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Employer of Record (EOR) in Saudi Arabia

Key Takeaways

  • A Saudi Arabia Employer of Record (EOR) helps international companies to hire employees in Saudi Arabia.
  • A Saudi Arabia EOR becomes the legal employer for your team in Saudi Arabia, ensuring full compliance with local labor laws, and leaving you to focus on core business. . 
  • The top Saudi Arabia EOR companies are Connect Resources, Horizons, Kinza HR, Staff Arabia and Deel

A Saudi Arabia Employer of Record (EOR) company helps foreign companies hire in Saudi Arabia, without having to set up a local entity.

By working with a Saudi EOR provider, international businesses ensure a compliant Saudi Arabia payroll, and save up to 80 percent of the cost of hiring in Saudi Arabia. The best Saudi Arabia EORs will also be able to provide employees with additional premium benefits such as private health insurance and extra leave. 

Whether attracted by the strength of the Saudi economy, or the high quality of local talent, an EOR company will be able to support your business to hire in the Kingdom of Saudi Arabia. 

What is a Saudi Arabia Employer of Record?

An Employer of Record (EOR) in Saudi Arabia is a third-party organization that takes on the role as the legal employer in Saudi Arabia. The EOR becomes the employer for compliance, tax, and local labor law purposes, while the employees still operate under the guidance and direction of the client company (the ‘operational employer). 

A Saudi EOR is similar to a Saudi Arabia Professional Employer Organization (PEO), and often the two terms are used interchangeably. 

Connect Resources on the Benefits of EOR

How does a Saudi Arabia Employer of Record work?

A Saudi Arabia EOR provides a comprehensive solution for businesses looking to operate in the country:

  1. Recruitment and Onboarding: The EOR can assist in sourcing, interviewing, and hiring new employees based on the company’s requirements.
  2. Payroll Management: The EOR company ensures timely salary disbursement, handles tax deductions, and manages other payroll-related tasks.
  3. Compliance and Legalities: The EOR stays up-to-date with changing labor laws and ensures the company remains compliant. Companies that hire in Saudi Arabia and commit labor law violations can be subject to significant penalties
  4. Benefits Administration: An EOR provides employees with a range of benefits. This includes mandatory benefits that meet the statutory minimum under social insurance law, such as occupational hazards insurance. But may also include additional benefits such as supplementary health insurance.  
  5. Contract Management:  The EOR can handle employment contracts, ensuring they align with Saudi Arabian labor laws (read more about this in detail below).
  6. Visa support. The EOR can help you to get visas that apply throughout the Gulf region (i.e., Gulf Cooperation Council countries). 

Saudi Arabian Labor Law

Arguably the most important part of a Saudi Arabia EOR’s role is ensuring all employment is in full compliance with Saudi Arabia labor laws. Some key areas where an EOR will ensure regulatory compliance include: 

  1. Employment contracts. EORs usually provide draft employment contracts. These will specify any probationary periods, regular working hours, appropriate salary, and overtime pay. Note, the contract may specify different rules for Muslim employees and non-Muslims. For example, Muslim employees in Saudi Arabia are entitled to reduced working hours during Ramadan
  2. Paid leave. This includes public holidays, annual leave (21-35 days depending on tenure), and paid sick leave. Note, Saudi law requires that employees provide a valid medical certificate to be eligible for sick leave. 
  3. Minimum wage laws. The Saudi EOR will ensure that all employment complies with minimum wage laws. 
  4. Expat worker laws. In Saudi Arabia, different rules apply to Saudi employees and expatriate employees/foreign national employees. The EOR will ensure that only the correct rules are applied. 
  5. Maternity and Paternity Leave. In Saudi Arabia, mothers are entitled to ten weeks of paid maternity leave, while men are entitled to three days

Note all labor laws are strictly enforced by the Saudi Ministry of Labor and Social Development

How to engage a Saudi Arabia Employer of Record

To utilize the services of an EOR, we suggest:

  1. Research: Begin by conducting thorough research to understand which EOR aligns with your business needs. A good place to start would be with the five leading Saudi Arabia EOR companies listed below. 
  2. Consultation: Engage in discussions with potential EORs to understand their processes, costs, and expertise.
  3. Service Agreement: Once satisfied, sign a service agreement outlining roles, responsibilities, and terms of service.
  4. Transition: The EOR will then facilitate the hiring or transition of employees, managing administrative tasks.

What are the benefits of a Saudi Arabia Employer of Record?

Potential benefits of a Saudi Arabia EOR solution include:

  1. Streamlined Entry: Accessing the Saudi Arabian market quickly without the need for a formal business entity.
  2. Cost Efficiency: Save on setup costs, ongoing administrative expenses, and potential compliance penalties.
  3. Local Expertise: Benefit from the EOR’s understanding of the local market, cultural nuances, and labor laws.
  4. Flexibility: Easily scale operations up or down without dealing with complex legal procedures.

What are the disadvantages of a Saudi Arabia Employer of Record?

Potential downsides of a Saudi Arabia EOR solution include:

  1. Limited Control: While operational control remains, there’s a dependence on the EOR for HR functions.
  2. Service Fees: EORs charge for their services, which may increase operational costs.
  3. Cultural Misalignments: Potential misalignment between the company’s culture and the EOR’s practices.

Top 5 Saudi Arabia Employers of Record

  1. Connect Resources: With rich experience throughout the Middle East, and customized HR and EOR services to meet your hiring needs Connect Resources is the No. 1 Saudi Arabia Employer of Record. Read more in our 2024 review of Connect Resources
  2. Horizons: Known for its comprehensive hiring and HR solutions, Horizons has the expertise in Saudi Arabia compliance to ensure that your employee hiring goes without a hitch. The added benefit of working with Horizons in Saudi Arabia is that they are a truly global PEO/EOR Companythey can hire and pay your employees in 180+ countries.
  3. Kinza HR: Specializing in Middle East HR services, Kinza HR ensure compliance and efficient solutions for foreign businesses in Saudi Arabia and throughout the region. 
  4. Staff Arabia: Staff Arabia offers a wide range of international HR and recruitment solutions, in Saudi Arabia and throughout the Middle East and North Africa. Their solutions include Saudi Arabia EOR, payroll outsourcing, office space management, global mobility, staffing and recruitment. For a complete Saudi Arabia staffing solution, Staff Arabia is an excellent choice. 
  5. Deel: A modern, tech-driven EOR emphasizing transparent solutions for businesses, Deel is an excellent solution for businesses looking to hire in other countries as well as Saudi Arabia. 

Saudi Arabia Employer of Record — choose wisely

Employers of Record offer a convenient gateway into the Saudi Arabian market. By handling the intricacies of employment, compliance, and administration, they allow companies to focus on core business objectives.

It’s imperative to choose the right EOR partner that aligns with your company’s goals, values, and market aspirations. In 2024, leading EOR partners include Connect, Horizons, Kinza, Staff Arabia and Deel. 

Saudi Arabia and Middle East Business Guides

FAQs

While the HR solutions are similar, staffing agencies typically do not take on the legal employer role and may not handle payroll or compliance in the same comprehensive manner as a Saudi Arabia EOR. The choice between an EOR and a staffing agency depends on your requirements for long-term employment management versus short-term staffing solutions.

Yes, it is possible to transition from an EOR arrangement to establishing your own legal entity in Saudi Arabia. This may be desirable where your company has grown to such an extent that it needs its own subsidiary. 

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