How Foreign Companies Can Meet Saudi Labor Compliance Requirements

For a smooth expansion, here is a simplified checklist for foreign companies entering the Saudi market.

1. Get a grasp of Nitaqat and KSA Saudization Policies

The core of Saudi labor law is Saudization, which is locally called Nitaqat. This measure aims to ensure that private companies reserve a fixed percentage of their workforce for nationals.

The percentage is not fixed and can vary based on two factors:

• Which sector does your company belong to (e.g., retail, IT, construction, etc.)

• The total number of employees in your company

Based on your hiring numbers, the system classifies your business into color-coded zones. Being in the "Green" or "Platinum" zones indicates that you are meeting the requirements, and you will have no trouble getting work visas for foreign staff. On the other hand, "Yellow" or "Red" zones indicate that you have not met the targets, and this will prevent you from renewing visas or employing new foreigners.

Besides this, there are new directives stating that 100% of administrative support staff (like secretaries and data entry operators) and 60% of sales and marketing personnel must be Saudis. So, you will need to keep these KSA Saudization Requirements in mind right from day one of your hiring process.

2. Register with the Qiwa Platform

Managing employees in Saudi Arabia requires the use of the Qiwa platform. It is the official online platform that is operated by the Ministry of Human Resources and Social Development (MHRSD).

Qiwa is the main platform that allows you to:

• Make digital employment contracts, get those contracts signed, and then store them privately online.

• Issue, control the use of, and renew work visas.

• Move employees from one company to another.

• Keep track of your Saudization levels.

Printed contracts alone are no longer sufficient. The authorities expect the contracts of all employees, both locals and foreigners, to be electronically verified via Qiwa. Also, if a local (Saudi) employee's contract isn't recorded on Qiwa, then such an employee won't be counted towards your Saudization target.

3. Comply with the Wage Protection System (WPS)

The Saudi government closely monitors employee payment in companies. The Wage Protection System (WPS) was developed to track salary payments. 

According to the system, you have to pay your employees in Saudi Riyals (SAR) and only through a bank account based in Saudi Arabia. Each month you are required to submit payroll electronically to the portal designated by the government. The platform compares your payment against the contract to verify if you paid as per the contract and whether the payment was timely. If payments to your employees are delayed or incorrect, the government may suspend your business operations immediately.

4. Use the GOSI Portal for Social Insurance

The General Organization for Social Insurance (GOSI) requires foreign companies to register their staff with them.

Besides the company, the employees have to contribute to this system monthly:

• Saudi Employees: The monthly fee includes retirement, pensions, and unemployment insurance.

• Expat Employees: The contributions cover workplace injury insurance only.

The share of the employee is to be withheld from the salary; you then have to pay the employee's contribution together with the company's one via the GOSI online portal before the due date of that month.

5. Update Your Employee Leave and Benefits Policies

Saudi labor laws grant workers not only protection but also comprehensive leave benefits. You need to make changes to your global HR guide in order to align with these local standards:

• Working Hours: A normal working week consists of 48 hours (8 hours per day). Muslims who observe the holy month of Ramadan have their working hours cut down to a total of 36 hours a week (6 hours per day).

• Maternity Leave: Female employees are entitled to maternity leave for 12 weeks on full pay.

• Paternity Leave: Fathers are entitled to 3 days of leave after childbirth. 

• End-of-Service Gratuity: The employer is under the obligation to provide employees with a final payment upon their departure based on the duration of their employment with the company. This is a legal requirement in Saudi Arabia.

6. Get Mandatory Health Insurance

If you are an employer in KSA, providing private health insurance is mandatory for your employees and their legal dependents (family members like spouses and children). In fact, this insurance shall be kept active for the whole duration of the employees' work with you. To be noted, issuance or renewal of the residency permit (Iqama) of an expatriate worker shall not be carried out without demonstration of the validity of their health insurance.

Partner with TASC to Navigate Saudi Labor Compliance with Confidence

For foreign companies entering or expanding in Saudi Arabia, labour compliance is a critical component of operational success. With 18+ years of regional expertise, TASC helps organisations align their workforce practices with Saudi labour laws, Saudisation requirements, employment regulations, and digital government platforms.

From workforce planning and employment contract management to Qiwa compliance, onboarding processes, and regulatory documentation, we provide end-to-end support that helps businesses minimise risk and maintain compliance throughout the employee lifecycle. Our structured approach ensures greater operational clarity, reduced administrative burden, and readiness for evolving regulatory requirements.

Connect with TASC today to build a compliant workforce framework that supports sustainable growth and long-term success in Saudi Arabia. 

Frequently Asked Questions

What happens if my company fails to meet KSA Saudization Requirements?

The government will take measures to limit your business if you find yourself in the low-compliance zones (Yellow or Red). You will be unable to obtain work visas, renew the visas of your expatriate workers, or engage in contracts with the government. Moreover, you may face financial penalties 

Can I hire foreign workers immediately after setting up my company?

Yes, but at the same time, you need to show that you are sticking to the Nitaqat system. Most of the time, you will have to bring on a few local Saudi employees first to get your visa quotas, which will allow you to recruit foreign workers.

How long are employment contracts for foreign workers?

Foreign employees are generally hired on fixed-term contracts, according to the regulations. So, if you sign a contract with the employee where you don't mention the duration of the contract, it's considered to be one year only from when the worker started working in the company.

What is an Iqama?

In simple terms, an Iqama is a residency permit card that is granted to foreign workers in Saudi Arabia. An Iqama gives foreign employees the legal right to live and work in the country. The company/employer has to pay all the charges related to issuing and renewing the Iqama.

Can we pay our employees from our international headquarters?

WPS or the Wage Protection System will not allow that. The payment to employees has to come from a company bank account within the Kingdom and in Saudi Riyals.