How to Hire and Pay Employees in Saudi Arabia: A Step-by-Step Guide for Employers

Saudi Arabia: It's a hub for innovation in the Middle East, with a growing economy that attracts talent from all over the world. Expanding there offers a wealth of opportunity, but the laws and regulations are strict. And if you plan to bring in international talent? That means navigating Saudi Arabia's visas, sponsorships, and Saudization quotas.

Don't worry-we'll walk you through every step of hiring and paying employees in Saudi Arabia.

Before hiring in Saudi Arabia

Before you extend an offer, make sure your business is properly set up in Saudi Arabia. Without the right registrations, you won't be able to employ staff or run payroll.

You'll need to:

• Register with the Ministry of Commerce
• Enroll in the General Organization for Social Insurance (GOSI)
• Open a local corporate bank account
• Create a profile in Qiwa, the Ministry of Human Resources and Social Development's (MHRSD) portal for contracts and Saudization tracking

Each step comes with paperwork: commercial registration, tax number, and your banking details. Get these ready upfront to avoid delays.

Hiring process after registration

Once you're registered, follow these steps:

1. Draft an employment contract and upload it to Qiwa.
2. Meet Saudization (Nitaqat) quotas, which require a set percentage of Saudi nationals on staff.
3. For expatriates, apply for a work visa through the Ministry of Foreign Affairs, then finalize their iqama (residency permit) with the Passport Department.
4. Register the employee with GOSI.
5. Confirm the contract online for government approval.

Common challenges for employers

It's common to run into delays. Saudization targets can also be tricky, since requirements vary by industry and company size. Many employers use government e-services like Absher and Qiwa, or work with local partners, to help cut through the complexity. For more context, you can also check the labor reforms and contract structures in Saudi Arabia.

Ensuring payroll compliance in Saudi Arabia

Payroll isn't just paying on time-it's being able to prove to the government that you're paying on time.

Payroll systems and payment rules

All salaries must be paid in Saudi riyals (SAR), from a Saudi bank account, and reported through the Wage Protection System (WPS). This electronic system monitors whether employees are paid correctly and on schedule.

A typical monthly payroll calendar looks like this:

• Process payroll by the 25th
• Upload WPS files by the 28th
• Ensure employee accounts are credited by the end of the month

Statutory deductions and allowances

Employers must:

• Deduct 9% of salary for employee GOSI contributions
• Add their own 9% contribution, plus 2% unemployment insurance for Saudi nationals
• Budget for expatriate costs like iqama renewals
• Include common allowances for housing or transport, which make up 25-35% of total pay in many contracts

Miss a deadline or skip a WPS upload, and you could face fines or restrictions on new visas. Staying organized pays off.

Hiring and paying foreign employees

Bringing in talent from outside Saudi Arabia requires acting as their sponsor. That includes handling visas, iqamas, and exit/re-entry permits. The process takes weeks, so apply well in advance.

You'll also need to balance foreign hires with Saudization quotas, which directly affect how many visas you can request. These quotas shift often, so check updates in Qiwa regularly.

Key salary and employment insights

So what is considered a good salary in Saudi Arabia? It depends on the role, but here are a few benchmarks:

• The average monthly salary is SAR 10,238 (US$2,810).
• The minimum wage for Saudi nationals in the private sector is SAR 4,000/month (US$1066).
• Many packages include allowances for housing and transportation.

For deeper benchmarking, check the Saudi General Authority for Statistics.

How an Employer of Record can help

Managing all these moving parts can feel overwhelming. That's why many companies turn to an employer of record. An EOR is a local partner that legally hires employees on your behalf. They handle contracts, payroll, taxes, benefits, visas, and compliance so you don't have to set up a new entity in Saudi Arabia.

Here's how an it makes things easier:

• Drafts and registers contracts that meet Saudi labor law
• Runs payroll through WPS and manages GOSI contributions
• Handles visa sponsorship, iqamas, and renewals
• Keeps you aligned with Saudization requirements

Pairing an EOR with local resources like Mudad (for payroll) and Qiwa (for contracts) gives you confidence to expand quickly without the headaches. If you're curious how an EOR differs from a traditional PEO, our glossary breaks down the definitions clearly.

Hiring in Saudi Arabia, simplified

Hiring in Saudi Arabia is absolutely doable, you just need the right roadmap. Register your business, keep Saudization in mind, process payroll through WPS, and get ahead of visa timelines… it can be a lot.

So why not partner with Pebl?

Our comprehensive employer of record service lets you hire hire in days, not months, and all without setting up a local entity. We handle compliance, payroll, benefits, and visas, while you focus on building your team. Whether it's a Saudi national or international talent, Pebl gives you the clarity and peace of mind you need to expand with confidence.

Contact us when you're ready to learn more.

This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided "as is," and no representations are made that the content is error-free. 

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