Saudi Labour Law Basics Every New Employer Should Know

Starting a business in Saudi Arabia comes with clear legal steps for anyone employing staff. New employers must register their establishment with the Ministry of Human Resources and Social Development, obtain a Commercial Registration, and open their establishment file through قوى before hiring their first worker.

Every private establishment with at least one employee must also register with the General Organization for Social Insurance (GOSI), a step that is free of charge. Employers then set up accounts on قوى, GOSI, مقيم, and the relevant Ministry of Interior services to manage staff records and government transactions.

Contracts and Saudization

All employment contracts must be registered and electronically authenticated through قوى. From August 2026, قوى-authenticated contracts will serve as enforceable instruments for salary claims. Employers must also comply with their establishment's Nitaqat Saudization band, which affects eligibility for foreign-worker services and work-permit charges.

For Saudi employees, the commonly stated employer GOSI contribution is 9.75%, depending on the applicable insurance branches and salary rules. For non-Saudi employees, employers register them for occupational-hazard coverage at a contribution of generally 2%.

Costs for expatriate workers

Employers bear recruitment costs, work-permit and Iqama issuance and renewal fees, profession-change fees, and delay penalties for non-Saudi workers. The base work-permit fee is SAR 100 while the commonly stated annual Iqama fee is SAR 650 excluding other charges. The expatriate labour levy is generally SAR 700 and SAR 800 when they do.

Government charges are paid electronically through قوى, مقيم, SADAD, or connected banking channels. Before lawful employment, employers must complete the worker's medical insurance, medical examination, visa, work permit, and Iqama procedures. Throughout employment, staff are entitled to statutory rights covering working hours, rest days, leave, wage payment, termination, and end-of-service benefits under Saudi labour law.

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