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How Much Does It Cost to Hire an Employee in Saudi Arabia?

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Hiring international employees can be an attractive option for growing companies. Countries like Saudi Arabia offer a diverse, skilled talent pool to boost business competitiveness.  

While salaries are important, there are many other costs to keep in mind when it comes to global hiring. For example, employers are typically required to make mandatory social security contributions. They may also provide staff with additional benefits like healthcare when competing for top talent. 

This article will walk you through the various fixed and variable costs of hiring in Saudi Arabia. 

Costs to Consider When Hiring Around the World

Basic hiring costs in Saudi Arabia include: 

  • Employee’s gross annual salary 
  • Taxes and benefits
  • Vacation pay and other leaves 
  • Overtime pay 
  • Severance pay 

Plus, you may want to add certain optional costs like benefits, bonuses, and extras. 

Mandatory Costs of Hiring in Saudi Arabia 


The Kingdom of Saudi Arabia has set out ambitious plans to advance its digital economy through Vision 2030 and investment in Artificial Intelligence (AI). This is putting the country on the map not only as the largest economy in its region but also as a high-skilled and attractive talent pool.  

The current minimum wage in Saudi Arabia is SAR 4,000 per month (about USD 1,066). However, average salaries for skilled professionals are significantly higher. For example, an IT hire may earn about triple or more than the minimum wage

Mandatory taxes and benefits 

Payroll costs in Saudi Arabia add up to 12% of the employee's gross salary. These include: 

  • ‍9%: Social Insurance 
  • 2%: Occupational Hazard
  • 1%: Unemployment Insurance

Note that for non-Saudi employees, employers only pay the 2% occupational hazard insurance. This is calculated on top of the gross salary and housing allowance. 

Employers and employees both make social security contributions. There is no personal income tax in Saudi Arabia. So, employers must also withhold: 

  • 9%: Social Insurance 
  • 1%: Unemployment Insurance 

Mandatory bonuses  

There are no mandatory bonuses in Saudi Arabia. However, it is customary for employers to offer performance-based and end-of-year bonuses. 

Paid leave

There are several types of paid leave entitlements in Saudi Arabia

  • Public holidays: There are nine public holidays in Saudi Arabia. 
  • Paid vacation days: Full-time employees with tenure below five years are entitled to 21 days of paid annual leave. After five years, this number goes up to 30 days. 
  • Sick leave: Saudi Arabian employees can take up to three months of sick leave per year. The first 30 days are paid in full. The following 30 days are paid at 75% of their regular wages. And the last 30 days are unpaid. All these costs are borne by the employer.    
  • Parental leave: New mothers are entitled to paid maternity leave for four weeks prior to and six weeks after the birth of their child. If the woman has worked for the employer for less than three years, she will receive half her pay. For tenures of three years and more, she will be paid in full. Fathers can take one day of paternity leave. 
  • Other leaves: Employees are also entitled to religious, bereavement, marriage, examination, and other leaves. 

Overtime pay 

Standard working hours in Saudi Arabia are eight hours a day for up to 48 hours per week. During Ramadan, the standard working hours are six hours per day and 36 hours per week. Fridays are considered a holiday and the workweek is from Sunday to Monday. 

Overtime is paid at 150% of the employee’s standard rate. Working hours shouldn’t exceed a total of 11 hours per day. Any hours over 48 hours per week are considered overtime and shall be compensated ‌accordingly. 

Severance pay 

Most employees in Saudi Arabia are entitled to an end-of-service benefit. Exceptions apply to certain types of contracts and reasons for termination. However, the general calculation for terminated indefinite contracts is: 

  • Half a month’s salary per year of service for the first five years of tenure 
  • A full month’s salary per year from five years onward  

If the employee resigns, they may still be eligible to receive the end-of-service benefit. The calculation varies depending on the length of service and contract completion. 

Additional Costs of Hiring Saudi Arabian Talent 

Today’s talent market is extremely competitive. To hire top Saudi Arabian talent, employers may also want to offer a benefits package, which can help both search and retention. Here are some benefits you might consider offering Saudi Arabian employees, along with other possible costs. 


Offering the right benefits package can help you stand out from the competition. In Saudi Arabia, many employers offer benefits like private health insurance, extended retirement plans, training funds, flexible work arrangements, gym memberships, accommodation stipends, and more. 

Note that the public healthcare system only covers Saudi nationals. If you hire workers in Saudi Arabia who are not Saudi nationals, you must provide private health insurance. 

Bonuses and extras 

Finally, you’ll want to consider smaller expenses like gifts for special occasions, compensated meals or coffees for meetings, etc. 

Additionally, you may want to pay for a coworking space or provide funding to set up a home office for an employee or two. Daily rates for coworking spaces in Saudi Arabia start at about USD 20. 

It could be wise to rent an office space to facilitate collaboration among your staff in Saudi Arabia if you intend to hire an entire team. 

Average Cost of Hiring One Employee in Saudi Arabia (Annual in USD)

Below is an estimate based on a salary of $100,000 for an employee in Saudi Arabia. This salary is for ease of calculation only. It will change as per your hiring goals including the employment contract, the candidate’s experience, and the type of position. 

  • Salary: $100,000
  • Employer Taxes: $12,000
  • 9%: Social Insurance 
  • 2%: Occupational Hazard
  • 1%: Unemployment Insurance 
  • TOTAL: $112,000 + Benefits (discretionary) 

Note that these totals do not include other standard costs like optional benefits commonly offered in Saudi Arabia.

A Global EOR Can Help You Manage International Payroll 

With so many costs to consider, it may feel overwhelming to start hiring globally. An Employer of Record (EOR) can help. An EOR like Borderless can help you compliantly hire and pay employees in Saudi Arabia.

If you’d like to begin global hiring but aren’t sure where to start, book a demo with Borderless. We’ll walk you through every step so that you can reap all the benefits without the added headaches. 


Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.

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