

Termination

The termination period must be specified in the employment contract and mutually agreed.

2 month is the generally accepted notice period, however by law this can be up to a maximum of 3 months if the employment contract has a longer notice period.

1 week notice during probation period in order to terminate the employment.

Working Hours

40-48 hours per week. The working week is Sunday to Thursday.

Overtime

Overtime should be set out in the employment contract. Daily working hours should not exceed 11 hours.  Overtime is paid at 1.5x the employee’s salary rate.

Annual Leave

1 – 5 years of continuous employment          21 days of leave
5+ years of continuous employment             30 days of leave

Annual leave can be carried over with written consent from the employer. Any unused annual leaves have to be paid as cash to the employee based on the basic salary rate.

Sick leave

First 30 days of medical/sick leave is paid in full by the employer.
Day 31 to day 90 are paid at 1/3 of the salary rate.

An employee must have a valid medical/sick leave certificate issued from a medical professional to cover the sick leave period. 

Maternity Leave

Female employees who are expected to give birth are entitled to 10 weeks of maternity leave. Maternity leave starts 4 weeks before the expected due date. Maternity leave is paid at 50% of the salary for employees who have 1-3 years of service and full pay for employees who have more than 3 years of service. If a female employee also takes annual leave during the same year she will be entitled to 50% of annual leave pay or no annual leave pay if she is getting 100% maternity pay.

A father is only entitled to 1 day of for the birth of the child.

VAT / ZAKAT:

VAT in Saudi Arabia is managed by the General Authority of Zakat and Tax.

Saudi VAT and ZAKAT Information

Income Tax

There is no direct income tax in Saudi Arabia.

GOSI

Saudi Nationals (private & public sector) – 22% of the maximum monthly applicable earnings (9% each for the employee and employer for annuity (pension). 1% each for unemployment contribution and 2% for occupational hazard, both of which the employer pays).

GCC Nationals (excluding Saudis) – between 17-22% in total depending on the nationality – always a 9% annuity contribution from the employer, 2% unemployment contribution from employer and the balance from the employee.

Expatriates – just 2% unemployment contribution paid by the employer.

Saudi GOSI Information

Public Holidays

9 days of public leave.

Eid al Fitr – End of Ramadan (4-5 days)
Eid al Adha – Hajj Pilgrimage (4-5 days)
National Day – 23 September

Severance Pay

Severance pay is also called End of Service Benefit (EOSB). Article 84 of the Labour Law defines the payments for End of Service. An employee is entitled to 50% of their monthly salary for every year worked. EOSB is only payable after an employee has completed 2 years of service. EOSB payment is dependent on whether the employee is resigning or being terminated. The calculation for EOSB can now be performed online on the government portal.

Saudi EOSB Information and Calculator

Work and Residence Permits (Expatriates)

EWS can support expatriate employment in Saudi Arabia. We need basic employee information and a few forms to be filled. The templates can be shared upon request.

Business travellers can apply for a Business Visit Visa at a Saudi consulate 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).

All foreign employees must have a valid Iqama (work visa) for Saudi Arabia. The iqama is applied for by the employer in Saudi Arabia who is registered with the ministry of interior. An Iqama must be renewed every year for all foreign nationals.

Residence Permits (Expatriates Family Members)

Option 1:

Online through Absher Account (depending on eligibility). The employee will log in to the personal Absher Account and select the below services:

–  E-services > my services > services
–  Expatriate affairs
–  Family visa service
–  New family visa application
–  Apply for a new family visa application
–  The system will check employee eligibility either they can apply online
–  In case if the employee is eligible, they will fill up own and dependents details online
–  Once submitted, they will get the printout from the system and share it with EWS to attest it via online COC portal and wait for the final government confirmation through text message

Option 2:

In case the employee is unable to obtain visa through the online system, a manual application should be processed. The following documents are required during the manual process:

–  A current and valid contract of employment
–  The consulate name where the employee’s family will be filing the visa application
–  National address (in Saudi) details
–  Employee iqama and passport copy
–  Dependent’s passport copies
–  Dependent’s passport size photos (two each member)
–  Attestation educational qualification & certificate copy
–  Course specialisation
–  Course duration
–  Date of certificate issuance
–  University name
–  The period since employee is in Saudi
–  Isteqdam payment (family visa payment)
–  PRO assistance required for Isteqdam

Housing rentals in Saudi Arabia

Some of the country’s best-known and reliable property listing sites are mentioned below. These will have either the agent’s or the landlord’s contacts, and we can set up a meeting after taking a virtual tour. Agents typically charge around the equivalent of 2.5% of the annual value of the rental.

1. https://www.bayut.sa/en/
2. https://www.propertyfinder.sa/en/

In Saudi Arabia, the year’s rent is paid in advance through post-dated cheques. The landlord can ask for two cheques or for quarterly cheques. This, however, is negotiable, and not always watertight. There are cases – especially in compounds – where the tenant may be allowed to even do a monthly payment. Registering a tenancy agreement on Ejar is a must for tenants.

Obtaining a Driving License (Car)

–  The applicants minimum age must be 18.
–  Fill-in the specified form completely (available at driving license centre)
–  Provide four photos, size (4X6) cm.
–  Provide the original foreign license along with an attested Arabic translation.
–  Provide a copy of Civil Affairs ID (Saudis.)
–  Provide a copy of Resident Permit (Iqama) and passport (Non-Saudis.)
–  Provide an no objection letter from the sponsor (Non-Saudis.)
–  Provide a valid medical check-up report (eye test and blood type)
–  Pay the required fees.
–  Provide a file to save documents.

If a Saudi or Non-Saudi does not have a driving license already (from a foreign country) then they will have to attend a driving school. Every applicant must pass the final road test to obtain a Saudi driving license.

Car rentals are quite easy in Saudi Arabia. To explore some options click here

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