By Innovation-sa on April 27, 2022 in Blog
The Kingdom of Saudi Arabia is well-known for its fascinating culture, history, and windswept deserts. It is definitely on many travelers’ bucket list of destinations. The country has a huge workforce, reduced employer taxes, and an economy that is powered by petroleum. It is also a prospect for business expansion internationally.
The law in Saudi maintains a strong protection for their workers. Therefore, having knowledge of their regulations is important if you’re looking forward to building a team. In this guide, we have put together a few important tips to help you hire in KSA. You can also collaborate with the best payroll company in Saudi Arabia to help you with the payroll.
Things to Know About Hiring in KSA
If you’re looking at hiring in KSA, there are a few factors that you must consider and nuances off topic that you need to understand. They include leave policies, working hours, termination requirements, along with other crucial factors of employment.
KSU is a country that has a population of over 34 million people. Over 10 million international employees are hired. Many employees move from one country to another, like the Philippines, Pakistan, Yemen, Bangladesh, Egypt, and India, seeking employment. Sometimes they also compete with Saudi citizens for employment.
Businesses expanding to KSA should consider their national program, Nitaqat. Companies that hire Saudi citizens instead of international workers receive incentives from this program. Getting international workers to join the company on a work visa is challenging. Furthermore, the Saudi law requires industries to hire only Saudi citizens. When these companies hire Saudi citizens, they receive certain incentives.
The law for Saudi employment requires companies to have an official contract with every employee. Contracts can vary from unlimited to fixed term, specifying terms that include benefits, compensation, position, and termination requirements.
Companies must adhere to strict severance and termination rules when they plan on parting ways with an employee. The employment law has a probation period of 90 days that can be extended for an additional 90 days with the agreement of both parties.
Taxes and Payroll
KSA has certain social security schemes for its citizens, and every firm must participate in them. The social insurance tax must be paid by the companies to GOSI (the general organization for social insurance). The contribution in general is 10% of every employee’s overall compensation. This includes commissions, allowances, and base salary.
Working Hours and Wages
The standard working hours for a week in KSA are between 40 and 48 hours, or 5-6 days of work a week for 8 hours. Employees have the opportunity to earn overtime that is 150% of their salaries if they work beyond 40 hours. If an employee needs to work on a public holiday or a Friday, it will be counted as overtime. During Ramadan, the working hours are reduced to 26 hours for all Muslim workers.
In KSA, compensation has 2 important components that include: 1) Base Salary 2) Travel and lodging expenses.
Hiring employees in KSA can be time-consuming and extremely complex. This is particularly true if your firm plans to set up a subsidiary. You can also choose to collaborate with HR consultancy services in Saudi Arabia. The tips in this guide will help you enhance your new endeavors.