Saudi Arabia has no income tax, but its mandatory benefits framework creates real employer obligations: GOSI contributions, compulsory health insurance, generous statutory leave, and an end-of-service gratuity that accrues throughout employment.
This guide covers every mandatory benefit, the most common optional perks, and what total employment cost looks like for both Saudi national and expatriate hires.
Mandatory vs optional benefits in saudi arabia
| Category | Benefit |
|---|---|
| Mandatory | GOSI contributions, health insurance (employee and dependents), end-of-service gratuity (EOSB), statutory leave (annual, sick, maternity, paternity, Hajj, marriage, bereavement), public holidays |
| Common but not required | Housing allowance, transport allowance, annual airfare for expatriates, education allowance |
| Competitive differentiators | Enhanced medical coverage, life insurance, performance bonuses, family flight tickets, multi-currency accounts for expat employees |
GOSI: saudi arabia’s social insurance system
What GOSI covers
The General Organization for Social Insurance (GOSI) is Saudi Arabia’s mandatory social insurance scheme. It operates across three branches:
- Pension and annuities — retirement, disability, and survivor benefits
- Occupational hazards — work-related injury and disease coverage
- SANED — unemployment insurance for Saudi nationals
Coverage differs significantly between Saudi nationals and expatriate employees (covered in detail below).
Contribution rates for saudi nationals
GOSI contributions for Saudi national employees are calculated on basic salary plus housing allowance, capped at SAR 45,000 per month.
| Branch | Employer rate | Employee rate | Total |
|---|---|---|---|
| Pension and annuities | 9.75% | 9.75% | 19.5% |
| Occupational hazards | 2% | 0% | 2% |
| SANED (unemployment) | 0.5% | 0.5% | 1% |
| Total | 12.25% | 10.25% | 22.5% |
Note: contribution rates are increasing by 0.5% annually until July 2028. Budget accordingly when modeling multi-year employment costs.
Contribution rates for expatriate employees
Expatriate employees are not enrolled in the pension or SANED branches. The employer pays a 2% occupational hazards contribution only. Expatriates receive no pension accumulation and no unemployment insurance through GOSI.
| Branch | Employer rate | Employee rate |
|---|---|---|
| Occupational hazards | 2% | 0% |
| Pension / SANED | Not applicable | Not applicable |
GOSI registration requirements
All employers operating in Saudi Arabia must register with GOSI before hiring. Each employee must be enrolled individually at the point of hire. For foreign companies without a Saudi legal entity, a registered Employer of Record (EOR) handles GOSI registration and remittance on your behalf.
Health insurance requirements
Health insurance is mandatory for all employees in Saudi Arabia, including their dependents. The employer pays the premium. Coverage is provided through private insurers regulated by the Council of Cooperative Health Insurance (CCHI).
Key points for employers:
- Minimum coverage standards are set by the CCHI; plans must meet the Basic Benefits Plan (BBP) threshold
- Coverage must extend to legally sponsored dependents
- The employer is responsible for enrolling employees and maintaining active coverage throughout employment
- Failure to provide health insurance is a compliance violation subject to fines
Many employers offer plans that exceed the mandatory minimum as part of a competitive package. The premium cost varies by insurer, employee age, and the number of dependents covered, but employers should budget roughly SAR 2,000 to SAR 5,000 per year per employee for standard plans, with higher costs for families or senior hires.
End-of-service gratuity (EOSB)
End-of-service gratuity is a mandatory lump-sum payment due to employees on termination of employment. It is not discretionary. The obligation begins to accrue after two years of continuous service.
How EOSB is calculated
EOSB is calculated on the employee’s final basic salary only, not total compensation. Allowances are excluded.
| Years of service | Accrual rate |
|---|---|
| First 5 years | 0.5 months’ basic salary per year |
| After 5 years | 1 month’s basic salary per year |
Example: An employee with 7 years of service and a final basic salary of SAR 10,000/month:
- First 5 years: 5 x 0.5 x SAR 10,000 = SAR 25,000
- Next 2 years: 2 x 1 x SAR 10,000 = SAR 20,000
- Total EOSB: SAR 45,000
Employers should treat EOSB as a liability that accrues monthly and set aside provisions accordingly.
EOSB for resignation vs termination
The accrual rules apply in full when the employer terminates the employee. For resignations, the picture is more nuanced:
- Less than 2 years: no EOSB
- 2 to less than 5 years: employee receives one-third of the calculated amount
- 5 to less than 10 years: employee receives two-thirds of the calculated amount
- 10 or more years: employee receives the full amount
When EOSB is forfeited
An employee forfeits EOSB entitlement entirely if dismissed under Article 80 of the Saudi Labor Law — which covers serious misconduct, such as gross negligence, assault on the employer or colleagues, or unauthorized absence beyond specified thresholds. Forfeiture applies only to the EOSB payment; other accrued entitlements (unpaid salary, accrued leave) remain payable.
Leave entitlements under saudi labor law
Annual leave
Employees are entitled to paid annual leave as follows:
- First 5 years of service: 21 calendar days per year
- After 5 years of service: 30 calendar days per year
Employees must take a minimum of 5 consecutive days per leave cycle. Leave accrues from day one but is typically taken after the probationary period ends. Unused leave can be carried over or paid out upon termination.
Sick leave
Sick leave entitlement is 120 days per year, structured in three tiers:
| Sick leave period | Pay rate |
|---|---|
| First 30 days | Full pay (100%) |
| Next 60 days | 75% of salary |
| Final 30 days | Unpaid |
A medical certificate is required to support sick leave claims. The 120-day entitlement resets each year.
Maternity and paternity leave
Maternity leave: 12 weeks fully paid. Leave can begin up to 4 weeks before the expected delivery date. At least 6 weeks must be taken after delivery — this is a mandatory minimum and cannot be waived or shortened.
Paternity leave: 3 days paid, taken at the time of birth.
Other statutory leave types
| Leave type | Duration | Pay | Conditions |
|---|---|---|---|
| Hajj leave | 10 to 15 days | Unpaid | Once during employment; only for employees who have not yet performed Hajj |
| Marriage leave | 5 days | Paid | Employee’s own wedding |
| Bereavement leave | 5 days | Paid | Death of spouse or close relative |
| Exam leave | Duration of exams | Paid | For employees enrolled in study; subject to employer confirmation |
Public holidays
Saudi Arabia observes approximately 9 to 11 public holidays per year. The main ones are:
| Holiday | Approximate duration |
|---|---|
| Eid al-Fitr | ~3 days |
| Eid al-Adha | ~5 days |
| Saudi National Day (September 23) | 1 day |
| Founding Day (February 22) | 1 day |
Exact dates for Islamic holidays shift each year in line with the lunar calendar. Employers should confirm the official government calendar at the start of each year.
Salary structure and allowances
Typical package breakdown
Saudi employment packages are conventionally structured as a split of basic salary and allowances rather than a single consolidated figure. A common breakdown is:
- Basic salary: 65% of total package
- Housing allowance: 25% of total package
- Transport allowance: 10% of total package
This structure matters for compliance purposes. GOSI contributions are calculated on basic salary plus housing allowance. EOSB is calculated on basic salary only. Structuring the package correctly can affect both employer cost and employee entitlements at termination.
Housing allowance
Housing allowance is not legally mandated as a standalone benefit, but it is standard practice and expected by most candidates. Many employment contracts specify it as a fixed monthly amount or as a percentage of the total package. For senior or expatriate hires, employers sometimes provide company-arranged accommodation instead of a cash allowance.
Transport allowance
A transport allowance is standard across most roles. Like housing, it is commonly expressed as a percentage of the total package. It is excluded from the EOSB calculation base.
Expatriate airfare entitlement
For expatriate employees, one round-trip economy airfare to their home country per year is widely provided and is often written into employment contracts. This is not mandated by the Labor Law for all categories of employee, but it has become a de facto standard in the market. Some employers extend this to include flights for immediate family members.
Common non-mandatory benefits
These benefits are not required by law but are commonly offered to attract and retain talent in the Saudi market:
- Education allowance: provided for employees with school-age children; particularly important to expatriate hires relocating with families
- Enhanced medical coverage: plans that exceed the CCHI minimum, including broader specialist access, dental, and optical
- Life insurance: term life policies funded by the employer
- Performance bonuses: annual or project-based, typically structured as a percentage of basic salary
- Family flight tickets: some employers extend the annual airfare entitlement to cover the employee’s spouse and dependents
- Multi-currency accounts or USD debit cards: increasingly relevant for expatriate employees managing cross-border finances
Total employment cost in saudi arabia
The table below shows a worked example of total monthly employer cost for a SAR 15,000/month total package (basic salary SAR 9,750 + housing SAR 3,750 + transport SAR 1,500).
| Cost component | Saudi national | Expatriate |
|---|---|---|
| Gross monthly salary | SAR 15,000 | SAR 15,000 |
| GOSI employer contribution | SAR 1,654 (12.25% on SAR 13,500) | SAR 270 (2% on SAR 13,500) |
| Health insurance (estimate) | ~SAR 350/month | ~SAR 350/month |
| EOSB monthly accrual (yr 1-5) | SAR 406 (0.5/12 x SAR 9,750) | SAR 406 |
| Estimated total monthly cost | ~SAR 17,410 | ~SAR 16,026 |
Note: the health insurance figure is illustrative. Actual premiums depend on the insurer, the plan level, and the number of dependents covered. The GOSI calculation uses basic salary plus housing allowance as the contribution base (SAR 9,750 + SAR 3,750 = SAR 13,500).
Benefits for saudi nationals vs expatriates
Several key differences affect how you structure packages depending on the employee’s nationality and residency status.
| Area | Saudi nationals | Expatriates |
|---|---|---|
| GOSI pension | Enrolled; employer pays 9.75% | Not enrolled |
| GOSI unemployment (SANED) | Enrolled; employer pays 0.5% | Not enrolled |
| Occupational hazards | Employer pays 2% | Employer pays 2% |
| EOSB | Entitled after 2 years | Entitled after 2 years |
| Annual airfare | Not standard | Standard practice; often contractual |
| Iqama (residency permit) | Not applicable | Employer responsible for Iqama costs |
| Nitaqat (Saudization) | Count toward quota | Count against quota |
On Nitaqat: Saudi Arabia’s Saudization program (Nitaqat) classifies companies by their ratio of Saudi national employees. A company’s Nitaqat band affects its ability to sponsor expatriate work visas. Employers with a significant expatriate workforce should monitor their classification and plan hiring accordingly.
How to manage benefits without a saudi entity
Foreign companies hiring in Saudi Arabia without a registered local entity cannot directly employ workers, register with GOSI, or administer health insurance locally. The practical solution is to use an Employer of Record that holds the legal employment relationship in-country.
An EOR operating in Saudi Arabia handles:
- GOSI registration and monthly contributions for both Saudi national and expatriate employees
- Health insurance enrollment and premium payment to CCHI-approved insurers
- EOSB calculation and accrual provisioning
- Compliant employment contracts in line with Saudi Labor Law
- Payroll processing in SAR, including correct allowance structuring
- Iqama sponsorship for expatriate hires where required
This removes the need to set up a Saudi entity, which can take months and carries its own ongoing compliance obligations.
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RemotePass provides EOR services across Saudi Arabia and the broader MENA region, with a platform built for distributed teams. Employers can onboard Saudi-based hires, run GOSI-compliant payroll, manage statutory leave, and handle EOSB accruals through a single system without setting up a local entity.
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FAQs about employee benefits in saudi arabia
Is health insurance mandatory in Saudi Arabia?
Yes. All employers are legally required to provide health insurance to employees and their dependents. Coverage must meet the minimum standards set by the Council of Cooperative Health Insurance (CCHI). The employer pays the premium.
Who pays GOSI contributions?
Both employer and employee contribute. For Saudi nationals, the total contribution is 22.5% of basic salary plus housing allowance, split as 12.25% employer and 10.25% employee. For expatriates, the employer pays 2% for occupational hazards only; there is no employee contribution and no pension or unemployment coverage.
What happens to EOSB if an employee resigns?
The full entitlement applies only when the employer ends the employment. For resignations, employees with fewer than 2 years of service receive nothing. Between 2 and 5 years they receive one-third of the calculated amount; between 5 and 10 years, two-thirds; and at 10 or more years, the full amount.
Are expatriates entitled to GOSI pension benefits?
No. Expatriate employees are only covered by the occupational hazards branch of GOSI. They do not accumulate pension entitlements and are not enrolled in SANED unemployment insurance.
Can annual leave be carried over?
Yes. Unused annual leave can be carried over to the following year. If employment ends before unused leave is taken, the balance is paid out in cash at the time of termination.
What benefits serve as competitive differentiators in the Saudi market?
Beyond the mandatory floor, the benefits that most affect candidate decisions are: enhanced medical coverage (beyond the CCHI minimum), education allowances for employees with children, family airfare allowances, performance bonuses with clear criteria, and flexible multi-currency payment arrangements for expatriate hires. Life insurance is also increasingly common among employers competing for senior talent.
