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Saudi Arabia 2022
Day Date Holiday Notes
Monday May-2 Festival of Breaking the Fast
Tuesday May-3 Second Day of the Festival of Breaking the Fast
Wednesday May-4 Third Day of the Festival of Breaking the Fast
Friday Jul-8 Day of Arafat
Saturday Jul-9 Feast of the Sacrifice
Sunday Jul-10 Second Day of the Feast of the Sacrifice
Monday Jul-11 Third Day of the Feast of the Sacrifice
Friday Sep-23 Saudi National Day
Countrypedia

Saudi Arabia
Payroll and Benefits Guide

Last updated: Mar 21, 2022
Currency
Saudi Riyal (SAR)
Payroll Frequency
Monthly
Employer Taxes
12.00% to 13.50%

Papaya Offers Complete Payroll, PEO and Contractor Management Services For Saudi Arabia

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Overview

Capital
Riyadh
Currency
Saudi Riyal (SAR)
Date Format
dd/mm/yyyy
Fiscal Year
1 January- 31 December
Public holidays calendar

Contributions

Employer

Employer Payroll Contributions

1.50%

Social Insurance Tax for No Saudi employees – occupational hazard (Minimum earnings 400 SAR, maximum earnings 45,000 SAR) (with effect from 1/2/2022, the General Organisation for Social Insurance (GOSI) confirmed that social insurance contributions must be calculated on a daily basis rather than a monthly basis)

12.00%

Social Insurance Tax for Saudi employees – occupational hazard, pension, and unemployment) (Minimum earnings 1,500 SAR, maximum earnings 45,000 SAR) (with effect from 1/2/2022, the General Organisation for Social Insurance (GOSI) confirmed that social insurance contributions must be calculated on a daily basis rather than a monthly basis)

12.00% to 13.50% Total Employment Cost

Employee

Employee Payroll Contributions

10.00%

Social Insurance Tax for No Saudi employees – occupational hazard

10.00% Total Employee Cost

Employee

Employee Income Tax

0.00%

ince there is no individual income tax regime in Saudi Arabia, earnings from employment are not subject to income tax.

Minimum Wage

General

The national minimum wage in Saudi Arabia is 4,000 SAR per month. 

Payroll

Payroll Cycle

In Saudi Arabia, the payroll frequency is weekly or monthly. The employer must make the payment for weekly employees once a week and make payments for monthly paid employees at least once a month. 

13th Salary

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

Working Hours

General

The working week in Saudi Arabia is typically 48 hours, 8 hours per day, and six days a week. The working day may decrease to 6 hours a day during the time of Ramadan. Typically, Fridays are a rest day.  

Overtime

All work exceeding the standard working hours a week is to be paid as overtime and is regulated by employment contract/collective agreements. Daily hours cannot exceed 11 hours.

All overtime hours in excess of 48 hours a week are paid at an overtime compensation rate; this rate is typically 150.00% of the employee’s average salary rate. 

Working Week

Saturday-Thursday

Leave

Paid Time Off

In Saudi Arabia, (Article 109 of the Labour Law), the annual leave entitlement is dependent on the employee’s seniority as follows:  

  • 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. 

Employees may carry over any untaken leave to the following vacation leave with the employer’s written consent. 

Employees may request ten additional days of unpaid leave per year, subject to the employer’s approval. 

Public Holidays

There are 9 public holidays.

Sick Days

In accordance with Article 117 of the Labour Law, employees are entitled to 120 days of sick leave per year as below: 

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

Employees are required to provide a medical certificate for all sick days.  

Sick leave laws apply to employers with more than 20 employees.

Maternity Leave

Female employees are entitled to 10 weeks of paid maternity leave commencing four weeks before the expected due date. The payment of maternity leave is dependent on the employee’s seniority; employers will compensate employees with service of at least one year at 50.00% of the employee’s pay rate. Employees with at least three years of service receive compensation at the rate of 100.00% of the employees’ regular pay.  

An employee receiving full maternity leave entitlement may not also take the payment of annual leave in the same year. In contrast, an employee receiving 50.00% of their salary as a maternity benefit may also take an annual leave entitlement of 50.00% 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.  

Other Leave

Depending on the Collective Agreement/Employment Contract terms, an employee may be allowed additional leave types, once approved between the employer and employee, for the following: 

  • Bereavement leave: In the event of the death of an immediate member, an employee is entitled to two days of bereavement leave.  
  • Marriage leave: An employee is entitled to 3 days of leave in the event of their wedding.  
  • Hajj leave/Pilgrimage leave: As per Article 114 of the Labour Law, an employee is entitled between 10 to 15 days (including the Eid Al-Adha holiday) to perform Hajj if the employee has completed at least 2 consecutive years of service with the employer. However, this entitlement arises only if the employee has not performed Haj previously.  

Termination

Termination Process

The termination process varies according to how the employment agreement and collective agreement are in place and is based on the type of contract and reason for termination. The employer must give a valid reason for the dismissal of an employee; if an employer cannot provide lawful reasoning, compensation may be issued.  

If an employee resigns, the employer must issue their final wages immediately.

Notice Period

In Saudi Arabia, the notice period is dependent on the type of contract in place; for employees on monthly employment contracts, the notice period is 30 days and 15 days of notice for any other type of employment contract.

Severance Pay

The amount of severance pay is defined in Article 84 of the Labour Law. This states that the employee is entitled to an end-of-service wage of a half-month wage for each of the first five years, and a one-month wage for each of the following years of employment. The end-of-service payment is calculated based on the last paid salary amount. 

Article 85 also stipulates that the employee is entitled to:

  • one-third of the payment after a service of not less than two consecutive years and not more than five years 
  • two thirds if the service if more than five successive years but less than ten years and to the
  • full payment if his service amounts for ten or more years when the work relation ends due to the employee’s resignation. 

However, there are exceptions as to when severance is not mandatory:  

  • When the employer assaults their employer or supervisor  
  • When the obligations outlined in the employment contract are not fulfilled by the employee and has been warned in writing  
  • Negligence or intent to cause harm to the employer 
  • Dishonesty or forgery  
  • When the employee is on probation  
  • When the employee is absent from work for more than 20 days in a year or 10 consecutive days  
  • Divulging in trade secrets

Probation Period

In Saudi Arabia, the probation periods may vary depending on the employment contract in place. However, the probation period is typically 90 days however this period may be extended subject to the employees written consent but cannot exceed 180 days. 

VISA

VISA

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.   ​Saudi Arabia’s quota system and nationalization program can make the process of employing a foreign national relatively complex and restrictive. Applicable procedures involve a home-country consular process, followed by several post-arrival steps before final residency rights are granted. 

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), or up to five years (multiple-entry) for citizens of countries that signed bilateral visa agreements with Saudi Arabia. The maximum allowable duration of stay under a single-entry visa for three and six months is 30 days; for visas with other validities, it is 90 days. 

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.​​​​​​​ 

This does not apply to citizens from Bahrain, United Arab Emirates, Kuwait, and Oman. Citizens from these countries may enter with their ID. 

VAT

General

The standard of VAT in Saudi Arabia is 15.00%  

Version History

March 21, 2022
The father/partner is now entitled to 3 days of paid Paternity leave after the child's birth (Article 113 of the Labour Law).   
probation period has been updated.
Payroll contributions and personal income tax rates have been updated.
April 18, 2021
The monthly minimum wage has increased from 3,000 to 4,000 SAR.
Stay up to date on payroll & employment law changes

Questions & Answers

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Peter
Peter
1 year ago

If I am hiring in Saudi Arabia, are there laws about hiring local Saudi residents?

Admin
1 year ago
Reply to  Peter

Under the Nitaqat program implemented by the Ministry of Labor, a certain percentage of the workforce must be composed of Saudi citizens. The number vary from industry to industry.

In general, companies receive a rating as premium, green, yellow or red based on how many Saudi citizens they employ. Those that have higher ratings have better latitude in recruiting. Those with low ratings face the possibility of fines.

Pciong Gutierrez
Pciong Gutierrez
1 year ago
Reply to  Alex Margolin

I’m 14yrs.now in my company how to compute my severance?

Sunil Rai
Sunil Rai
1 year ago

however company send me back in my country without paiying benefit service , what i do to get my benefit ?

Anna
Anna
1 year ago

Any retirement benefits?

Emily Kuhnert
Admin
1 year ago
Reply to  Anna

Hi Anna, thank you for your question. Are you an ex-pat or a Saudi national?

Aaron
Aaron
1 year ago

Hi, is there any incentive of 10K riyals if you completed 10 years in the company?

Admin
1 year ago
Reply to  Aaron

Hi Aaron, this would depend on the company and the contract agreement.

Muhammad Farhan Arshad
Muhammad Farhan Arshad
1 year ago

If I am going on unpaid leaves for 2 months then what laws says about leave balance count. Does my leave balance will accumulate for these 2 months or not?

Jakhongir Tolipov
Jakhongir Tolipov
11 months ago

hi, I have 2 years contract with my company, Now im married 3000 sar is not enough for my family, I have been working in current company almost 1 year. I want to finish my contract and transfer to another employer! But my employer and HR are saying me that i Need to pay for remaining 12 months of contract (36000 sar) is it legal or not? Thanks!

Last edited 11 months ago by Jakhongir Tolipov
Emily Kuhnert
Admin
11 months ago

Hi, thank you for your question. We recommend that you speak with a labor or immigration lawyer to help you understand what your options are.

IssaC Robert
IssaC Robert
11 months ago

Hi, if the company has informed of non-renewal of the contract before 2 months remaining of contract and is accepted by the staff, is the staff entitled to additional off in the week to look for another job?

Tayyab Mehmood
Tayyab Mehmood
10 months ago

Hi
I want to know our company didn’t show up /give us our salary details and overtime (salary slip) in saudi law have any rule for this can you update me please.
Thanks

Muhammed jimada hussain
Muhammed jimada hussain
10 months ago

When you sign a contract with a company in ksa while you are still in your country, when are you suppose to start to be recieving salary, is it from the date you sign the contract or after joining the company

Emily Kuhnert
Admin
10 months ago

Hi Muhammed, thank you for your question. You begin to receive wages from the day you start to work, not from the day you sign your contract (unless the dates are the same). Usually, the start date is agreed upon and outlined in the employment agreement.

Aziz Muhammed
Aziz Muhammed
9 months ago

Hi, I was on unpaid leave for more than 6 months. Company is saying this was my decision and is not including this term in my end of service? Are they right?

Emily Kuhnert
Admin
9 months ago
Reply to  Aziz Muhammed

Hi Aziz, thank you for your question. This is correct, this does not count towards the time you were employed.

Nagona Isaac
Nagona Isaac
8 months ago

Am 2 morths now in Saudi Arabia ,but am not paid but my Employer tells me that I have to first state work then be paid . Is it true or? And how can I be paid

Emily Kuhnert
Admin
8 months ago
Reply to  Nagona Isaac

Hi, thank you for your question, can you please clarify what you mean by “I have to first state work?” Do you have a proper work visa?

Shakeel
Shakeel
8 months ago

Is it possible to transfer salaries to Non-Sponsored expat workers?
What’s the best solution?
What are the Pros & Corns?

Last edited 8 months ago by Shakeel
Emily Kuhnert
Admin
8 months ago
Reply to  Shakeel

Hi Shakeel, does the worker have a valid long-term work permit? If so, you can pay them like you would pay any other employee. If they do not have a valid visa or permit to be able to live and work in Saudi Arabia, it is not legally possible to employ said person.

Jack
Jack
8 months ago

Does weekend consider in annual leave

Emily Kuhnert
Admin
8 months ago
Reply to  Jack

Hi Jack, thank you for your question. No, weekends are not counted in annual leave, the law is actually quite strict. Employers are subject to fines if they include weekends in annual leave.

Vicky
Vicky
5 months ago

Am 2 morths now in Saudi Arabia ,but am not paid but my Employer tells me that I have to first start work then be paid . Is it true or? And how can I be paid

Kate Ineson
Kate Ineson
5 months ago

Is there a legal requirement to provide flights to non-Saudi nationals as part of their package?

LATIF BHISTI
LATIF BHISTI
4 months ago

HOW MANY DEDUCTION IF I WILL SUBMITTE MY RESIGN BEFORE MY IQAMA EXIPRE.

Emily Kuhnert
Admin
4 months ago
Reply to  LATIF BHISTI

Hi Latif, thank you for your question. The deduction remains the same, regardless of when your Iqama expires.

acc
acc
3 months ago

i resign is it okay that my employer did not give me my retro active salary. 1 resign after 6months after they increase my salary and they give retro after 6 months but i did not receive coz the reason is i resign is that ok

HHH
HHH
2 months ago

Hi. If you are absent for 1 day, is it right to deduct also from your housing allowance this one day?

MMS
MMS
1 month ago

Hello Team,

I took unpaid leave of 10 days and the company deducted my housing as well for these 10 days. Can company deduct housing for 10 days unpaid leave?

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