Thinking of expanding your business or hiring in Saudi Arabia?

As the largest economy in the Middle East and a key player in global energy and infrastructure, Saudi Arabia offers many opportunities for businesses looking to grow. Major government initiatives like Vision 2030 are driving investment across sectors, from tech and tourism to renewable energy and more. There has never been a more exciting time to establish your presence and for hiring in Saudi Arabia.

However, hiring in Saudi Arabia requires a solid understanding of local labor laws, Saudization policies, and regulatory processes around visas, contracts, and taxation. This guide provides a clear overview of the Saudi hiring landscape, including employment laws, compensation, work permits, and social security. We also offer practical solutions to help you hire efficiently, compliantly, and with confidence.

Two ways to hire in Saudi Arabia

Expanding your business into Saudi Arabia involves understanding the country’s specific employment regulations and cultural practices. Let’s look at the three primary methods to hire in Saudi Arabia:

1. Establishing a local entity, subsidiary or branch office

This involves registering a legal entity within Saudi Arabia, such as a Limited Liability Company (LLC) or a branch of your foreign company. This setup allows for direct hiring of employees under your company’s name.​

However, there are some considerations:

• Compliance with Saudi corporate laws and labor regulations

• Mandatory Saudization policy which requires a certain percentage of your workforce to be Saudi nationals, with specific quotas varying by industry and company size
• Time-consuming

2. Engaging an Employer of Record (EOR)

This involves partnering with a local EOR service that officially employs staff on your behalf. This allows for rapid market entry but it is important to select a reputable EOR with a deep understanding of Saudi labor laws.

This is where we come in. Our EOR services in Saudi provide:

• Employment contracts, payroll, tax compliance, and benefits administration

• Visa and work permits for your staff

• Compliance and Saudi laws and regulations
• Minimized administrative burden so you can focus on your core operations

Each hiring method comes with its own benefits and considerations. If you’re unsure which approach best suits your business goals in Saudi Arabia, our experts are here to help. Get in touch for a free consultation and tailored guidance.

What your company needs for hiring foreign employees Saudi Arabia 

Hiring foreign talent in Saudi Arabia requires careful planning and strict compliance with the Kingdom’s labor and immigration regulations. From sponsorship to onboarding, each step involves legal procedures that must be followed to avoid penalties and ensure a smooth hiring process.

I. Determine Work Permit Requirements 

In Saudi Arabia, nearly all foreign nationals must have a valid work visa and residency permit (Iqama) to be legally employed. Employers are responsible for sponsoring the employee’s visa and ensuring all documentation is submitted through the Ministry of Human Resources and Social Development (HRSD) and the Ministry of Interior.

II. Become a Recognized Sponsor 

To become a To hire foreign workers, your company must be registered and approved to act as a sponsor. This means having the following:

• Valid commercial registration (CR)
• An established Saudi-based entity
• Meeting Saudization quotas set under the Nitaqat program.

Please note: Companies with low compliance or poor Saudization ratings may face restrictions on visa issuance.

III. Apply for the Right Visa 

The most common route is the standard work visa, which requires a block visa approval from the Ministry, followed by individual visa processing for each employee. Other visa categories, such as investor or specialized profession visas, may apply depending on the role and the employee’s qualifications. You can find the detailed requirements of applying for an employment visa here.

IV. Handle Employee Registration and Taxes

Once a foreign employee arrives in Saudi Arabia, employers must complete residency permit (Iqama) procedures within 90 days. The employee must also be registered with the General Organization for Social Insurance (GOSI). While there is no personal income tax, social security contributions are required from employers for occupational hazard coverage.

V. Ensure Compliance and Onboarding 

• Issue contracts in Arabic or bilingual format
• Provide clear onboarding and workplace policy training.
• Follow Saudi labor laws on pay, hours, leave and termination 
• Keep employee records updated and renew Iqamas on time.

What to know before hiring in Saudi Arabia 

Hiring in Saudi Arabia requires navigating a unique legal framework, understanding cultural dynamics, and aligning with national policies like Saudization. To ensure a smooth and compliant hiring process, it’s important to be familiar with who is eligible to work in the Kingdom, what the employment laws require, and the types of contracts you can offer.

Who can work in Saudi Arabia without a visa?

Unlike the EU or UK, Saudi Arabia does not offer visa-free work rights to foreign nationals. Virtually all non-Saudi citizens must have valid work authorization before starting employment. Here’s how it works:

• Saudi Nationals: naturally, Saudi citizens can work without restrictions

• GCC Nationals: Citizens of Gulf Cooperation Council (GCC) countries may have fewer restrictions, but this is subject to change and should be verified with current regulations.

• Foreign Nationals: Most non-GCC nationals must be sponsored by an employer to obtain a work visa and Iqama (residency permit). This includes both skilled and unskilled workers.
• Dependents: Family members on dependent visas are not permitted to work unless they switch to a work visa with a sponsoring employee.

Employers are responsible for sponsoring foreign employees and ensuring all documentation is in place before they begin work.

Employment laws and regulations

Saudi Arabia’s labor system is governed by the Saudi Labor Law, which outlines both employer and employee rights. While the government has introduced reforms to make the market more business-friendly, compliance is non-negotiable. 

• Saudization (Nitaqat): Employers must meet quotas for hiring Saudi nationals based on their industry and company size

• Working Hours: The standard workweek is 48 hours; reduced to 6 hours/day during Ramadan for Muslim employees.

• Overtime: Overtime is paid at 150% of the regular wage.
• Leave:Minimum 21 days annual leave, increasing to 30 days after five years; up to 120 days sick leave; 10 weeks maternity leave with partial to full pay.
• Termination: Notice periods typically range from 30 to 60 days, and employees may be entitled to End of Service Benefits based on tenure.

Employers must also be aware of cultural norms, gender considerations, and religious holidays when managing staff in the Kingdom.

Types of employment contracts in Saudi Arabia

• Fixed-Term Contract: A contract with a specific start and end date, commonly used for expatriates and project-based roles. This includes the Probationary Period: A trial period of up to 90 days (extendable to 180 with consent) during which either party can end the contract without compensation.
  In some cases, this contract may change into an indefinite contract if the decision is made by both parties to continue after the contract period.

• Indefinite (Open-Ended) Contract: A contract with no fixed end date, often used for long-term roles and Saudi nationals.

Direct Hiring vs Employer of Record (EOR): Which is Right for you? 

When expanding into Saudi Arabia, businesses must choose between setting up a local entity to hire employees directly or partnering with an Employer of Record (EOR). Each approach has its own advantages, and the right choice depends on your goals, available resources, and how you plan to navigate local labor laws, Saudization requirements, and compliance risks.

Which Option is Right for You? 

• Long-term expansion & full control? → Set up a Saudi Arabia entity 

• Fast, compliant hiring with no local entity? → Use an EOR like WTS Energy 

Compliance risks when hiring employees in Saudi Arabia

Hiring in Saudi Arabia comes with strict legal and regulatory obligations. Mistakes can result in fines, visa bans, and restricted access to government services. Below are key compliance risks employers should be aware of when hiring in the Kingdom:

Saudization (Nitaqat) Non-Compliance 

Saudi Arabia’s Saudization program, also known as Nitaqat, requires companies to meet minimum quotas for Saudi nationals, which vary by sector and company size. Failing to meet these quotas can result in blocked work permits for expatriates, fines, or a downgrade in your company’s classification, ultimately limiting your ability to operate.

Improper work visa and Iqama sponsorship

Foreign employees must have a valid work visa and Iqama sponsored by their employer. Delays or errors in processing or renewal can lead to fines, deportation, or suspension of work permits, making accurate documentation a legal obligation for employers.

Contractual valuations

Employment contracts in Saudi Arabia must be in Arabic or bilingual, with Arabic as the legally binding version. Contracts must clearly state salary, benefits, role, and duration as unclear terms can lead to disputes. Employers must also follow labor law rules for probation, renewal, and termination.

Incorrect Payroll and GOSI Contributions

Employers are required to contribute to GOSI (General Organization for Social Insurance) on behalf of their employees—12% for Saudi nationals, and 2% for non-Saudis under occupational hazard insurance. Misreporting, late payments, or incorrect classification of employees can result in audits, back payments, and financial penalties.

Cultural and legal missteps

Saudi Arabia’s workplace laws are deeply influenced by cultural and religious norms. Missteps around gender segregation, religious holidays, or prayer breaks can not only create friction within the workplace but also lead to official complaints. Companies must ensure that internal policies respect and reflect these cultural expectations while maintaining compliance.

Need help managing compliance in Saudi Arabia? WTS Energy ensures your hiring practices meet all legal and cultural requirements, so you can focus on building your team with confidence.

Simplify your Saudi Arabia hiring with WTS Energy’s Headhunting and Recruitment services

Expanding your team in Saudi Arabia? From navigating labor laws and Saudization quotas to handling visa processes and compliance, hiring in the Kingdom can be complex. WTS Energy makes it simple. We connect you with top talent and managing the entire recruitment process for you.

• Stay fully compliant with Saudi labor laws and Saudization requirements

• Access a strong network of local and international professionals

• End-to-end recruitment support, from sourcing to onboarding

• We handle screening, contracts, visa coordination, and paperwork

Frequently asked questions

*The content provided is for general informational purposes only and is based on publicly available sources deemed trustworthy at the time of writing. However, we do not guarantee its accuracy, completeness, or ongoing relevance. For the most up-to-date guidance or advice tailored to your specific situation, please reach out to our team directly*