Key Factors to Consider Before Hiring in Saudi Arabia:

1. The nature of the job (permanent, temporary, or part-time).
2. The scope of the employee’s responsibilities.
3. The appropriate contract type that aligns with Saudi Labor Law.
4. Whether the hiring will be done directly or via an Employer of Record (EOR) service like Globaine.

Why Employment Contracts Are Important in Saudi Arabia 

All employment contracts in Saudi Arabia must be in writing and in Arabic, as required by the Saudi Labor Law. This ensures transparency, protects employee rights, and reduces the risk of legal disputes.

Types of Employment Contracts in Saudi Arabia

1. Fixed-Term Contract A Fixed-Term Contract specifies a clear start and end date. This type of contract is most commonly used for project-based roles or seasonal employment.

Key Characteristics:

• Duration: Must be clearly defined in the contract.
• Renewal: If renewed more than once or for a total period of four years, the contract may convert to an indefinite-term contract.
• Termination: Ends automatically at the end of the term unless renewed.
• Probation Period: Employers can include a probationary period of up to 90 days (or 180 days with employee consent) as per Saudi Labor Law.

When to Use It: For roles with a clear project timeline or seasonal work.

2. Indefinite-Term Contract An Indefinite-Term Contract does not have a specific end date and continues until terminated by either party with proper notice.

Key Characteristics:

• Duration: Open-ended; continues until either party terminates it.
• Termination: Employers must have a legitimate reason to terminate and must provide notice.
• Employee Benefits: Employees hired on indefinite-term contracts are typically entitled to more benefits, such as end-of-service gratuity.

When to Use It: For roles where long-term employment is expected.

3. Part-Time Contract Part-time employment contracts are for workers who work less than the standard 48-hour workweek.

Key Characteristics:

• Working Hours: Limited to less than 8 hours per day and less than 48 hours per week.
• Benefits: Part-time employees are entitled to pro-rated benefits.
• Termination: Termination terms depend on the agreed conditions in the contract.

When to Use It: For roles where a reduced work schedule is required (e.g., students or flexible roles).

4. Temporary Contract A Temporary Contract is typically used for short-term assignments or seasonal work with a predefined end date.

Key Characteristics:

• Duration: Lasts for a specific period or until the completion of a specific task.
• Termination: Ends automatically at the conclusion of the contract period.
• Employee Benefits: Benefits are limited compared to indefinite-term contracts.

When to Use It: For short-term projects or temporary assignments.

5. Contract Through Employer of Record (EOR) If a foreign company does not have a local legal entity in Saudi Arabia, it can hire employees through an Employer of Record (EOR) like Globaine.

Key Characteristics:

• Employer Status: Globaine becomes the legal employer on behalf of the hiring company.
• Compliance: Ensures adherence to Saudi labor laws.
• Payroll & Benefits: Globaine manages payroll, benefits, and employment taxes.

When to Use It: For foreign companies hiring employees in Saudi Arabia without establishing a local legal entity.

Essential Components of an Employment Contract (Based on Article 52 of Saudi Labor Law)

Under Article 52 of the Saudi Labor Law, an employment contract must include the following key elements:

• Employer Information: Name, location, and company details.
• Employee Information: Full name, nationality, and official identification (e.g., Iqama number).
• Job Title and Description: Role, responsibilities, and job scope.
• Wages and Benefits: Breakdown of wages, allowances, and any other benefits.
• Duration: Contract term, whether fixed-term or indefinite.
• Probationary Period: Terms of the probation period, if applicable.
• Working Hours: Working days, daily/weekly hours, and overtime rules.
• Leave Entitlements: Annual leave, sick leave, and other leave entitlements.
• Notice Period: Required notice period for resignation or termination.
  
  

Benefits of Using an Employer of Record (EOR) in Saudi Arabia

1. Compliance with Local Laws Saudi labor regulations can be complex and require local expertise. Globaine’s EOR services ensure that contracts, payroll, and benefits are fully compliant.
2. No Need for a Local Entity If your company does not have a local presence in Saudi Arabia, an EOR like Globaine enables you to hire employees without having to establish a legal entity.
3. Cost and Time Savings Setting up a local entity can be time-consuming and costly. Globaine allows companies to operate in Saudi Arabia without incurring the costs of local incorporation.
4. Payroll & Benefits Management Globaine takes care of payroll, social insurance contributions, and employee benefits, ensuring accuracy and compliance.
5. Faster Onboarding With Globaine’s support, companies can onboard new employees in Saudi Arabia within days instead of months.