Saudi Labour Law Basics Every New Employer Must Know

Employers launching a business in Saudi Arabia face a clear set of steps to stay compliant with the country's labour rules. From registering the establishment to documenting contracts and paying salaries through approved channels, understanding the basics helps new companies avoid fines and protect both the business and its workforce.

The first step is to register the establishment with the Ministry of Human Resources and Social Development, activate the establishment file, and use قوى for labour services and employment contracts. Every private-sector contract should be documented through قوى, a service that is free of charge. A documented contract can also support direct wage enforcement through the Ministry of Justice's ناجز platform if wages go unpaid, subject to the applicable requirements.

Two dates matter for wage clauses. From 6 March 2026, the enforceable wage clause applies to renewed or extended fixed-term contracts, and from 6 August 2026 it applies to existing indefinite-term contracts. For salary payments, employers must use Mudad and approved banking channels under the Wage Protection System, submitting wage files and paying salaries within the required monthly deadlines.

Costs employers must cover

Employers must register eligible Saudi and non-Saudi staff with GOSI and pay the applicable employer contributions, which vary by nationality, wage, and coverage. Employers also bear recruitment costs for non-Saudi workers, plus Iqama and work-permit issuance and renewal fees, delay fines, profession-change fees, exit and re-entry visa fees, and the worker's return ticket after employment ends.

Work-permit fees vary by workforce composition and expatriate-to-Saudi ratio. Common annual amounts are SAR 700 or SAR 800, while qualifying small establishments may be exempt or pay SAR 100. Employers should also maintain valid commercial, municipal, and activity licences via Balady, use مقيم and Absher Business for residence and visa services, and rely on نفاذ for identity verification. Under Nitaqat, a Saudi employee may count for up to five contracts during the preceding 52 weeks.

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