Employer of Record in Saudi Arabia
Skuad's Saudi Arabia EOR (Employer of Record) solution is the perfect option to allow your business to take advantage of this environment without requiring an entity setup. Our unified and automated global hr platform enables you to expedite the onboarding of your remote team, manage their payroll, benefits, etc. Compliantly. We help you streamline the global expansion process with the able assistance of our international network.
Skuad's Saudi Arabia EOR solution helps you expand your business effortlessly without worrying about the complexities of the hiring policies in the country. From recruitment, payroll management, and employee management to probation, regulation, and managing provincial laws, Skuad handles everything for you without requiring you to set up a separate legal entity. Talk to Skuad experts today and learn how to expand your business into Saudi Arabia in the most hassle-free manner.
Saudi Arabia has been one of the most desirable places to work in the Middle East in recent years due to its monarchy's measures to make it a more liberal and effective place of business.
Saudi Arabia at a Glance
Population: 34.08 million (as of 2019)
Currency: SR Saudi riyal
Capital City: Riyadh
Languages Spoken: English, Arabic, Urdu
GDP: 701.47 billion US dollars
One platform to grow your global team
Hire and pay talent globally, the hassle -free way with SkuadTalk to an expert
What You Must Know Before Employing in Saudi Arabia
The legal system in Saudi Arabia is based on the teachings from the Quran and Sharia law. The judges here refer to this Sharia law for giving any kind of punishment to the offenders. Saudization is the recent law passed in Saudi Arabia that mandates foreign employers to fill their positions with the Saudi workforce. Women are allowed to work in Saudi Arabia but with certain restrictions. Naturally, the legal framework of another country is likely to be confusing and complex for people new in the territory and are unfamiliar with such a system. In terms of their impact, however, the system in Saudi Arabia does resemble most other nations.
Nevertheless, to minimize or mitigate the challenges for companies looking to set up a local office, it is advisable to partner with an Employer of Record partner who is well-versed in the practicalities of the law in Saudi Arabia and how it affects different types of workers.
Below are some of the rights and entitlements for employees in Saudi Arabia:
To learn more about employment laws, Saudi Arabia and employment agreements in Saudi Arabia, talk to Skuad experts.
Contractors vs. Full-Time Employees
The labor law doesn't distinguish different classes of employees without any specific regulation. The law, however, clearly demarcates various benefits for individuals based on their nationality.
There is also fixed-term contract work which expires once the period is completed. The concept of freelance work and self-employment is not common in Saudi Arabia in most industries. Part-time contractors are rather typical in the agricultural sector. However, like all other commercial activities in Saudi Arabia, self-employment shall require the individual to hold a trade license. To learn more, click here.
Hiring in Saudi Arabia
Prospective employees can be found through different means, such as referrals or open applications, depending on the scale of the organization. Online employment websites are also suitable options. The best websites to seek out employees in Saudi Arabia include
- Gulf talent
To contact a Skuad expert, click here.
Probation & Termination
The labor law governs the rules regarding probation, specifically articles 53 and 54. Any agreement in respect to probation has to be mentioned in the employment contract. The probation period can be for a maximum 90 days with an option to extend it to 180 days upon mutual agreement by both parties. This does not include Eid ul-Fitr and Eid ul-Adha holidays and sick leave. Additional probation rules apply to teachers who gain employment in Saudi Arabia – a teacher can have probation for up to two years.
Article 54 of the labor law provides that once the probationary period elapses, employees must not be placed on another such period without mutual consent and an undertaking to extend the ambit of the work performed by the employee. Both the employer and employee shall normally be granted the right to terminate the contract during this period unless they had previously agreed to different terms in the contract. Further, there shall be no compensation or end-of-service for the employee if the contract is terminated during this period. A foreign national employee shall also have to bear the expenses of returning to their home countries if they resign or are terminated due to being unfit during this period.
The domestic workers regulation allows for a 90-day probation period, according to the law of domestic workers. The employer may end the service without assuming responsibility if the worker is determined to be incompetent during the probation period.
Talk to a Skuad expert to learn more about probation in Saudi Arabia.
Termination of Services
The termination of the employer-employee relationship has been specially dealt with in chapter 3 of the labor law.
In the event of any wrongful termination, the parties shall be entitled to compensation.
Learn more about the probation and termination of employees in Saudi Arabia here.
EOR Solution in Saudi Arabia
A Saudi Arabian Employer of Record (Saudi Arabia EOR) solution makes it easier and faster for businesses to expand into the kingdom. Taking the EOR route ensures smooth and compliant payroll processing and other employment responsibilities without any entity establishment. Skuad can help you manage monthly payroll, contracts, work permits, taxation, etc. In Saudi Arabia for your employees. Book a Demo today.
Outsourcing Employment Through an Employer of Record
When your organization decides to expand into Saudi Arabia, you also need to determine the route you wish to pursue, i.e., whether you want to build your organization by establishing an in-house team or using an EOR service like Skuad to manage such an operation. Our team of well-informed professionals will handle the arduous task of managing global payroll, compliance, and taxation, on your behalf. Talk to Skuad Experts and build a global team of efficient workers.
Types of Visas in Saudi Arabia
For working in Saudi Arabia, one needs to obtain an employment visa. This process has to begin with the employer applying for this visa. The steps have been listed below:
- The sponsoring employer registers with the Saudi Arabian Ministry of Interior.
- The ministry, during this process, opens an immigration file that records the details of all the employer's expatriate workers.
- The employer shall then file an application with the ministry of labor for an employment visa.
- Upon approval, the ministry of labor shall inform the ministry of foreign affairs, which, in turn, shall issue a visa authorization number within two weeks.
- The employee shall then submit their application to the relevant embassy, along with the following documents.
- Passport valid till employment period
- Color passport photo
- Proof of online payment of the visa fee through the enjazit website
- Visa application duly filled
- Signed medical report (three copies)
- Sponsored Saudi Arabia company’s employment letter
- Signed employment contract
- A criminal record report by the police
- A prepaid envelope with an address
- The embassy shall then issue the visa within approximately three weeks, upon which the employee can travel to Saudi Arabia.
- The employee must then apply for a residency permit through the Ministry of Labor, which will then forward the application to the Ministry of Interior.
- The permit shall finally be issued through the directorate-general for passports.
This permit is an essential document and must be carried by the worker at all times to prove they reside and work in Saudi Arabia legally. The employee shall also have to seek exit and re-entry permits should they temporarily leave Saudi Arabia.
Expatriates coming to work in Saudi Arabia must have a sponsor. The sponsor can either be a citizen of Saudi or an international company. The expatriates can work and leave the country only with the permission of their sponsor. The provision to get Iqama is made once you got the work permit from the Ministry of Labor. Skuad's local partner in Saudi Arabia can sponsor work permits for foreign workers. As an EOR in Saudi Arabia, Skuad can handle all the requirements and responsibilities related to employment. The client company can manage its employees' daily activities and operations.
Talk to a Skuad expert to know more.
Things You Must Know to Set Up Payroll in Saudi Arabia
Saudi Arabia is unique in the manner business is conducted here. As mentioned above, contracts play a significant role in the employment culture of the country. The rules, while straightforward, attract substantial penalties upon non-compliance. As a business operating on foreign shores, knowledge and understanding of these systems are paramount for effective functioning. The two most popular ways of going about it are -
- Establishing an in-house unit to manage the payroll and related issues in Saudi Arabia; or
- Hiring a service expert to ensure all compliance issues are taken care of by an expert in the local laws efficiently and effectively.
The employer is expected to contribute 12 percent of the employee's salary to social insurance for Saudi nationals. It does not impose any specific requirements for foreign nationals.
Taxes in Saudi Arabia
There is no personal income tax in Saudi Arabia. However, a flat tax of 20% is imposed on the tax-adjusted profit of non-Saudi residents and individuals who don't belong to the Gulf Cooperation Council (GCC).
These individuals may also have to pay withholding tax for income originating in Saudi Arabia. Further taxes shall be imposed depending on the existence of an international tax agreement between Saudi Arabia and the nation to which the foreign national belongs.
Annual bonuses are common, and the state typically gives out a bonus equal to a month's wage. Bonuses based on performance are also common.
Incorporation: How to Set Up a Subsidiary in Saudi Arabia
Depending on the scale of the organization, the type of entity to be set up shall likely differ. The most common type, however, is the limited liability company (LLC).
Although not imposed through a law, the ministry of investment of Saudi Arabia has established a minimum capital requirement of sr 500,000 to set up an LLC. The company must also have between 2 and 50 shareholders and be managed and represented by one or more managers.
The law does not mandate the establishment of a board of directors. However, shareholders are free to establish one via the memorandum of association. If the company has over 20 partners, it must establish a body termed the 'board of controllers,' which functions similarly to the board of directors.
There are immense business opportunities in Saudi Arabia. Because of the country's flourishing economy, many businesses find it attractive to expand into Saudi Arabia. However, it is essential to know the various laws for incorporation.
Learn more about setting up a subsidiary in Saudi Arabia with Skuad's potent EOR solution.
Professional Employment Organization (PEO)
A Professional Employment Organization, or PEO, is an organization that facilitates the main HR processes of small and medium-sized enterprises. Like the EOR facility, they usually provide services like regulatory compliance, tax filing, and HR training and development. The key difference between PEO and EOR services is in respect to who the legal employer actually is.
PEO services only facilitate the hiring and other HR tasks. This means that your business will still have to enter the country and establish a legal presence through a subsidiary or other means. Depending on the scale of your enterprise, this could be an economically unfavorable option. EOR, on the other hand, incorporates all the services offered by a PEO by becoming the legal employer of the workers. The decision between the 2 shall depend on the scale of your organization and what suits your business needs.
Skuad's integrated platform acts as an EOR solution. Its unified employment platform manages all hr-related functions; right from recruitment to termination, everything is handled by Skuad's single platform. You can build an efficient team of workers remotely while complying with the local laws. Skuad handles all the functions such as onboarding workers, both full-time and contractors, managing their payroll and taxes, etc. Connect with us and elevate your business prospects while saving your time and money with Skuad's advanced EOR solutions.
Expand your business into Saudi Arabia while complying with all the country's labor laws with Skuad's effective EOR solution. Handle the complexities of business expansion with ease and create a profitable business enterprise by making a global presence. Talk to Skuad experts and learn about every aspect of business expansion in Saudi Arabia.