Saudi Arabia requires a locally compliant contract for every hire, a standard 48-hour work week, and at least 21 days of paid annual leave, rising to 30 after five years. An Employer of Record meets all of that without you registering your own local entity — Remote& runs it for a flat $400 per employee per month.
Saudi Arabia is the largest economy in the region by a wide margin, and its ongoing economic diversification push has opened real demand for international skills — technology, finance, engineering, and healthcare in particular. None of that changes one fact — a worker based in Saudi Arabia needs a registered local employment contract. You either build the entity that can issue one, or you use a partner that already has.
This page walks through what Saudi employment law actually requires, what hiring really costs and how fast it happens, the real choice between an Employer of Record and your own entity, where contractors fit, and what Remote& charges.
Last updated August 6, 2026. Jump to: Why hire in Saudi Arabia · Employment basics · EOR vs. a local entity · What it costs · Hiring timeline · Contractors and risk · What Remote& costs · FAQ
Why companies hire in Saudi Arabia
The market is large and growing. A national push to diversify the economy beyond oil has created sustained demand for specialist and technical talent, and the government has made bringing that talent in a stated priority. Riyadh and Jeddah both run on time zones that overlap comfortably with Europe for a solid stretch of the working day, and there is no personal income tax on salaries, which simplifies pay conversations with candidates.
What it does not simplify is the paperwork. You cannot pay a Saudi-based worker from a foreign payroll and call it done — local law expects a registered contract, and the worker needs residency status tied to a local employer. Our Saudi Arabia employment guide covers the fuller picture; this page focuses on the decision in front of you: how to get a compliant hire onto payroll, what that costs, and how fast it happens.
Employment basics in Saudi Arabia, at a glance
Before you draft an offer, here is what Saudi employment law sets as the floor (as of 2026).
| Employment fact | What the law requires |
|---|---|
| Standard working week | 48 hours — 8 hours a day, 6 days a week. Hours are reduced for Muslim employees during Ramadan. |
| Annual leave | 21 days a year for the first 5 years of service, rising to 30 days after that. |
| Sick leave | Up to 120 days a year — the first 30 at full pay, the next 60 at 75% pay, the final 30 unpaid. |
| Maternity leave | 12 weeks. |
| Paternity leave | 3 days. |
| Probation | Up to 90 days, extendable to 180 days total by written agreement. |
| Notice | Required for indefinite contracts; length and any payment-in-lieu terms are set in the contract. |
| Pay frequency | Monthly, typically paid between the 25th and 27th of the month. |
| End-of-service gratuity | Accrues from year one for termination, contract expiry, or retirement. A reduced, tiered scale applies only to voluntary resignation (a third of the amount at 2 years, two-thirds at 5, full at 10). |
This table condenses the essentials. See our Saudi Arabia employment guide for the full walkthrough, including how termination works in practice.
Get any one of these wrong and the exposure is real — a compensation claim, or a rejected application when you try to bring on your next hire. That compliance load is exactly what an Employer of Record takes off your desk.
EOR vs. opening a local entity in Saudi Arabia
There is more than one way to put a worker on payroll in Saudi Arabia, and not every option is legally sound.
- Running payroll from your home-country entity. Not viable. A worker based in Saudi Arabia needs a locally registered contract and residency status — a foreign payroll cannot supply either.
- Engaging the person as an independent contractor. Legally thin ground for full-time work. More on this below.
- Registering your own local entity. More than one entity structure is available in Saudi Arabia, each with its own paperwork, cost, and setup time, plus ongoing filings with local authorities once it is running.
- Using an Employer of Record. An EOR already holds a registered local entity and employs the worker on your behalf, under a compliant contract, from day one.
For a single hire, or a first test of the Saudi market, opening an entity rarely pays for itself. Setting one up commonly takes weeks to months before you can even extend an offer. An EOR compresses that to days, because the entity already exists.
| Employer of Record | Your own entity | |
|---|---|---|
| Speed to first hire | Days, once terms are agreed. | Weeks to months, before you hire anyone. |
| Upfront cost | None — a per-employee monthly fee. | Registration, licensing, and setup costs, paid before any hire. |
| Ongoing compliance | Carried by the EOR. | Carried by you — filings with local authorities, on your own calendar. |
| Best fit | A first hire, a small team, or a market you are still testing. | A large, permanent team with real local operations. |
The two paths are not exclusive over time. Many companies start on an EOR to prove the market, then register their own entity once headcount justifies the fixed cost. Our EOR vs. entity guide walks through that crossover point in general terms, and our global payroll vs. EOR vs. entity guide lays out the same decision at a broader, country-agnostic level.
What hiring in Saudi Arabia actually costs
Three layers make up the real number: the salary itself, the statutory costs a Saudi employer carries by law, and — if you use an EOR — the EOR’s own fee. The statutory layer differs by nationality, which is the one place this page needs to cite a tax-category label rather than a generic term.
| Employer cost item | Saudi nationals | Non-Saudi employees |
|---|---|---|
| Occupational hazard insurance | ~2% of salary | ~2% of salary |
| Unemployment insurance | ~0.75% of salary | Not applicable |
| Social insurance (pension) contribution | ~9% to ~10% of salary, depending on registration date — see below | Not applicable |
| Total employer contribution | ~11.75% to ~12.75% of salary, depending on registration date | ~2% of salary |
| Personal income tax | None | None |
That range exists because Saudi Arabia runs two social insurance schedules side by side. Saudi nationals already registered before July 2024 stay on the older schedule, where the combined employer contribution runs about 11.75%. Most new hires in 2026 fall under the newer social insurance law instead, which phases in a higher rate: roughly 12.25% from the employer for the first half of 2026, stepping up to roughly 12.75% from July 2026, under a scheduled annual increase. Since this page is about hiring someone new, budget for the newer, higher end of that range.
On top of that: statutory leave accrual (21 to 30 days a year, paid whether or not it is taken) and end-of-service gratuity, which accrues from an employee’s first year of service and is calculated on final salary and length of service. If you use an EOR, add its flat monthly fee — Remote& charges $400 per employee per month, covering the contract, the compliance load, and local HR support.
Want the exact number for your own salary figure? Our employment cost calculator models EOR-versus-entity math for the countries it covers today; for a Saudi-specific quote, book a demo and we will run it with your real numbers.
How fast you can hire in Saudi Arabia
Because an EOR already holds the local entity, the sequence from agreed terms to a working contract is short.
| Stage | Typical timing |
|---|---|
| Terms agreed | Day 0 — salary, start date, and role are settled. |
| Compliant contract drafted and signed | Within 1 to 3 business days. |
| Residency sponsorship initiated | Days to a couple of weeks, depending on document turnaround. |
| First payroll cycle | Employee is live and paid on the standard monthly cycle. |
Total time to a signed, compliant contract is usually measured in days, not months. Opening your own entity, by contrast, is typically weeks to months of registration and licensing before you can extend a single offer — see the comparison above. Our guide to what it costs to hire abroad breaks down where that time, and money, generally goes across markets.
Contractor or employee: how to decide
Saudi Arabia does not set a standalone misclassification penalty in statute, but a non-compliant arrangement still exposes the employer to regulatory fines and enforcement action. Where a worker is reclassified as an employee, the full statutory entitlements — leave, gratuity, and the rest — can become payable retroactively.
The test that matters is exclusivity, not the label on the contract.
| Signal | Genuine contractor | Employee (via EOR) |
|---|---|---|
| Works for multiple clients | Usually, yes. | No — works exclusively for you. |
| Sets own hours and tools | Yes. | No — follows your direction and schedule. |
| Statutory leave and gratuity | Not applicable. | Accrues from day one. |
| Misclassification risk if full-time | High. | None — already compliant. |
If the role reads like a full-time job in everything but the paperwork, hire the person as an employee through an EOR — it costs less than a misclassification claim. Our contractor management guide covers how to keep genuine, project-based contracting clean, and our contractor of record guide explains a middle path: engaging a contractor through a compliant local structure without converting them to a full employee.
What Remote& costs to hire in Saudi Arabia
Remote& employs your Saudi hire through our own local entity, for a flat $400 per employee per month — no matter the salary, no tiers to decode. Published EOR pricing across the market runs $199 to $699 or more per employee per month (as of 2026); our flat fee sits inside that range with no surprise at renewal.
- A locally compliant employment contract, drafted and kept current with Saudi labor law.
- Residency sponsorship for your hire.
- Payroll run through the country’s mandated wage payment system, on the local monthly cycle.
- Statutory leave and end-of-service gratuity accrual, calculated for you.
- Local HR support, so questions about Saudi employment law do not sit on your desk.
You keep directing the work. We carry the local employer role.
Comparing EOR against running your own payroll or entity more broadly? Our guide to global payroll vs. EOR vs. opening an entity lays out the general framework this page applies specifically to Saudi Arabia.
Hiring somewhere else too? See our guides to Employer of Record in the UAE, Employer of Record in Slovakia, and Employer of Record in Tunisia for the same breakdown in those countries.
Frequently asked questions
What is an Employer of Record in Saudi Arabia?
An Employer of Record (EOR) is a company that already holds a registered local entity in Saudi Arabia and employs your worker on your behalf, under a compliant local contract. You direct the day-to-day work; the EOR runs payroll, holds the contract, and manages the local compliance that comes with it. It lets you hire in Saudi Arabia without registering your own entity first.
How much does it cost to hire an employee in Saudi Arabia through an EOR?
Remote& charges a flat $400 per employee per month for Saudi hires, regardless of salary. Published EOR pricing across the market runs from $199 to $699 or more per employee per month (as of 2026). The platform fee sits on top of the employee’s gross salary and statutory costs such as social insurance contributions and end-of-service gratuity accrual.
Can I hire contractors in Saudi Arabia instead of employees?
You can, but only for genuine, project-based work. Saudi law does not treat an exclusive, full-time working relationship as real contracting, whatever the agreement calls it — a worker in that position can be reclassified as an employee, with the full statutory entitlements becoming payable retroactively. If the role is effectively a full-time job, hire the person as an employee through an EOR instead.
How long does it take to hire someone in Saudi Arabia with an EOR?
Once terms are agreed, an EOR can typically issue a compliant local contract and start the residency process within days, because it already holds a registered local entity. Opening your own entity first, by comparison, commonly takes weeks to months before you can extend an offer at all.
What is end-of-service gratuity in Saudi Arabia?
It is a statutory payment calculated on final salary and length of service. For most separations — termination, contract expiry, or retirement — it accrues from the employee’s first year and is payable in full. A reduced, tiered scale applies only when the employee resigns voluntarily: a third of the amount at 2 years of service, two-thirds at 5 years, and the full amount at 10 years or more. Remote& calculates and manages this as part of running your Saudi payroll.
Is there personal income tax in Saudi Arabia?
No. Saudi Arabia does not levy personal income tax on employment income. Saudi nationals and their employers make social insurance contributions, and the employer rate depends on when the employee was registered: about 11.75% in total for employees registered before July 2024, rising to roughly 12.25%–12.75% for employees newly registered in 2026 under the country’s newer social insurance law, which phases in a higher rate over the year. Non-Saudi employees are generally only covered by the employer’s occupational hazard contribution, around 2%, with no deduction from their own pay.
EOR vs. opening my own entity in Saudi Arabia — which is faster?
An EOR is faster in nearly every case, because it already holds a registered local entity and can issue a compliant contract within days. Opening your own entity means registering, licensing, and setting up payroll before you hire anyone — a process that commonly runs weeks to months. An entity earns its keep once headcount grows large enough to outweigh that time up front.
Do employees hired through Remote& in Saudi Arabia get full statutory rights?
Yes. Employees hired through Remote& in Saudi Arabia receive a locally compliant contract, sponsored residency status, statutory leave — including annual, sick, maternity, and paternity leave — and end-of-service gratuity, the same entitlements a direct local hire would receive. Salaries are paid monthly through the country’s mandated wage payment system.
What happens if I need to terminate an employee in Saudi Arabia?
Contracts can end by mutual agreement, expiry, resignation, or termination for valid cause. Indefinite contracts require notice, with the length set in the contract and payment in lieu generally accepted. Termination without valid cause creates a compensation obligation to the employee, and every termination requires final dues to be settled promptly — unpaid wages, accrued leave, and end-of-service gratuity. An EOR runs this process for you and keeps it inside the statutory rules.
Is an Employer of Record the same as a staffing agency in Saudi Arabia?
No. A staffing agency typically recruits and directly manages workers, often on flexible short-term assignments. An EOR is the legal employer of a worker you recruited and direct yourself — it holds the contract and runs compliance, but you own the working relationship day to day. See our EOR vs. staffing agency guide for the fuller comparison.
Can I use a contractor of record instead of an EOR in Saudi Arabia?
A contractor of record fits genuine, project-based work where the person is not effectively a full-time employee — it puts a compliant structure around an independent contractor relationship without converting them to payroll. If the role is really full-time, an EOR is the correct fit, not a contractor of record. Our contractor of record guide walks through the distinction.
Hire in Saudi Arabia without opening an entity
Remote& employs your Saudi team through our own local entity, for a flat $400 per employee per month — no tiers, no surprise at renewal. You keep directing the work; we carry the contract, the compliance, and the payroll.