Overview

Capital
Riyadh
Currency
Saudi Riyal (SAR)
Date Format
dd/mm/yyyy (ah)

Taxes

Employer

Employer Payroll Tax

9.00%
Social Insurance
1.00%
Unemployment Insurance
2.00%
Occupational Hazard
12.00% Total Employment Cost
Employee

Employee Payroll Taxes

9.00%
Social Insurance
1.00%
Unemployment Insurance
10% Total Employee Cost
Employee

Employee Income Tax

0.00%
For Saudi Nationals
Employer Taxes
3 HIGHEST
3 LOWEST
Brazil
China
Slovakia
Saudi Arabia
South Africa
Georgia
Macedonia
82.39%
41.12%
37.2%
12%
2%
2%
0%
Employee taxes
3 HIGHEST
3 LOWEST
Romania
Macedonia
Netherlands
Saudi Arabia
Georgia
Belarus
Ukraine
45%
28%
27.65%
10%
2%
1%
0%

Minimum Wage

General

The monthly minimum wage is 4,000 SAR.

Minimum wage (per month)
$4000
$2663
$2491
$800
$47
$36.80
$2.33
Geneva
Luxembourg
Australia
Saudi Arabia
Malawi
Angola
Venezuela
3 HIGHEST
3 LOWEST

Payroll

Payroll Cycle

Payment of wages varies.  If an employee is employed based on a weekly salary, then they are paid at least once a week, and if the employee is on a monthly salary, the frequency of wage payments is monthly.   

13th Salary

While not mandatory, it is customary to pay employees a 13th salary before Eid al-Fitr 

Working Hours

General

An employee cannot work more than 8 hours a day or 48 hours within a week.  During Ramadan, however, the workday is reduced to 6 hours and up to 36 hours per week.  

Overtime

An employee cannot work more than 11 hours a day. For hours over 8 per day, payment in overtime is 150% of the regular pay rate.  

Leave

Paid Time Off

If an employee has completed 1 year of employment, they are entitled to 15 days of paid leave per year.  After 10 years of employment, this entitlement is increased to 21 days per year. 

The employee is also entitled to 10 days of unpaid leave per year, subject to employer approval.  

Vacation days
Public holidays
3 HIGHEST
3 LOWEST
Brazil
Peru
Albania
Saudi Arabia
Michigan
China
Federal
30
13
43
30
12
42
28
14
42
15
3
18
2
11
13
5
7
12
10
10
Public Holidays

There are 3 public holidays.

Sick Days

Sick leave in Saudi Arabia is 90 days for every year, where the first 30 are paid in full and then reduced to 75% for the remaining 60. For the employee to use sick leave, they must be able to produce a medical certificate.  

Sick leave laws apply to employers with more than 20 employees.   

Maternity Leave

Maternity leave is 10 weeks and can begin no earlier than 4 weeks from the expected due date. If the woman has been employed for at least 1 year, maternity leave is paid at the rate of 50% of the regular pay. If the mother has been employed for at least 3 years, maternity leave is paid at the rate of 100% of the regular pay.  

A woman will not be paid for regular annual leave if maternity leave is taken within the same year that full pay for maternity leave is received and will only receive payment of 50% of annual leave pay when maternity leave is also at 50% of the regular pay.

PAID MATERNITY LEAVE (DAYS)
410
365
365
70
45
30
0
Bulgaria
Serbia
Albania
Saudi Arabia
United Arab Emirates
Tunisia
Federal
3 HIGHEST
3 LOWEST
Paternity Leave

Fathers are entitled to 2 days’ paid leave for the birth of a child.

Parental Leave

There are no provisions in the law regarding parental leave.  

Other Leave

Marriage leave – 3 days’ unpaid leave  

Death of a family member – 2 days’ paid leave  

Termination

Termination Process

In Saudi Arabia, a valid reason must be given upon termination, Otherwise, the employer may be either forced to pay compensation that is determined by the labor commission or can be forced to reinstate the employee.   

If the employee initiates the termination, final wages must be paid immediately.  

Notice Period

Notice period is 30 days for employees on monthly employment contracts and 15 days for other types of employment contracts.   

Severance Pay

The amount of severance pay varies based on length of employment and the manner in which the employment agreement ends.   

If the employer initiates the termination or an employee resigns due to marriage or childbirth, is called for military service, or resign due to force majeure, the employee is entitled to half a months’ salary for each year of employment up to 5 years and 1 months’ salary for every year after.  

If the employee resigns, they are entitled to one third of the above mentioned for 2-5 years of service and two thirds for every year up to 10 years.  After 10 years of service, the employee is entitled to the full benefit.  In order for the employee to be eligible, they must have given at least 30 days’ notice in writing.  

However, there are exceptions as to when severance is not mandatory:  

  • When the employer assaults their employer or supervisor  
  • When the obligations outlined in the employment contract are not fulfilled by the employee and has been warned in writing  
  • Negligence or intent to cause harm to the employer 
  • Dishonesty or forgery  
  • When the employee is on probation  
  • When the employee is absent from work for more than 20 days in a year or 10 consecutive days  
  • Divulging in trade secrets
Probation Period

90 days  

VAT

General

Standard rate of 5%.

Version History

April 18, 2021
The monthly minimum wage has increased from 3,000 to 4,000 SAR.

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    Questions & Answers

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    Peter
    Peter
    3 months ago

    If I am hiring in Saudi Arabia, are there laws about hiring local Saudi residents?

    Alex Margolin
    Admin
    3 months ago
    Reply to  Peter

    Under the Nitaqat program implemented by the Ministry of Labor, a certain percentage of the workforce must be composed of Saudi citizens. The number vary from industry to industry.

    In general, companies receive a rating as premium, green, yellow or red based on how many Saudi citizens they employ. Those that have higher ratings have better latitude in recruiting. Those with low ratings face the possibility of fines.

    Pciong Gutierrez
    Pciong Gutierrez
    2 months ago
    Reply to  Alex Margolin

    I’m 14yrs.now in my company how to compute my severance?

    Erez Greenberg
    Admin
    2 months ago

    Hi, this depends on the type of contract you have and the reason for ending your employment. However, it’s common that once the employment contract ends, the employee is entitled to severance payment that is equal to half of one month’s average wages for each of the first five years of employment, and equal to a full month’s wages for each year of work after the fifth year. (Individual cases vary based on employee contract and cause for terminations so please check regarding your specifics)

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