Saudi Arabia HR Glossary

Non-compliant employers are escalated through a graduated response: warning (first month's delay), suspension of new work permit services (second month), and referral to the Labour Court (third month). Companies with 100+ employees face enhanced WPS monitoring. The WPS covers all Saudi and expatriate employees in the private sector. HRSD inspectors can conduct unannounced audits.

The Labour Law covers all private-sector employees in Saudi Arabia, including expatriates (non-Saudis), but excludes domestic workers (covered by a separate regulation). It mandates maximum working hours (8/day, 48/week; 6/day, 36/week during Ramadan for Muslim employees), annual leave (21 days rising to 30 after 5 years), sick leave (with graduated pay), and procedural requirements for disciplinary action and termination. The law is enforced by HRSD labour inspectors.

Saudi employees contribute 10% of their salary to GOSI (9% retirement, 1% occupational hazards) while employers contribute 12% (9% retirement, 2% occupational hazards, 1% annuity); expatriate employees are covered only for occupational hazards at 2% (employer only). Contributions are calculated on the combined basic wage and housing allowance. GOSI contributions must be remitted by the 15th of each month. Non-payment incurs a 2% monthly penalty.

Employers are legally responsible for ensuring all expatriate employees hold a valid Iqama; employing someone with an expired Iqama is a violation that can result in fines, deportation of the worker, and suspension of the employer's right to issue new visas. Iqama renewals require a valid employment contract registered with HRSD and proof of GOSI and WPS compliance. The Iqama number is used across all government transactions.

Companies are categorised into Platinum, Green, Yellow, or Red zones based on their Saudization ratio. Red-zone companies are restricted from obtaining new work visas and may face additional penalties. Yellow-zone companies are at risk if their ratio drops. The Nitaqat platform calculates each company's zone in real time. Exempt occupations (e.g., some technical roles) do not count toward or against the Saudi headcount.

The end-of-service award is calculated at 1/3 of a month's wage for each of the first 5 years, and 2/3 of a month's wage for each year beyond 5 years (rising to a full month's wage after 10 years if terminated by the employer). Employees who resign after more than 2 years receive a proportionate fraction depending on years served. The award is based on the last wage (basic + specific allowances). Non-payment is a labour violation enforceable through HRSD courts.

Employers interact with HRSD primarily through the Qiwa platform for work permit applications and renewals, Mudad for WPS payroll reporting, and Nitaqat tracking. HRSD labour inspectors conduct workplace inspections and respond to employee wage complaints. All employment contracts must be registered with HRSD via Qiwa before expatriate workers can obtain their Iqama.

Annual leave pay must be paid before the employee takes their leave, calculated on the employee's basic wage plus regular allowances. Leave can be split by agreement, but employers cannot defer leave for more than two years. If an employment relationship ends before leave is taken, the employer must pay an equivalent cash value. Saudi nationals generally also take additional leave during national holidays and religious occasions.