Saudi Labour Law: What New Employers Must Know

New employers in Saudi Arabia face a set of core obligations under the Saudi Labor Law, starting with documenting every employment contract for Saudi and non-Saudi workers electronically on قوى before the employee's first working day.

A unified employment contract template on قوى — including a wage breakdown and an enforceable ناجز execution number — is being phased in. It is mandatory for all new and amended contracts from 6 October 2025, for fixed-term contracts on renewal or extension from 6 March 2026, and for all indefinite contracts from 6 August 2026. Undocumented or non-قوى contracts are treated as non-compliant for labor compliance indicators and نطاقات Saudization calculations.

Wages, insurance and social security

Employers must register all staff with the General Organization for Social Insurance (GOSI) and pay monthly contributions on the declared contributory wage. In 2026, the employer contribution for Saudis first registered before 3 July 2024 is 11.75%, while Saudis registered on or after that date carry a 12.75% employer rate from July 2026, with scheduled annual increases under the reformed system.

A key rule is that three wages must match for each employee: the wage in the قوى contract, the contributory wage declared to GOSI, and the net wage transferred and reported through مدد under Wage Protection. Employers must enroll in مدد, submit payroll data regularly, and pay salaries by bank transfer on the due date under the Wage Protection System. Discrepancies can trigger penalties.

Employers must also maintain نطاقات (Saudization) compliance, notify the competent labor office at commencement of business, and provide CCHI-compliant health insurance before issuing the Iqama and throughout employment. نطاقات status directly affects access to many ministry services and work permits, making early compliance essential for any business hiring in the Kingdom.

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