Private-sector employment in Saudi Arabia is governed by the Labor Law, overseen by the Ministry of Human Resources and Social Development (HRSD), with significant amendments in force since February 2025. There is no personal income tax, but GOSI social insurance applies. Here is what employers need to know about leave, pay and ending employment.
The Labor Law sets minimum paid leave for Saudi and expatriate employees alike. The 2025 amendments extended maternity leave and added leave for the death of a sibling.
21 days of paid leave a year, rising to 30 days after 5 consecutive years with the same employer.
With a medical certificate: the first 30 days at full pay, the next 60 days at three quarters pay, and the last 30 days unpaid.
Fully paid. The 6 weeks after childbirth are compulsory; the other 6 can be arranged from 4 weeks before the expected due date.
Fully paid leave on the birth of a child, taken within 7 days of the birth.
Set up each Saudi leave type in IceHrm with its own accrual, carry forward and approval rules, including the step up from 21 to 30 days after 5 years. Employees see their live balance before they apply, and managers see who is away on a shared calendar. Leave management →
There is no general statutory minimum wage in the private sector. In practice, Saudi employees need to earn at least SAR 4,000 a month to count fully towards Nitaqat Saudisation quotas, so check the current Nitaqat rules when setting pay for Saudi staff.
Per day and per week. During Ramadan, Muslim employees work a maximum of 6 hours a day and 36 hours a week.
Overtime is paid at the hourly wage plus 50% of the basic hourly wage.
Capture attendance and overtime in IceHrm and feed the hours straight into payroll, including shorter working days during Ramadan. Time & attendance →
Saudi Arabia does not tax employment income, for Saudi nationals or expatriates, so there is no income tax to withhold from salaries. The only statutory deduction from pay is the employee share of GOSI contributions for Saudi employees. Non-employment income of individuals, such as business income, may be taxed or subject to withholding tax under separate rules.
GOSI contributions are paid monthly on basic salary plus housing allowance (cash or in kind) and commissions, up to a monthly ceiling of SAR 45,000.
| Branch | Employer | Employee |
|---|---|---|
| Pension (annuities) – Saudi employees | 9% | 9% |
| Unemployment insurance (SANED) – Saudi employees | 0.75% | 0.75% |
| Occupational hazards – all employees | 2% | – |
| Total for a Saudi employee | 11.75% | 9.75% |
| Total for a non-Saudi employee | 2% | – |
Build Saudi pay the way you already structure it, with your own salary components, deductions and formula columns, such as housing allowance, GOSI and end-of-service accrual columns. Want to know how well IceHrm handles payroll calculations for Saudi Arabia? Contact us or see Payroll →
A fixed-term contract ends on its expiry date. An indefinite contract can be ended by either party for a legitimate reason with written notice. Termination without a legitimate reason entitles the other party to compensation, and the Labor Law lists specific cases where an employer may dismiss without notice or award, such as serious misconduct.
| Situation | Notice |
|---|---|
| Monthly-paid employee, termination by the employer | 60 days |
| Monthly-paid employee, termination by the employee | 30 days |
| Employee not paid monthly, either party | 30 days |
| Years of service | Award |
|---|---|
| First 5 years | Half a month’s wage per year |
| Each year after 5 years | One month’s wage per year |
An employee who resigns receives one third of the award after 2 to 5 years of service, two thirds after 5 to 10 years, and the full award after 10 years. Less than 2 years of service gives no award on resignation.
The private sector observes a small number of official holidays. The two Eid holidays follow the Islamic (Hijri) calendar, so their Gregorian dates move about 11 days earlier each year and are confirmed by HRSD announcements.
Employees are paid in full for public holidays. Work on a public holiday is treated as overtime.
Leave groups give each office its own holiday calendar, so you can add the Eid dates once they are announced and employees across Riyadh, Jeddah and Dammam see them automatically. Holiday calendars →
Employment contracts must be in writing, in Arabic (a bilingual version is common), and documented on the Qiwa platform. Contracts for non-Saudi employees are fixed-term and tied to a valid work permit.
A probation period must be stated explicitly in the contract and may not exceed 90 days. It can be extended by written agreement, but never beyond 180 days in total. Either party may end the contract during probation.
Send contracts for e-signing, store them with iqama and work permit details on the employee’s record, and track onboarding with task lists so registrations and probation reviews are not missed. Documents & e-signing →
This guide is general information to help you plan HR processes, not legal, tax or financial advice. Employment law and rates change regularly and awards, enterprise agreements and state rules may give employees more than the minimums shown here. Always confirm current requirements with the official sources or a qualified adviser.
Configure leave types, accrual rules and public holidays for Saudi Arabia, keep employee records and contracts in one place, and run payroll with your own salary components. Want to know how IceHrm handles payroll calculations for Saudi Arabia? Talk to us.
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