- Overview: Saudi Arabia
- Global HR Compliance
- Global PEO and payroll
- Work permit for hiring expats via PEO
- Contractor vs. employee: which is better?
Global HR Compliance in Saudi Arabia
If you hire international workforce, or plan to hire, then Hiring and Firing Workforce in Saudi Arabia Guide below will help you understand the nuances of labor legislation in the country.
Companies hire international workforce for various reasons but in most cases they are:
- entering the foreign markets to sell company products. To do so, the company hires sales representatives who would represent their product and sell it to their local client base.
- hiring a global talent with unique skills that is unavailable in the local market or costs the company less than the talent with similar skills hired in the home country.
Before entering a certain foreign market or engaging a global talent, it is crucial for the company to understand how it can make local hires and reward its workers on a monthly basis. Growing companies often face a challenge of paying benefits and bonuses to the commission-based independent sales representatives they are working with.
If you intend to hire and pay your foreign workforce in full compliance with labor laws and regulations of Saudi Arabia, then the Global Employer of Record service from Acumen International may be the best way for you to go. We are an International PEO company and we specialize in global employment, meaning we can employ your employees in Saudi Arabia and act as their legal employer on your behalf. We will payroll your foreign workforce monthly and provide benefits to them through our global network so you don’t have to set up your own legal entities there.
We are experts in global workforce employment in , and our goal is to become your single provider. Instead of working with numerous local staffing agencies and legal advisors, Acumen International can solve your global business challenges and save you time, costs, and resources.
Our team of English-speaking professionals frees you from working through language nuances. Acumen International works 24/7 and can assist you whenever you need, regardless of time zones. Our goal is to create tailored labor solutions for you that are managed legally and in full compliance with the local employment laws.
With our knowledge and deep understanding of local nuances, you easily satisfy your need for skilled professionals in your global industry. With our qualified local partners, you can trust that your global workforce satisfies all local tax, social security, and immigration requirements in Saudi Arabia.
See Hiring and Firing Workforce in Saudi Arabia Guide below for a general overview of labor rules and regulations in the country. Or contact us if you need to employ workers in Saudi Arabia or would like to get more details.
Hiring and Firing Workforce in Saudi Arabia Guide
# Employment contracts
A written employment contract signed by the employer and an expatriate employee is compulsory, specifying a fixed duration, usually two years.
The contact shall be in Arabic. However, if it is in another language along with Arabic, in case of dispute, the Arabic text shall prevail. The contract shall include the name and address of the employer and the employee, job title, location of work, duration of contract, probation period, wage agreed upon, provision of free food or food allowance and accommodation, working hours, overtime allowance, vacation, air passages, medical insurance, end of the service benefits, provision in regard to disposal, mode of settlement of disputes, etc.
The Labour Law permits two types of contracts: term contracts and project-based contracts. Term contracts are further divided into fixed-term contracts and indefinite contracts. Indefinite contracts are contracts that: (a) exceed four years; (b) have no provisions for renewal but have been renewed by course of conduct; or (c) have been renewed three consecutive times. Where the employee is a foreign national, the indefinite contract is limited by the length of the work permit granted to the employee, which means that, in practice, indefinite contracts exist only for employees who are Saudi nationals.
# Minimum (Statutory) Employment Rules and Regulations in Saudi Arabia
# Hours of work:
The maximum number of employee working hours is generally eight hours per day or 48 hours per week, with the exception of the holy month of Ramadan, when actual working hours for Muslim employees may not exceed six hours per day or 36 hours per week.
# Probation period:
The Labour Law permits an employee to be hired on a probationary basis, provided that this is expressly stated in the contract of employment. The probation period may be up to a maximum of 90 days, excluding public holidays and sick leave. The probation period may be extended up to 180 days, if agreed in writing by the employer and the employee.
# Annual leave:
Every employee under Saudi Arabian Labor law is entitled 21 days annual(yearly) paid leave. This leave will be available to the employee after completing two consecutive years with company. If after mutual understanding between employer and employee the duration of leave will increase up to 30 days but if employee completed five years of employment.
# Parental leave:
Female workers are now entitled to 10 weeks’ maternity leave fully paid, to commence maximum four weeks before the expected date of delivery. The leave can also be extended for an additional month on an unpaid basis. The duration of paternity leave is 3 day’s leave on the birth child.
# Sick leave:
An employee whose sickness has been proven is allowed to take 4 months sick leave from sponsor Employer. As per this condition, Employer cannot terminate him from job or remove him from employee payroll. To apply this condition, Employee has to submit doctor certification stating the number of the days employee need to rest. Without doctor medical sick leave certificate, It is discretion of the employer. It is allowed to employee to add his annual vacation leave with the sick leaves. Implemented Yearly basis quota is as follows:
- First 30 Days – fully paid;
- Next 60 Days – 3/4 of total salary;
- Next 30 Days – unpaid.
The Labour Law mandates that overtime is paid on the basis of the basic hourly rate (pro-rated, if applicable) plus 50%. Typically, employers in the Kingdom that regularly require their employees to work overtime pay a fixed monthly amount in lieu of the actual overtime payment, calculated by reference to the overtime worked, as it can save money and reduces the administrative burden of keeping track of overtime worked.
# State minimum salary:
While Saudi Arabia has no official minimum wage for the private sector, the public sector has a minimum rate of 3,000 Saudi riyals.
# Employee dismissal:
Employment contract may be terminated: without notice by either party any time during probation; if the worker failed the medical examination; by mutual consent of both parties; on expiry of term of contract unless it is extended; at the discretion of both parties in indefinite contracts; or on the worker attaining the age of retirement (60 years for male and 55 for female) unless both parties agree to continue work beyond the age of retirement.
The employer may dismiss the worker without notice for assaulting the employer/management; failure to perform duties, follow legitimate orders or safety instructions; disobedience; misconduct or acts infringing on honesty or integrity; deliberately causing material loss to the employer; forgery in order to obtain the job; absence from work for more than 20 days in one year or for more than 10 consecutive days; unlawfully takes advantage of his position for personal gain; disclosure of work- related industrial or commercial secrets, etc.
Termination of the contract by the worker without giving notice, if the employer/his representative fails to fulfil contractual or statutory obligations; resorts to fraud at the time of contracting with respect to the work conditions and circumstances; assigns the worker, without his consent, a work which is essentially different from the work agreed upon; commits a violent assault or an immoral act against the worker or any of his family members; subjects the worker to cruelty, injustice or insult; fails to take measures to remove serious health or safety hazard at the workplace of which he was aware; cause the worker to appear as the party terminating the contract through his actions, unjust treatment or violation of the terms of the contract, etc. Termination of contract without a valid reason: If the contract is to be terminated without a valid reason, the party harmed by the termination is entitled to be compensated by the other party.
Acumen International can help you fast-track your possibilities of entering and expanding your business in Saudi Arabia by providing you with our Employer of Record services. Our unique mix of PEO/EOR solutions will enable you to jumpstart your global operations almost immediately, cost-effectively and compliantly without any need to set up a legal entity first or afterwards.