Saudi Arabia Employer of Record

As you look to hire employees in Saudi Arabia, here are some common regulations you’ll need to know to create a compliant contract, as well as how an employer of record and PEO can provide support for your unique HR need.

Working hours
Regular working hours are eight in a day and 48 in a week. Employees may work overtime as long as the workday does not exceed 12 hours.

During the month of Ramadan, Muslim employees can work a maximum of six hours per day or 36 per week. 

Friday is the weekly paid rest day, and employers may replace this with another day of the week as long as they notify the government. Payment may not be provided in lieu of a rest day. 

In remote areas and in jobs that require continuous operation, weekly rest periods may be consolidated for up to eight weeks as long as the employer and employee agree, and the Ministry of Labor approves. 

Employees may not work more than five consecutive hours without a break, with the exception of certain positions including management, guards and janitors, or work that is intermittent.

Compensation
As you consider the appropriate salary to offer new employees, keep in mind:

• There is no minimum wage in the private sector, although the government recommends 3,000 riyals a month. 
• Overtime pay is equal to 150% of regular wages.
• Wages must be paid at least monthly during regular working hours.
• Employers can make paycheck deductions without an employee’s written consent, such as for repayment of a loan, fines or social contributions.

As your employer of record in Saudi Arabia, we can provide you with resources and insights about employee compensation, so you are better equipped to make a competitive employment offer.

Bonuses
Bonuses are not required, but it is customary to give a 13th-month bonus on Eid al-Fitr.

Probationary period
Probationary periods of up to 90 days are permitted. They can be extended an additional 90 days with the employee’s written consent. 

An employee may not be employed on probation more than once by the same employer unless they change jobs or haven’t been employed by the same employer in the previous six months. 

During the probationary period, the contract can be terminated without notice by either party, unless the contract gives that right to only one of them.

Termination and severance
An employment contract may be terminated if both parties agree, with agreement in writing; because of force majeure; if the term specified in the contract expires, unless the contract has been explicitly renewed; or if the worker reaches retirement age, unless the two parties agree the employee should continue working.

If either employer or employee terminates a contract without the required notice, they must compensate the other wages for the duration of the notice period or the balance of the contract. 

An employee who resigns is entitled to one-third of their end-of-service award after two to five years of employment or two-thirds of the award for service between five and 10 years.

An employer may terminate without notice if the employee does any of the following:

• Assaults the employer or any superiors
• Fails to perform essential obligations, obey legitimate orders or observe posted safety instructions 
• Is guilty of misconduct or dishonesty
• Commits any act intended to cause material loss to the employer, provided the employer reports the incident to the appropriate authorities within 24 hours
• Committed forgery to obtain the job
• Is absent without a valid reason for more than 15 consecutive days or 30 total days in a year as long as the employer provides a written warning after 10 days’ absence in the first case and 20 in the second
• Unlawfully takes advantage of the position for personal gain
• Discloses work-related secrets 

Employers must give employees the opportunity to challenge their termination.

If an employee is terminated without a valid reason and severance is not specified in the contract, the employee is entitled to 15 days’ wages for each year of employment (with an open-ended contract) or all remaining wages (with a fixed-term contract). In either case, the minimum amount of compensation may not be less than two months’ wages. 

When employment ends the employer is required to give a certificate of work experience with dates of employment, occupation and the last wage received. The employer may include information that might limit future employment choices as long as they provide their reasoning. 

Employees who have been terminated and are working during their notice periods are entitled to eight paid hours or one day a week to look for a new job. 

Employees may resign without notice if the employer does any of the following:

• Fails to fulfill essential contractual or statutory obligations
• Lied about work conditions and circumstances at the time of hire
• Assigns the employee work that is essentially different from what was agreed to in the contract, except when necessitated by circumstances and for no more than 30 days a year
• Commits a violent assault or an immoral act against the employee or a family member, or the employer’s family member or the manager commits such an act
• The employer or manager treats the employee with cruelty, injustice or insult
• A serious hazard exists in the workplace that threatens the employee’s safety or health, and the employer does not fix it
• Unjust treatment or violation of the terms of the contract

End-of-service awards are mandatory. They amount to a half-month’s wages for each of the first five years of service and one month’s wages for each subsequent year. The award is calculated using the last full month’s wages. 

As your employer of record in Saudi Arabia, we can work with you to quickly handle the unforeseen event of an employee termination, providing legal guidance and a personalized process that ensures you stay out of labor court.