Top Compliance Considerations for Foreign Employers Hiring in Saudi Arabia

This article outlines the key compliance considerations in hiring and provides an overview of the recent labor law updates.

For global companies, hiring foreign staff in Saudi Arabia is a multi-faceted process. Business owners need to be apprised of the different aspects of employee onboarding, which are a vital part of their expansion and go-to-market strategy.

Foreign Employee Onboarding Compliance Checklist

Documentation and Pre-Onboarding Requirements

In the initial phase of the onboarding process, companies must maintain active commercial registration certificates (CR) and registrations across numerous government platforms. These include Muqeem, Qiwa, and Muddad.

With that in mind, businesses need to keep track of the renewal dates of essential documents such as the CR to avoid interruptions to their hiring process.

Additionally, ensuring the correct Saudization ratio is a continuous compliance requirement that directly impacts a company's ability to hire new employees.

Visa and Authorization

This phase involves addressing the demands of several governmental portals involved with visa authorization and processing.

To clarify, here are the steps you need to take to authorize visas for prospective foreign employees.

• Contract attestation through multiple government entities
• Visa agency delegation through the Ministry of Foreign Affairs portal
• Work permit acquisition through Qiwa
• Visa quota management and authorizations

Markedly, lack of proper engagement or delayed registrations can trickle down to multiple areas of the entire onboarding process, resulting in significant inefficiencies.

Employee Documentation Verification

Afterward, employers must verify the following information about their candidates:

• Passport validity and details
• Medical test results from the country of departure
• Police clearance documentation
• Educational and professional certificates with proper attestation

Notably, collecting and verifying the proper required data is an essential compliance matter, and failure to do so results in penalties of up to $27,000 per worker.

Post-Arrival Essential Procedures

Once an employee arrives in Saudi Arabia, important steps to take are:

• Coordinating medical examinations within the Kingdom
• Ensuring proper health insurance issuance under the border number
• Confirming insurance registration in the Council of Cooperative Health Insurance (CCHI) system
• Linking insurance to their Iqama

Contract and Payroll Compliance

Lastly, the final stages of employee onboarding in Saudi Arabia encompass finalizing contract arrangements and payroll integration. Below is a concise description of these final steps.

• Contract finalization and signing through Qiwa must align with Saudi labor law.
• GOSI registration and contribution requirements must be met promptly.
• Payroll processing through Mudad must comply with Wage Protection System regulations.

How Can Foreign Businesses Mitigate Hiring Compliance Risks?

The Saudi job market is one of the most competitive labor markets worldwide. This requires a comprehensive understanding of and adhering to the country’s unique regulatory frameworks and nuanced strategies for effective hiring practices.

Regular compliance is essential to avoid penalties, build a reputable and sustainable enterprise, and ensure smooth business operations. To clarify, businesses operating without proper licensing for employee outsourcing face even steeper penalties, ranging from SAR 200,000 to SAR 500,000.As such, engaging a market expansion partner such as AstroLabs can address many legal considerations for hiring multinationals in Saudi Arabia.

The firm’s ad hoc support allows businesses to focus on their core functions while continuing to attract and retain top talent.

Proficient in Saudi labor laws, AstroLabs’ on-the-ground team facilitates rapid onboarding of talent and helps companies ensure full adherence to payroll regulations and Saudization quota.

The customized assistance offered by the team also includes offering actionable recommendations for the best hiring practices, enabling business owners to simplify operations, enhance compliance, and empower growth.

Understanding Saudi New Labor Rules is Crucial to Maintaining Legal Compliance When Hiring

With Saudi Arabia rolling out new labor regulations, businesses need to pivot their hiring practices to align with these stricter guidelines.

The new legislation, which came into effect in February 2025, requires foreign employees to have written fixed-term contracts, with unspecified durations automatically becoming one-year agreements that renew automatically.

Additionally, the new amendment establishes a maximum probation period of 180 days, excluding the need for a written agreement to extend the initial 90-day period.

Other major changes include mandatory training policies for Saudi employees and penalties for non-compliance with Saudization requirements, including provisions for affected foreign workers to transfer employers without consent.

As regulations evolve, companies must adapt their compliance tools to promote equitable onboarding practices, setting the tone for the establishment of a diverse, high-performing workforce.

Frequently Asked Questions about Regulatory Compliance in Hiring in Saudi

1. What are the Saudization requirements for hiring in Saudi Arabia?

Under the Nitaqat program, foreign business owners are categorized into five groups: Platinum, High Green, Mid Green, Low Green, and Red.

In fact, companies in the platinum tier boast the highest proportion of Saudi employees. In contrast, the Red Zone indicates minimal compliance, with few to no Saudi nationals on staff. With its proven track record, AstroLabs helps companies conduct regular audit checks to ensure compliance with Saudization rules and keep tabs on percentages and Nitaqat scores.

2. How do I comply with Saudi labor law when hiring expats?

To comply when hiring ex-pats, businesses must:

• Ensure the position isn't restricted to Saudi nationals only
• Verify the candidate's credentials as stipulated in the law
• Issue an official job offer and contract in line with the guidelines
• Issue the employee's work permit, visa and Iqama
• Register employees with the General Organization for Social Insurance (GOSI)
• Provide health insurance
• process salary via Muddad.

For a step-by-step guide on how to hire professional foreigners compliantly and efficiently, check out this guide.

3. What are the visa and work permit requirements for foreign workers in Saudi Arabia?

For foreign workers, you'll need:

• Work visa (issued by the Saudi embassy in the worker's home country)
• Iqama upon arrival
• An attested employment contract or offer letter
• Medical fitness certificate
• Police clearance documentation from home country
• Attested educational and professional certificates

Additionally, the worker must also register with GOSI and obtain mandatory health insurance.

4. What are the mandatory benefits required by Saudi labor law?

The new legislation stipulates the need to provide a written fixed-term contract for foreign workers.

Saudi labor law mandates these benefits: sick leave, end-of-service benefits, annual paid leave, overtime compensation (which can come in the form of time off), paternity leave, maternity leave, health insurance, sick leave, weekly rest days, and official holiday leave.

5. How does the Nitaqat program affect hiring compliance in Saudi Arabia?

Businesses that are in compliance with Saudization rules won't be able to renew the work permit of non-Saudi employees, according to the updated legislation.