Saudi Arabia · Hiring guide
Saudi Arabia Hiring guide
No income tax, very low social security for foreigners (only employer 2% injury); but the Nitaqat localization quota is a hard constraint, foreigners carry government levies (labor fee/dependent fee), and the end-of-service award is on basic + housing. Hiring is shaped by quotas and Saudi-first.
What it costs
what one hire really costsFor expats the employer pays only 2% injury insurance and no income tax — social is near zero. But the Nitaqat (Saudization) quota is a hard constraint, and expats carry government levies (labor/dependent fees) — the real cost is the quota and levies.
How hard
can you get in and out?- must hire Saudis to Nitaqat ratios
- expats need Iqama + govt levies
- written Arabic contract (Qiwa-registered)
- contractual/statutory grounds + 30–60 days notice
- settle EOS (½ mo/yr first 5y, 1 mo/yr after)
- cancel/transfer Iqama; bound by Nitaqat
- Contract expiry / a statutory valid reason / redundancy.
- Gross misconduct listed in Art 80 allows summary dismissal, with no end-of-service award and no pay in lieu.
- Dismissal without valid reason: an indefinite contract pays 15 days’ wage/year (or as the contract states), plus the end-of-service award.
- 1.Advance written notice: indefinite ≥60 days (monthly-paid) / ≥30 days; or pay in lieu.
- 2.Settle the end-of-service (EOS) award + unused annual leave.
- 3.Cancel or transfer the foreign employee’s Iqama (residence) via the Qiwa process.
- 4.Meet Nitaqat localization ratios before backfilling with a foreigner.
End-of-service (EOS) = half a month’s wage/year (first 5 years) + one month/year (after 5), on the final "basic wage + housing allowance". Voluntary resignation is discounted by tenure (2–5 yrs pays 1/3, 5–10 yrs 2/3, ≥10 yrs full).
Example: Wage SAR 10,000, 4 years (employer dismissal): half month/year × 4 = 2 months = SAR 20,000; if the employee resigns (2–5 yr band), only 1/3 ≈ SAR 6,700.
- Nitaqat localization: meet the Saudi-hiring ratio before hiring foreigners, or visas/renewals are restricted and fines apply.
- Foreigner levies (labor fee + dependent fee) are an ongoing hidden cost — budget for them.
- EOS is on "basic + housing", and resignation vs dismissal differ (resignation is discounted).
Source: Saudi Labor Law, Art 80, 84–85
Supporting detail
How to start
first stepsWhat bites you
what others got wrong- Nitaqat localization: meet the Saudi-hiring ratio before hiring foreigners, or visas/renewals are restricted and fines apply.
- Foreigner levies (labor fee + dependent fee) are an ongoing hidden cost — budget for them.
- EOS is on "basic + housing", and resignation vs dismissal differ (resignation is discounted).
FAQ
What’s the all-in employer cost of one hire in Saudi Arabia?
For a local employee on SAR 10,000/month, employer monthly cost is about SAR 10,200 (overhead +2%), ~SAR 122,400 annualized. Use the calculator for your actual wage.
How are employer social contributions paid in Saudi Arabia?
GOSI (nationals) ~12%/10% (cap 45k); expats employer 2% only
What limits hiring foreigners in Saudi Arabia?
Subject to Nitaqat localization quotas (meet the Saudi-hiring ratio first), and foreigners carry government levies (labor fee + dependent fee). On social security, foreigners pay only employer 2% injury, with no income tax.
How is end-of-service calculated in Saudi Arabia?
EOS = half month’s wage/year (first 5 years) + full month/year (after 5), on final basic + housing; resignation is discounted by tenure (2–5 yrs 1/3, 5–10 yrs 2/3, ≥10 yrs full).
Deeply researched and verified against official bodies, auto-updated; rates and processes are for reference — for major decisions rely on each country’s authorities and local counsel.