RemotePad Logo

What is an Employer of Record

How to hire globally with an EOR

What is a Global PEO

An alternative to EOR

What is a PEO

Hire locally with a PEO

Our Methodology

Why you can trust our guides

Hire Globally

Find international talents

Outsource Recruitment

How to outsource recruitment

Work Visas

How to get a work visa

Digital Nomad Visas

Get a digital nomad visa

Best Employer of Record (EOR)

Hire globally with the best EOR companies

Best Contractor Management

Hire and pay contractors and freelancers

Best Global PEO

Discover the best international co-employers

Best PEO Companies

Save on payroll and HR costs

Best Background Check Companies

Screen employees before hire

Best Global Payroll Providers

Outsource international payroll

Best Relocation Services

Relocate employees internationally

International Company Registration

Get help to incorporate overseas

All Reviews

Compare all providers

1. Horizons

Best Global EOR

2. Remote

Best EOR for Compliance

3. Deel

Best EOR Platform

4. Papaya Global

Best EOR for Payments

All EOR Reviews

Compare all providers

Where do you need a service provider?

All Countries

Explore our detailed guides for professional advice on international growth, recruitment, compensations strategies, and a curated list of top service providers.

Saudi Arabia PEO (Saudi Arabia Professional Employer Organization)

VERDICT: The best Saudi Arabia PEO in 2024 is Horizons. Horizons stands apart from other Saudi Arabia PEOs with its strong talent networks, and record of expertise in Saudi Arabia HR and payroll. 

Key Takeaways

  • A Saudi Arabia Professional Employer Organization (PEO) is the co-employer of your Saudi Arabia workforce. They take over compliance, while you remain the operational employer. 
  • They allow companies to enter the Saudi market more swiftly and with less overhead.
  • The top 5 Saudi Arabia PEOs in 2024 are Horizons, Connect Resources, Kinza HR, Staff Arabia and Deel

A Saudi Arabia Professional Employer Organization (PEO) is your trusted co-employer in the Kingdom of Saudi Arabia. They will ensure compliance with the often complex labor laws of Saudi Arabia, enabling you to focus on core business. 

As Saudi Arabia continues to attract global business through initiatives like Vision 2030, PEO services become invaluable for companies entering this vibrant market.

In this guide, we explain the benefits of a Saudi PEO solution, the specific services that they provide, and evaluate the top 5 PEOs in Saudi Arabia for 2024. 

What Is a Saudi Arabia PEO Service?

Professional Employer Organizations (PEOs) in Saudi Arabia provide comprehensive HR solutions for companies looking to expand into the Saudi market without setting up a local entity. These PEOs operate under a co-employment model, where they legally hire and handle the administrative aspects of employment on behalf of the client company.

Key Services Offered by PEOs in Saudi Arabia:

  1. HR Management: They oversee HR tasks, such as recruitment support, drafting employment contracts, and managing onboarding procedures.
  2. Payroll Administration: PEOs manage employee payroll with a clear understanding of the local tax laws and regulations.
  3. Compliance and Risk Management: They ensure that companies stay compliant with Saudi labor laws, reducing legal exposure.
  4. Benefits Administration: These organizations administer employee benefits, ensuring competitiveness in the local market.

The Top 5 Saudi Arabia PEO Companies in 2024

  1. Horizons: Known for its comprehensive hiring and HR solutions, Horizons is the ideal co-employer for your local Saudi workforce. The added benefit of working with Horizons is that their SaaS platform supports hiring in virtually any location — they can hire and pay your employees in 180+ countries. This means one hiring partner for all your international employees. 
  2. Connect Resources: With a depth of experience in both Saudi Arabia hiring and throughout the Middle East, Connect Resources is one of the leading PEOs operating in Saudi Arabia and throughout the Gulf region. 
  3. Kinza HR: Specializing in Saudi Arabia and Middle East HR and payroll services, Kinza HR will ensure full compliance with local labor laws both in Saudi Arabia and throughout the region. 
  4. Staff ArabiaStaff Arabia offers a wide range of HR and payroll solutions, in Saudi Arabia and throughout the Middle East and North Africa. Their solutions include PEO, payroll outsourcing, office space management, visa support, staffing and recruitment. For companies looking for a full Saudi Arabia staffing solution, Staff Arabia is a good pick.  
  5. Deel: A global PEO platform that integrates with all the leading HR and payment apps, Deel is an excellent solution for businesses seeking to integrate Saudi Arabia PEO with the rest of their tech stack. 

Legal Framework Governing PEOs in Saudi Arabia

In Saudi Arabia, the legal framework for Professional Employer Organizations (PEOs) is influenced by a comprehensive set of labor laws, taxation regulations, and business registration requirements that ensure compliance and governance.

Labor Laws

PEOs in Saudi Arabia must adhere to the local labor laws which dictate the terms of employment, employee rights, and co-employer responsibilities. They must comply with regulations regarding wages, working hours, and benefits, ensuring fair treatment for all employees.

Key Labor Law Requirements include:

  • Employment Contracts: Compliance with Article 51 of the Labor Law requires that all employees are provided with a written employment contract. 
  • End of Service Award: According to Article 84 of the same law, an employee is entitled to an end-of-service award at the end of the contract.

For more specific information regarding labor law compliance in PEO agreements, one should refer to the services providing local labor law compliance.

1. Taxation Regulations

PEOs must navigate the taxation landscape which encompasses corporate tax, payroll tax, and VAT. These organizations are responsible for withholding and remitting the correct amounts to the Saudi tax authorities on behalf of their clients and the employees.

Notable Tax Rates:

  • Corporate income tax: generally a flat rate of 20% on non-Saudi entities.
  • VAT: A standard rate of 15% applies to most goods and services.

2. Business Registration Requirements

Business registration is paramount for PEOs operating in Saudi Arabia. They must secure the correct licenses and adhere to the stringent regulatory requirements set out by the Saudi government, including adherence to the new Companies Law issued by Royal Decree No. (M/132) dated July 22, 2022.

Essential Registration Steps:

  1. Securing a Commercial Registration (CR) from the Ministry of Commerce.
  2. Enrolling with social insurance through the General Organization for Social Insurance (GOSI).

Benefits of Using a PEO in Saudi Arabia

Using a PEO service in Saudi Arabia offers tangible benefits to businesses looking to expand or establish their presence in the region. These organizations manage HR tasks, ensuring legal compliance, and offering cost-effective solutions.

1. Ease of Market Entry

PEOs facilitate smoother entry into the Saudi market by handling complex administrative tasks. They provide support with employment contracts, visa applications, and onboarding processes. This partnership allows businesses to set up operations swiftly without the need for a local entity.

2. Compliance and Risk Management

PEOs in Saudi Arabia are adept at navigating the intricate legal landscape. They ensure businesses adhere to local labor laws, immigration policies, and employment regulations. Companies benefit from this expertise by minimizing potential legal risks.

3. Cost Savings

Outsourcing HR functions to a PEO can lead to significant reductions in overhead costs. Companies save on establishing in-house HR departments and mitigate the risk of non-compliance fines. PEOs often offer economies of scale on benefits, making them more affordable for small and medium-sized enterprises.

Challenges Faced by PEOs in Saudi Arabia

Professional Employer Organizations in Saudi Arabia navigate through a unique set of challenges that are deeply rooted in cultural expectations and a dynamic regulatory framework.

1. Cultural Nuances

Underestimating the impact of cultural nuances is a significant challenge for PEOs in Saudi Arabia. Business practices and employment customs are deeply intertwined with local culture, which includes a high context communication style and a strong emphasis on forming personal relationships. PEOs must tailor their approach to HR solutions, recognizing the importance of Islamic holidays, local norms, and social practices to operate successfully.

2. Changing Legal Landscape

The legal landscape in Saudi Arabia is evolving, especially with initiatives like Vision 2030 spurring economic transformation. PEOs must stay informed and agile to navigate the ever-changing employment laws, visa regulations, and compliance requirements. With the introduction of new labor laws and taxation rules, PEOs are tasked with continuous legal monitoring and swift adaptation to ensure that the businesses they represent remain compliant.

Key Considerations When Selecting a PEO in Saudi Arabia

When choosing a PEO in Saudi Arabia, businesses must evaluate certain critical factors to ensure the partnership aligns with their operational needs and complies with local regulations.

1. Local Expertise

Local knowledge: Working with a PEO that has deep understanding of Saudi Arabia’s legal and cultural environment is essential for compliance with local labor laws, such as those pertaining to sick leave entitlements. It is crucial that the PEO can navigate the nuances of Saudi employment regulations to avoid costly legal pitfalls.

Established presence: A PEO should have an established presence in the Saudi market, which signals that they have a track record of successful co-employment arrangements and can provide insights into the local business landscape.

2. Industry Specialization

Sector experience: Businesses should seek out a PEO with experience specific to their industry. This specialization means the PEO will be more likely to understand the particular challenges and needs of the business, from regulatory compliance to talent acquisition.

Tailored solutions: The PEO should offer services tailored to the client’s industry, ensuring efficient management of HR functions that are unique to the sector, such as specialized recruitment or compliance with industry-specific labor laws.

3. Service Offerings

Comprehensive services: A PEO should provide a full suite of HR services to manage tasks ranging from payroll administration to benefits management and more. A wide-ranging service offering can more effectively support a company’s diverse HR needs.

Flexibility and scalability: The PEO must demonstrate the ability to adapt its services to the evolving requirements of the business. As the business grows or changes, the PEO should be able to adjust its services accordingly, providing a scalable solution that can accommodate the business at every stage of development.

Choosing Your Saudi Arabia PEO — Our Take

When an international company works with a Saudi Arabia PEO they save significant on the cost of hiring, and ensure full compliance with Saudi Arabia labor laws. To get the most benefit from a PEO, it is important that you choose the provider which offers the exact solutions you need. Our picks for 2024 are Horizons, Connect, Kinza HR, Staff Arabia and Deel

Saudi Arabia and Middle East Business Guides

FAQ

While the HR solutions are similar, staffing agencies typically do not take on the co-employment role and may not handle payroll or compliance in the same comprehensive manner as a Saudi Arabia PEO. Note, many companies provide both PEO and staffing solutions. 

Yes, it is possible to transition from a PEO to your own legal entity in Saudi Arabia. This is suitable where you are engaging in activities (such as local legal contracts) that require a local subsidiary. 

Travis is a global business development advisor. He has spent the last 14 years supporting business establishment and development in North America, Southeast Asia, and throughout the world. With multiple degrees from the University of Oregon, Travis currently splits his time between the US, and Bali, Indonesia. At RemotePad, Travis writes about remote work, hiring internationally and PEO/EOR business models.

Search

Search