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Payroll and Benefits Guide Saudi Arabia

Last updated: May 16, 2023

Currency
Saudi Riyal (SAR)
Employer Taxes
12.00% to 14.00%
Payroll Frequency
Monthly
Employee Costs
10%
Capital
Riyadh
Date Format
dd/mm/yyyy
Fiscal Year
1 January- 31 December

Contributions

Employer

Employer Payroll Contributions

2.00%

Social Insurance Tax for non-Saudi employees – occupational hazard (minimum earnings 400 SAR, maximum earnings 45,000 SAR) (The General Organization for Social Insurance (GOSI) requires that social insurance contributions are made based on a daily calculation rather than monthly).

12.00%

Social Insurance Tax for Saudi employees – occupational hazard, pension, and unemployment) (minimum earnings 1,500 SAR, maximum earnings 45,000 SAR) (The General Organization for Social Insurance (GOSI) requires that social insurance contributions are made based on a daily calculation rather than monthly).

2 to 12.00%

Total Employment Cost

Employee

Employee Payroll Contributions

10.00%

Social Insurance Tax for Saudi employees – occupational hazard

10.00%

Total Employee Cost

Employee Income Tax

0.00%

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

Employer taxes

Highest
Lowest

Employee taxes

Highest
Lowest

Minimum Wage

General

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

MINIMUM WAGE (PER MONTH)

Highest
Lowest

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, 5 days per week. The working day may decrease to 6 hours a day during the period of Ramadan.

Overtime

All work exceeding the standard working hours per week is to be paid as overtime and is regulated by employment contracts/collective agreements. Daily hours cannot exceed 11 hours. From the 8th hour the worker must be paid at a rate of 150% salary. Timesheets are required when an overtime set up is required.

Exemptions are in place depending on the type of worker e.g. persons occupying high positions of authority in management and policy.

Working Week

Sunday-Thursday

Leave

Paid Time Off

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

  • 21 days of annual leave for employees with one to five years of service
  • 30 days of annual leave for employees with more than five years of service

Employees may carryover 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.

Vacation Days
Public Holidays
Highest
Lowest

Public Holidays

The local government decides each year if holidays falling on the weekend are lost or moved to a working day in lieu.

Religious holidays are determined by the lunar cycle and will show as tentative until they are confirmed nearer the date of the holiday.

Sick Days

In accordance with Article 117 of the Labor Law, employees are entitled to 120 days of sick leave per year whether sickness is continuous or intermittent, as follows:

  • Full pay for the first 30 days of illness
  • 1/3 pay for the next 60 days of illness
  • Unpaid leave for a further 30 days of illness

Sick leave is paid by the Employer.

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

Maternity Leave

Female employees are entitled to 10 weeks of paid maternity leave commencing four weeks before the expected due date. It is not permitted to work during the 6 weeks immediately following the birth.

Payment of maternity leave is made by the Employer, at a rate dependent on the employee’s seniority. Employees with at least 1 year service are paid at a rate of 50% pay. Employees with at least 3 years of service are paid at a rate of 100% regular pay.

Employees receiving full pay during maternity leave are not permitted to also take the payment of annual leave in the same year. However, employees receiving 50% pay may also take half of their paid annual leave entitlement in the same year.

PAID MATERNITY LEAVE (DAYS)

Highest
Lowest

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 2 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 Labor Law, an employee is entitled to 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 the employment set up and is  based on the type of employment contract and reason for termination, which must be specified in writing.

The justifiable reasons for dismissal include misconduct, unauthorized absence, failure to perform job duties deemed essential, failure to comply with rules for health and safety, assaulting the employer, disclosure of industrial or trade secrets. When using fixed term contracts, justified dismissal can also be by non renewal of the contract at the end date, termination as specified in the contract’s terms, conversion of the contract to an indefinite term or expiration of the work permit (for expatriate employees).

When dismissal is due to disciplinary reasons, a process must be followed which includes notifying the worker in writing of the allegation within 30 days of the employer discovering the alleged offense followed by a meeting to question the employee on the allegation and allow the employee to defend themselves. If disciplinary sanction is found, the employee must be notified in writing within 30 days of the investigation completion.

Where the dismissal reason given is found to be illegitimate, additional compensation must be paid at 50 days pay for each year of the worker’s service when on an indefinite term contract or the outstanding wages for the remaining period of a fixed term contract; in both cases the minimum compensation may not be less than two months’ wages.

It is also possible to end employment via a Mutual Termination Agreement providing there is written consent from the employee.

It is not permitted to terminate workers whilst they are on maternity or medical leave.

Notice Period

In Saudi Arabia, the notice period is dependent on the type of contract in place.

For termination or resignation of an indefinite term contract (open-ended and paid monthly), 60 days’ notice is required. For fixed-term contracts, 30 days notice is required.

During the probation period the notice period is 1 day.

Severance Pay

End of Service Gratuity (EOSG) is payable only at the end of the employment relationship, not before.

If the employer ends the employment, the benefit is calculated by adding ½ a month’s wage for each of the first 5 years and 1 month’s wage for each subsequent year of service. 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 of service. 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.

If an employee is called to military service or cannot work because of force majeure, they are entitled to EOSG. Female employees are entitled to EOSG if they resign within 6 months of marriage or within 3 months of childbirth.

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 and may be extended subject to the employee’s 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.

There is a new short-term work visa for certain foreign nationals, available via an online platform, Qiwa. This new visa enables qualified employees to work in Saudi Arabia for a visa-sponsoring entity for up to 90 days per visa issuance in one year. During the course of the one-year period (i.e. from the date of first entry into KSA), it will be possible to reapply for new temporary work visas at the end of each 90-day period.

To apply, employers will need to be classified as at least “medium-green” in the Saudisation scheme, comply with obligations in the Wage Protection System, and ensure that foreign workers have valid work authorization. The quota will be limited to 50 visas per employer and visas will not be transferrable to other entities. It is expected that many employers will take advantage of the new temporary work visa, as businesses in the KSA have been seeking a legally compliant solution for short-term work assignments.

More foreign national-friendly programs are expected in Saudi Arabia in the future as additional foreign labor will be needed to fill positions in the NEOM – a cross-border city in northwest Saudi Arabia that is planned to be built by 2025.

VAT

General

The standard of VAT in Saudi Arabia is 15.00%.

Stay up to date on payroll & employment law changes

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.
More

Questions & Answers

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Peter
Peter
2 years ago

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

Alex Margolin
Alex Margolin
2 years 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
2 years ago
Reply to  Alex Margolin

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

Erez Greenberg
Erez Greenberg
2 years ago

Hi, this depends on the type of contract you have and the reason for ending your employment. However, it’s common that once the employment contract ends, the employee is entitled to severance payment that is equal to half of one month’s average wages for each of the first five years of employment, and equal to a full month’s wages for each year of work after the fifth year. (Individual cases vary based on employee contract and cause for terminations so please check regarding your specifics)

Sunil Rai
Sunil Rai
2 years ago

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

Erez Greenberg
Erez Greenberg
2 years ago
Reply to  Sunil Rai

Hi Sunil, we cannot answer this for you since this requires specific legal assistance. If you have any general labor law questions, we’d be happy to help.

Anna
Anna
2 years ago

Any retirement benefits?

Emily Kuhnert
Emily Kuhnert
2 years ago
Reply to  Anna

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

Aaron
Aaron
2 years ago

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

Alex Margolin
Alex Margolin
2 years 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?

Erez Greenberg
Erez Greenberg
1 year ago

Hi Muhammad, this depends on the agreement between you and your employer.

Jakhongir Tolipov
Jakhongir Tolipov
1 year 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 1 year ago by Jakhongir Tolipov
Emily Kuhnert
Emily Kuhnert
1 year 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
1 year 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?

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  IssaC Robert

Hi Issac, when a work contract is terminated (and non-renewal of a contract is considered termination), the employee is entitled to either 8 hours off per week or an entire day off per week to search for another job.

Tayyab Mehmood
Tayyab Mehmood
1 year 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

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Tayyab Mehmood

Hi Tayyab, Employers are supposed to provide their employees with salary details on their payslips.

Muhammed jimada hussain
Muhammed jimada hussain
1 year 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
Emily Kuhnert
1 year 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
1 year 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
Emily Kuhnert
1 year 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
1 year 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
Emily Kuhnert
1 year 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
1 year ago

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

Last edited 1 year ago by Shakeel
Emily Kuhnert
Emily Kuhnert
1 year 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
1 year ago

Does weekend consider in annual leave

Emily Kuhnert
Emily Kuhnert
1 year 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
1 year 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

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Vicky

Once you begin working the employer must make the payment for weekly employees once a week and make payments for monthly paid employees at least once a month.

Kate Ineson
Kate Ineson
1 year ago

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

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Kate Ineson

Employers are responsible for paying for the employee’s airfare from their home country to Saudi Arabia when they join the company and for their return after contract completion. When the contract is terminated during the probation period or if it was the worker’s fault, the employer does not need to pay for the return ticket.

LATIF BHISTI
LATIF BHISTI
1 year ago

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

Emily Kuhnert
Emily Kuhnert
1 year 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
1 year 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

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  acc

As this is quite specific to this worker, we would advise the worker to contact a local lawyer and review the contract/agreement terms.

HHH
HHH
1 year ago

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

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  HHH

Are you referring to absence due to illness? In Saudi Arabia workers are entitled to full pay during the first 30 days of illness followed by a period of reduced pay.

MMS
MMS
1 year 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?

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  MMS

Yes, they can.

ALDRICH OMANDAP
ALDRICH OMANDAP
10 months ago
Reply to  Erez Greenberg

Hello Mr. Erez,

Supposed I am absent from work from November 1 to 7 and every week I have 2 weekend paid which is Friday and Saturday, Am I entitled for Paid absents for Friday and Saturday if I am absent for 1 week without valid reason?

Erez Greenberg
Erez Greenberg
9 months ago

Leave should always be with a valid reason and approved by the manager in advance. For medical leave without warning, the manager should be informed as soon as possible.

MOHAMMED ABDUL SAJEED
MOHAMMED ABDUL SAJEED
11 months ago

SIR AFTER 15 YEAR OF WORK IN A COMPANY HOW MUCH SETTLEMENT WE GET

Erez Greenberg
Erez Greenberg
11 months ago

You are 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. 

asad
asad
11 months ago

what is the ratio of overtime on weekly off and public holiday

Erez Greenberg
Erez Greenberg
11 months ago
Reply to  asad

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. Daily hours cannot exceed 11 hours.

Debra Fay
Debra Fay
10 months ago

Hello, How is vacation pay calculated. I earned 22 days vacation and my HR is calculating the rate of as Monthly Salary/30 days which implies that I am paid for and need to take vacation pay for weekends. Is that correct?

Erez Greenberg
Erez Greenberg
9 months ago
Reply to  Debra Fay

Correct, here annual leave is usually discussed in terms of calendar days. To verify this, the worker should check their employment contract.

Alcen
Alcen
10 months ago

Hi. My contract will end on dec 13, 2022. I submitted my resignation last week Nov 2, 2022, I have only given them a 42 days notice.
Now it is stated in my contract “that if I did not give a 60 days notice, my contract will renew automatically and have to pay 8,500sr”
I called the hr representative and he said that i needed to pay 28,000sr. I was shock because it is not what is written in the contract.
When I asked why it is 28,000sr, he said it is because he already paid for the renewal of iqama. But when I checked my iqama online, it is still not renewed.
What should I do?

Erez Greenberg
Erez Greenberg
10 months ago
Reply to  Alcen

Unfortunately, this is a legal question and we cannot advise. Please seek legal advice.

Ruben
Ruben
10 months ago

Is there any Penalty for the employer’s who’s not issuing payslip,.?

Erez Greenberg
Erez Greenberg
8 months ago
Reply to  Ruben

Under Papaya all workers will be given payslips. We don’t have information on penalties for companies in general who do not provide pay slips.

Mohammad amir
Mohammad amir
10 months ago

Hi how to count annual leave and service benefits it will be count from basic salary or gross salary?

Erez Greenberg
Erez Greenberg
8 months ago
Reply to  Mohammad amir

Annual leave is calculated on actual salary i.e. salary + allowances etc.

Catherine
Catherine
9 months ago

on termination of a limited term contract, does the company need to compensate for the remaining months of the contract? This is on top of the gratuity payment?

Erez Greenberg
Erez Greenberg
9 months ago
Reply to  Catherine

There are a few justified reasons for ending a definite contract early. If justified, it is likely that the remaining months would be paid out or some other compensation agreed upon.

Junior Couture LLC
Junior Couture LLC
9 months ago
Reply to  Erez Greenberg

I really like this post.
Thank you for sharing a informative information with us.
Visit my links to find best designer clothing retailers in Saudi arabia.

Shin
Shin
8 months ago

Does an employer have to pay for annual ticket fare if the service exceeds up to 5 years and more ? Where can I find such laws here in Saudi?

Erez Greenberg
Erez Greenberg
8 months ago
Reply to  Shin

Expats are entitled to paid flights depending on different scenarios – Article 40 of the Labour Law is where flights are decreed.

Abdul Muqsit Abbasi
Abdul Muqsit Abbasi
8 months ago

How does nitaqat apply to a company with less than 5 employees?

Also, how do you pay salaries when your company has less than 5 employees? What proof needs to be submitted? How to submit to GOSI?

Erez Greenberg
Erez Greenberg
8 months ago

Employers must register with the regional GOSI office within two weeks of initiating activities. I recommend the client reviews the payroll page of the Knowledgebase https://www.kb.papayaglobal.com/countries/saudi-arabia/saudi-arabia-payroll/

Dnny
Dnny
4 months ago

Hi, Is it legal to deduct 3 days of 1 day absent in Saudi Arabia?

Ann
Ann
4 months ago

Hi! I’ve been working in the kingdom for almost seven years now. I am working as a nurse and with my recent employer, since 2018 up to now, I haven’t used up my sickleave. Is there a chance or law that the unused sickleave can be converted into cash? Just wondering. Thanks in advance.

Madhav Kumar nepal
Madhav Kumar nepal
4 months ago

According to Saudi labor law, how some one should calculated exit benefit after the contract period end?

Chris
Chris
4 months ago

For first timers., If you stay in company or agency and haven’t been deployed yet, are they compensated you for the days that you stay in the accommodation because you haven’t deployed or not working yet.

FALEEL
FALEEL
4 months ago

12 HRS WORK WITHOUT DAY OFF AND NO MORE ANY OVERTIME KINDLY NEED YOUR ADVISE ON THIS REGARD.

Ali Muhaammad
Ali Muhaammad
3 months ago

Saudi labor laws requires that employers provide a written employment contract with their employees. The contract should include details such as job title, salary, working hours, leave entitlements, and other terms and conditions of employment.

Wika
Wika
3 months ago

Hy, I want to ask about the employee loan from company. Because I am the new employee from Indonesia. Hiring in Saudi 4 days ago.
how much I will get the loan from Company, as an advance salary ?
did this regulation wrote in Saudi’s labor law ?
I have to find the room and pay it,.
thank you very much

Ju Ba
Ju Ba
3 months ago

Are there specific stipulations in Saudi Labor Law regarding housing/accommodation and transport allowance? Is it mandatory to offer these to Saudi nationals? If yes, is the quantum defined by law? If not, what’s the general practice (as a % of monthly basic pay)

Mathy
Mathy
19 days ago

my employer(manpower supplier) was not paid my First-51 days salary and allowance because work not assigned for me. Need advise how can i get my salary on those 51 days or any legal moves?

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Payroll and Benefits Guide
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  • Employer/employee contributions
  • Minimum wage
  • Working hours
  • Visa requirements

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Public Holidays Calendar

Saudi Arabia 2023
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Day Date Holiday Notes
Wednesday Feb-22 Founding Day
Thursday Apr-20 Eid el Fitr
Friday Apr-21 Eid el Fitr
Saturday Apr-22 Eid el Fitr
Sunday Apr-23 Eid el Fitr
Monday Apr-24 Eid el Fitr
Tuesday Apr-25 Eid el Fitr
Wednesday Apr-26 Eid el Fitr
Thursday Apr-27 Eid el Fitr
Tuesday Jun-27 Eid al Adha
Wednesday Jun-28 Eid al Adha
Thursday Jun-29 Eid al Adha
Friday Jun-30 Eid al Adha