Hiring Talent And Managing Payroll In Saudi Arabia

Agreements

• Indefinite or open-term agreement: The indefinite agreement is offered to Arabic nationals only. Foreign employees are not hired under this agreement. It must be written in Arabic.
• Fixed-term agreement: A foreign employee is hired exclusively under a fixed-term agreement. It can be renewed only three times. The agreement is considered indefinite if it is renewed after the third time. Also, if the employee continues to work after the expiration of the contract, it will be considered indefinite.
• Temporary employment agreement: Contracts for services that are required for a short period are made under this. This employment may be available on a daily or weekly basis. However, the term of the employment must not be more than 90 days.

Onboarding Process

• A job description is prepared by the HR teams. They collaborate with the unit that has a job vacancy.
• The description is then uploaded on the official website of the company along with other platforms like LinkedIn.
• Some companies may even publish job vacancies in local newspapers. The advertisement can remain for a couple of days to a week.
• Candidates apply for the job by proving their eligibility. They are further shortlisted based on rounds of screenings and interviews.
• Final shortlisted candidates then negotiate their terms and conditions with the employer. After the mutual agreement, the candidate is hired as an employee.

Minimum Wage

Payroll Cycle

Annual Bonus

Health Benefits

• Health benefits in Saudi Arabia are provided by the state government and employers.
• Arabian nationals get health benefits from the government, while employers provide health benefits from foreign employees and private sectors.

Working Hours and Overtime

• Work hours: The standard work hours in Saudi Arabia are 8 hours per day and 48 hours per week. During the month of Ramzaan, Muslim employees are allowed to work only 6 hours per day.
• Break: An employee is entitled to take 30 minutes of break during continuous work hours. Friday is considered a break day in Saudi Arabia.
• Overtime: An employee must not work overtime exceeding 3 hours per day. The employer has to pay 150% of the regular salary for overtime. Female employees are prohibited to work evening shifts.

Social Security

Taxes for Employees

Termination

• Voluntary resignation by the employee
• On the expiration of the contract
• The inability of the employee to perform
• Dismissal on grounds of wrongful conduct like theft, etc.
• The employee must get a notice period of 30 days before the termination.

Severance Pay

• An employee is entitled to get severance pay depending on the tenure with the same employer. On termination, the employee gets 15 days' salary for the first 5 years. After 5 years of tenure, the employee gets 1 month's salary for each year.
• Upon resignation, after 2 years the employee gets:

  • 2 to 5 years -1/3rd of the monthly pay
  • 5 to 10 years -2/3rd of the monthly pay
  • More than 10 years -One month's pay

Employees or Contractors

• The company pays a duty of payment of overhead surcharges if found guilty of misclassification of any employee.
• The company has to pay all the related interests and sanctions on the behalf of a misclassified employee.

Final Words