Saudi Labour Law for Employers Hiring Foreign Workers: A 2026 Guide

By Editorial Team, Pakistan Progressive Associates (PPA)

Quick Answer: A Saudi employer hiring foreign workers must issue a written contract and sponsor the work permit and residency, pay wages through the Wage Protection System within 10 days of the pay period, observe an 8-hour day and 48-hour week with overtime at 150 percent, grant at least 21 days of paid annual leave, and pay an end-of-service award of half a month's wage for each of the first five years and a full month for each year after. Since the 2021 Labour Reform, workers also hold regulated job-mobility and exit rights.

Hiring skilled workers from abroad is straightforward once the ground rules are clear. This guide sets out the parts of Saudi labour law that matter most to an employer bringing in foreign workers, so you can budget, contract and onboard with confidence. It is general information, not legal advice; confirm specifics with the Ministry of Human Resources and Social Development (HRSD) or a licensed advisor for your case.

Employment contracts and work permits

Foreign workers in the private sector are engaged on a written employment contract, and the employer sponsors their work permit and residency permit (iqama). Contracts, permits and most workforce transactions are handled through the government platforms Qiwa and Absher. Getting the contract and the sponsorship right at the outset avoids the most common onboarding delays, because everything downstream, from the Wage Protection System registration to exit permissions, is tied to that record.

For an employer hiring from overseas, the practical work begins before the contract is even signed in-country: a demand for workers, candidate sourcing and screening, trade testing, medical clearance and visa processing all happen first. A licensed recruitment partner manages that pipeline so the worker arrives already documented and ready to deploy.

Working hours and overtime

The standard working day in Saudi Arabia is 8 hours and the standard working week is 48 hours, excluding rest, prayer and meal breaks. During Ramadan, actual working hours for Muslim employees are reduced to a maximum of 6 hours a day, or 36 hours a week, with no reduction in pay.

Overtime is paid at the worker's hourly wage plus 50 percent of the basic wage, so 150 percent of the basic hourly rate. Total actual working hours, including overtime, may not exceed 11 hours in a single day, which in practice allows up to 3 hours of overtime on top of the standard 8-hour day. With the worker's written consent, an employer may grant compensatory paid leave instead of overtime pay, at a rate of 1.5 hours of leave for each overtime hour.

Rest days and annual leave

Workers are entitled to a weekly rest day and to paid public holidays. Paid annual leave is no less than 21 days a year, rising to no less than 30 days once the worker completes five continuous years of service with the same employer. Building the higher leave entitlement into your workforce planning matters for roles you expect to retain long term.

Wages and the Wage Protection System

Wage payment is not left to trust. The Wage Protection System (WPS), operated through the Mudad platform, is mandatory for all private-sector establishments, with no exemption by company size. Employers must pay salaries through approved channels such as banks and report those payments digitally to HRSD.

Salaries must be paid no later than 10 days after the end of the pay period. Non-compliance carries penalties starting at SAR 3,000 per employee for delayed payments, and repeated delays can lead to suspension of new visa issuance, which directly affects an employer's ability to keep hiring. For a business that relies on a steady inflow of workers, WPS discipline is not just a payroll task, it protects your hiring pipeline.

End-of-service benefits

The end-of-service benefit, governed by Article 84 of the Labour Law, is a mandatory lump sum every private-sector employer pays at the end of employment. It accrues at half a month's wage for each of the first five years of service and a full month's wage for each year after that. It applies to expatriate and Saudi workers alike, on both fixed-term and open-ended contracts.

Where the worker resigns, the entitlement is scaled: one third of the award for two to five years of service, two thirds for more than five and less than ten years, and the full award once the worker completes ten or more continuous years. Treat the end-of-service benefit as a running liability you accrue from day one, not a surprise at the end.

Job mobility and exit rules

The Labour Reform that took effect in 2021 reshaped how foreign workers move and travel. A worker may now transfer to a new employer when their contract expires without the current employer's permission, and may transfer before expiry after at least one year in the country with 90 days' notice. Transfers are also permitted without conditions in defined situations, including where wages go unpaid for three consecutive months or the work permit expires.

On travel, workers can request an exit or exit-and-re-entry visa themselves through the Absher portal, subject to a fee and a short notice window during which the employer is notified and may object. Qualified workers can also apply for a final exit once their contract has ended. For employers, the reform means retention now rests on good terms and timely pay rather than on holding permissions, which is a healthier basis for a stable workforce.

What this means for hiring from abroad

Compliance starts long before a worker sets foot in the Kingdom. When you hire skilled workers from Pakistan through a licensed overseas employment promoter, the demand letter, sourcing, trade testing, medical clearance, document attestation and visa processing are all completed to standard first, so workers arrive documented and deployment-ready and slot straight into a WPS-compliant payroll.

Pakistan Progressive Associates has run that pipeline for Gulf employers since 1975. Explore our recruitment agency in Saudi Arabia, manpower supply and visa processing services, or our sector pages for construction, oil and gas and facilities management.

Frequently asked questions

What are the standard working hours under Saudi labour law? Eight hours a day and 48 hours a week, reduced to six hours a day for Muslim employees during Ramadan with no cut in pay.

How is overtime paid in Saudi Arabia? At 150 percent of the basic hourly wage, with total daily hours capped at 11.

How is the end-of-service benefit calculated? Half a month's wage for each of the first five years of service and a full month for each subsequent year, applying to expatriate and Saudi workers on fixed-term and open-ended contracts.

Is the Wage Protection System mandatory for all employers? Yes. All private-sector establishments must pay salaries through approved channels and report them to HRSD within 10 days of the pay period, regardless of company size.

Can a foreign worker change employers in Saudi Arabia? Since the 2021 Labour Reform, yes, on contract expiry without the current employer's permission, or earlier under defined conditions such as unpaid wages.