Absher
Saudi Arabia’s national digital government services platform, used by citizens and residents to manage identity, civil status, traffic and other everyday government transactions online.
Absher is the broad umbrella through which individuals, both Saudi nationals and residents, handle a wide range of government business without visiting an office in person, from passport and civil status matters to traffic services.
For HR purposes, Absher and Muqeem work as companions: some expatriate residency transactions are accessed through or alongside Absher, so employees are increasingly expected to be comfortable managing this kind of official business digitally rather than through paper processes.
A workforce that is confident using Absher tends to keep its own residency documents current with far less prompting from HR, which is a genuine, if quiet, compliance advantage for the employer.
Ajeer
A Qiwa linked programme that lets licensed recruitment and staffing offices supply workers to other employers on a temporary or task basis, without the receiving business becoming that worker’s legal sponsor.
Ajeer is typically used for things like domestic work placements, event and project staffing, seasonal labour, and government contract work, situations where a business needs extra hands for a defined period without the commitment of directly employing and sponsoring someone.
The key difference from a normal hire is who carries the sponsorship: the licensed staffing office remains the legal employer and sponsor, while the host business pays for the labour as a service. This keeps the arrangement lawful and documented, rather than an informal off the books favour between companies.
For employers weighing up a short lived spike in workload against a full time hire, Ajeer offers a middle path: genuine, government recognised flexibility, without the long term obligations that come with sponsoring someone directly.
Annual leave
Paid yearly holiday that employees in Saudi Arabia are entitled to under the Labour Law, which increases once an employee passes a longer length of service milestone.
Annual leave accrues across a year of service and is paid at the employee’s normal wage. Once an employee has been with the same employer beyond a set length of service, the law requires a more generous allowance than applies in the earlier years of employment.
Timing is generally agreed between employer and employee, though the employer typically has the right to set or adjust the schedule with reasonable notice to manage business needs across the workforce.
Unused annual leave does not simply disappear when someone leaves, it is normally paid out as part of their final settlement, calculated from their outstanding balance and final wage.
Annual leave is entirely separate from Hajj leave, which is a distinct, once in service entitlement rather than part of the yearly allowance.
Council of Cooperative Health Insurance (CCHI)
The Council of Cooperative Health Insurance (CCHI) is the Saudi authority that regulates private health insurance and sets the minimum standard of medical cover employers must provide.
The Council of Cooperative Health Insurance (CCHI) requires private sector employers to provide approved health insurance for their expatriate employees, and commonly their dependants too, with cover meeting a minimum benefits standard the authority sets.
Insurance must be placed with a licensed provider, and CCHI operates online verification tools that let employers, employees and government systems confirm a policy is genuinely active rather than taking a certificate at face value.
Valid medical cover is not just a benefits question, it is frequently checked alongside residency processes, so a lapsed policy can quietly stall an iqama renewal or a related government transaction until it is put right.
Domestic workers regulations
A separate set of rules that governs domestic workers, such as household drivers, cooks and carers, distinct from the main Saudi Labour Law.
Domestic work sits outside the standard protections of the Saudi Labour Law and instead follows its own dedicated regulation, with its own approach to contracts, working arrangements and end of service treatment.
Recruitment of domestic workers typically runs through licensed recruitment offices and a dedicated government platform built specifically for this category, rather than through Qiwa, which is oriented around ordinary private sector employment.
This distinction matters for any business or family employing domestic staff directly: assuming the general Labour Law rules apply, on hours, contracts or end of service, can lead to getting the obligations wrong, since this category is genuinely governed by a separate framework.
End of Service Benefits (EOSB)
End of Service Benefits (EOSB), also called the end of service award or gratuity, is a lump sum payment owed to an employee when their employment ends, calculated from final wage and length of service.
End of Service Benefits (EOSB) accrue across an employee’s time with an employer and are paid out when the relationship ends, whichever side initiates it. The calculation typically applies a lower accrual rate for an initial stretch of service and a higher rate for service beyond that, so the benefit grows faster the longer someone stays.
How much is actually payable can depend on how the contract ended: a resignation, a dismissal, and the natural expiry of a fixed term contract can each be treated differently, and whether the contract was fixed term or unlimited duration matters too.
The benefit is usually calculated on specific salary components, most often basic pay plus certain allowances, rather than total gross earnings, which is exactly why how a package is structured in the first place matters so much (see salary structure).
The sound practice is to accrue for this liability through payroll every period, rather than discovering the full cost only when someone resigns or is let go.
Exit and re-entry visa
A travel authorisation that lets a sponsored foreign worker leave Saudi Arabia temporarily and return within a defined validity window while remaining employed and resident.
An exit and re-entry visa is the standard way an expatriate employee travels abroad, for a holiday, a family visit or business, while keeping their job and residency status intact in the Kingdom. It has to be requested and issued before departure and carries a defined window within which the holder must return.
Historically this required the sponsoring employer’s direct approval for every trip. Under recent reforms, many eligible employees can now request it themselves through government platforms, though employer involvement still varies by circumstance and contract type.
Overstaying the validity window causes real problems, from fines to complications with the underlying residency status, so tracking these dates is worth building into any HR process that handles employee travel.
Final exit visa
The travel authorisation that ends a foreign worker’s residency and sponsorship in Saudi Arabia, used when someone is leaving the country for good rather than travelling temporarily.
A final exit visa is used when an expatriate’s time in the Kingdom is genuinely ending, whether because a contract has finished, someone has resigned, retired abroad, or is relocating with family, rather than simply travelling and coming back.
Processing it typically closes out the person’s iqama and formally ends the sponsorship link between employer and employee, so any final settlement, end of service benefits and other outstanding obligations are best resolved before or alongside the exit, not chased afterwards.
As with exit and re-entry visas, reforms have allowed some employees to request a final exit themselves in defined circumstances, without needing the sponsor’s direct sign off, though the employer’s underlying records still need to be in order for the process to go smoothly.
Fixed term and unlimited contracts
The two broad kinds of employment contract recognised under Saudi Labour Law, fixed term and unlimited duration, and the choice between them changes how the relationship can end.
A fixed term contract runs to a defined end date or the completion of a specific task or project, and is generally expected to run its course. Ending one early, particularly at the employer’s initiative, typically carries compensation consequences beyond a simple notice process.
An unlimited duration contract has no fixed end date and continues until either side lawfully ends it, usually through notice or through a recognised termination reason, making it the more flexible of the two for both parties over time.
Every contract, whichever type, needs to be documented and registered (see Qiwa), and choosing the wrong type at the outset tends to surface later as a real complication, both for calculating notice and for working out end of service entitlements correctly.
General Organisation for Social Insurance (GOSI)
The General Organisation for Social Insurance (GOSI) is Saudi Arabia’s social insurance authority, which collects contributions from employers and employees to fund pensions and to cover work related injury and occupational hazards.
The General Organisation for Social Insurance (GOSI) runs on two branches. The annuities branch, funding retirement, disability and survivor pensions, applies to Saudi national employees. The occupational hazards branch, covering injury and illness caused by work, applies to every employee, Saudi and expatriate alike.
Contributions are calculated as a set percentage of a defined portion of salary, split between employer and employee, at rates set by regulation and reviewed periodically. Registering every employee correctly from their first day, and paying contributions on time every pay cycle, is one of the most basic and most heavily scrutinised payroll duties in the Kingdom.
GOSI records have become a general purpose proof of employment: they are cross checked when confirming Saudisation compliance, wage protection compliance and eligibility for schemes such as unemployment insurance, so an error in registration quietly undermines several other compliance areas at once.
Hajj leave
A distinct, once in service paid leave entitlement that lets a Muslim employee take time off to perform the Hajj pilgrimage.
Hajj leave sits entirely apart from annual leave. It is granted only once during an employee’s employment with a given employer, not on every pilgrimage season, and only once the employee has completed a minimum qualifying period of service.
Because the Hajj season is concentrated into a short window each year and tied to the Hijri calendar, requests for this leave tend to cluster and need planning well in advance, particularly in workplaces with several eligible employees.
Employers can reasonably expect proof of intent to perform the pilgrimage, and treating the request with the seriousness it deserves, rather than as an inconvenient scheduling clash, tends to matter a great deal to the employees who rely on it.
Hijri calendar
The lunar Islamic calendar that Saudi Arabia uses alongside the Gregorian calendar for many official, religious and administrative purposes, including public holidays.
Because the Hijri calendar is lunar, its year runs shorter than the Gregorian solar year, so Hijri dates drift steadily earlier against the Gregorian calendar from one year to the next. Key religious observances, Ramadan, the two Eid holidays and the Hajj season, move through the Gregorian calendar accordingly rather than falling on the same Gregorian date each year.
For HR and payroll teams, this means public holiday dates cannot simply be copied forward from last year’s calendar. They have to be recalculated, and are often only confirmed close to the time once the relevant moon sighting is announced, which puts a premium on flexible rostering and communication.
For standardised civil and administrative scheduling, Saudi Arabia uses the Umm al-Qura calendar, a defined civil version of the Hijri calendar, which is why government announcements and employer holiday calendars can be planned with reasonable, if not perfect, advance notice.
Iqama
The residency permit a foreign national must hold to live and work in Saudi Arabia, issued in the name of a sponsoring employer and renewed periodically.
The iqama is far more than a work permit, it functions as an expatriate’s primary identity document inside the Kingdom, needed for everyday things such as opening a bank account, renting a home and accessing healthcare. Keeping it valid is a shared responsibility between the sponsoring employer and the individual holding it.
A lapsed iqama brings real disruption, from fines to restrictions on travel and government services, which is why renewal dates deserve the same tracking discipline as any other compliance deadline. Renewal transactions themselves are generally handled through Muqeem.
Reforms to the wider sponsorship system have given many workers more freedom to change employer or travel without needing their current employer’s direct sign off, but this has not removed the underlying requirement to hold a valid iqama tied to a registered sponsor at all times.
Kafala system
The sponsorship system historically used across the Gulf, including Saudi Arabia, under which a foreign worker’s legal residency and right to work are tied to a specific sponsoring employer.
Under the traditional Kafala system, a single sponsoring employer controlled nearly every aspect of a foreign worker’s legal status in the country: the visa itself, permission to travel out and back in, and any transfer of sponsorship to another employer, all needed that sponsor’s consent.
Saudi Arabia has since introduced a set of labour reforms, often discussed together as a labour reform initiative, aimed at giving workers more independence. Under defined conditions, eligible employees can now change employer without needing their current employer’s direct approval, and can request exit and re-entry or final exit visas through government platforms themselves in many circumstances.
This is genuine reform, not full abolition of the sponsor’s role: an employer still registers, renews and carries responsibility for the underlying work permit and iqama. Because the detailed rules continue to evolve, it is worth checking current Qiwa guidance before assuming how a particular transfer or exit will work.
Labour dispute resolution
The process for resolving disagreements between employers and employees in Saudi Arabia, which starts with an attempt at settlement through the Ministry of Human Resources and Social Development before reaching specialised labour courts.
Most labour disputes begin with an attempt at an amicable settlement handled through the ministry’s own channels, often digital, covering issues such as unpaid wages, disputed termination and disagreements over contract terms.
If no settlement is reached, the matter can escalate to specialised labour courts, which hear and decide the case more formally.
Throughout this process, documentation tends to decide outcomes: registered contracts, payslips, GOSI records and written correspondence carry far more weight than recollection, which is exactly why the record keeping habits described throughout this glossary matter well beyond routine compliance.
Ministry of Human Resources and Social Development (MHRSD)
The Ministry of Human Resources and Social Development (MHRSD) is the Saudi government ministry responsible for labour policy, employment services and workforce nationalisation, and the main regulator private sector employers deal with day to day.
The Ministry of Human Resources and Social Development (MHRSD) sets and enforces the rules behind almost every entry in this glossary: it oversees the Saudi Labour Law, runs Saudisation policy, and issues the work permits and approvals that let a foreign employee legally work for a Saudi employer. Older documents and conversations sometimes still refer to it by its previous name, the Ministry of Labour, which can cause confusion for newcomers.
In practice, most employers experience the ministry through its digital services rather than face to face, principally the Qiwa platform for contract registration, permits and Saudisation tracking, alongside its role as the first stop for labour disputes before they reach the courts.
Because the ministry sets both the rules and the digital rails they run on, keeping company records current on its platforms is not a paperwork nicety, it is what keeps visas renewing, permits issuing and Saudisation status healthy.
Mudad
A widely used electronic payroll platform that helps Saudi employers, particularly small and medium companies without their own payroll systems, prepare and submit salary payments that meet Wage Protection System requirements.
Mudad calculates pay, generates the bank readable salary file the Wage Protection System expects, and keeps a digital record of payslips, which is why it is commonly reached for by smaller employers who would otherwise have to build this compliance layer themselves.
Using a platform like this removes a lot of manual risk, but it does not remove the employer’s underlying legal responsibility: the business is still accountable for paying the right amount, to the right person, on time, whichever tool sits behind the payment.
For growing companies, Mudad or an equivalent platform is often the first piece of dedicated payroll infrastructure they adopt, well before they need anything as sophisticated as a full HR information system.
Muqeem
An online government platform, run through the passport authority, that expatriate residents and their sponsors use to manage residency related transactions such as iqama renewal, dependants and exit and re-entry visas.
Where Qiwa handles the employment relationship, Muqeem handles the residency and immigration side of an expatriate’s life in the Kingdom: renewing an iqama, registering or updating dependants, and requesting exit and re-entry or final exit visas.
For HR and payroll teams, Muqeem transactions are a genuine compliance calendar in their own right. Renewal deadlines, dependant changes and travel authorisations all need tracking here just as carefully as contract registrations are tracked on Qiwa.
Muqeem sits alongside the broader Absher government services platform, and for many everyday purposes the two are used together, with Muqeem being the service most directly relevant to an employer’s expatriate workforce.
Notice period
The advance warning, or payment instead of it, that either party must give under an unlimited duration Saudi employment contract before ending it.
For an unlimited duration contract, either the employer or the employee must give notice before ending the relationship, with a minimum length set by law that a contract can extend but not shorten. Paying the employee for the notice period instead of having them work it is an accepted alternative.
Fixed term contracts work differently: they are generally expected to run to their agreed end date, and ending one early can trigger compensation obligations rather than a simple notice process, which is one of several reasons the choice of contract type (see fixed term and unlimited contracts) matters from day one.
Notice, once given, interacts directly with the final settlement, including any end of service benefits and outstanding leave pay, so the notice date effectively anchors several other calculations at once.
Probationary period
An initial period at the start of Saudi employment during which either side can end the contract more easily while they confirm the role is a good fit.
A probationary period is set out in the employment contract, within a maximum allowed under the Labour Law, and gives both employer and employee an easier route to end the arrangement if the fit is not right.
A single extension is permitted if both sides agree to it in writing, but probation can only be used once for a given employer and employee relationship, an employee returning to the same employer in the same role cannot be placed on probation a second time.
Probation eases termination, it does not remove every protection: certain statutory safeguards, such as rules against dismissal for discriminatory reasons, continue to apply even during this initial period.
Qiwa
Saudi Arabia’s national digital labour platform, run by the Ministry of Human Resources and Social Development, where private sector employment contracts are registered and most employer facing labour services are managed.
Qiwa is where a Saudi employer documents and registers employment contracts, applies for and renews work permits, and tracks its Saudisation (Nitaqat) status. What used to require paper forms and in person visits to a government office has largely moved onto this one platform.
Registering a contract on Qiwa matters well beyond administrative tidiness: an unregistered or poorly documented contract can complicate a visa renewal, an exit and re-entry visa request, or a labour dispute, because the platform’s records are what the ministry and the courts treat as authoritative.
Qiwa also hosts a marketplace of flexible labour services, including the Ajeer programme, giving employers a lawful, documented route to bring in short term or task based support without taking on full sponsorship for every worker involved.
Ramadan working hours
A mandatory reduction in daily working hours during the holy month of Ramadan, which applies to Muslim employees under Saudi law.
For the duration of Ramadan, the standard working day is shortened by a set number of hours to make it easier for employees who are fasting to manage their working day. The reduction is a legal requirement, not a matter of employer discretion.
The reduction is generally tied to employees observing the fast, so how non Muslim staff are scheduled during the month can vary by employer policy, and companies should be explicit about how this works rather than leaving it ambiguous.
Employees continue to receive their normal pay despite the shorter hours, so the practical work for HR and operations is mostly about adjusting shift rosters and coverage plans for the month, then reverting once it ends. Because Ramadan’s Gregorian dates shift each year (see Hijri calendar), this planning has to be redone annually rather than copied from the year before.
Salary structure
The way a Saudi pay package is usually split between a basic salary and additional allowances, a distinction that affects far more than the payslip.
A typical Saudi salary structure separates basic salary from allowances such as housing, transport and other role specific payments, rather than paying everything as one undifferentiated figure.
This split matters because several major statutory calculations, GOSI contributions, end of service benefits and certain leave payments among them, are based on specific components of pay rather than total gross earnings. Two employees on the same total package can end up with different entitlements if their packages are split differently.
Getting this structure right, and keeping it consistent across the workforce, matters more in Saudi Arabia than in markets where everything is simply calculated on gross pay, and it is worth reviewing whenever offer letters or contract templates are updated.
Saudi Labour Law
The core legislation governing private sector employment in the Kingdom of Saudi Arabia, covering contracts, working hours, leave, termination and workplace protections. It sets the floor every employer operating in the Kingdom must meet.
The Saudi Labour Law applies to private sector employees, both Saudi nationals and expatriates, and underpins almost everything else in this glossary: how contracts must be written, how wages and hours are handled, what leave people are owed, and how a working relationship can lawfully end. Certain categories, such as domestic workers, sit outside it under their own separate rules.
Much of the fine detail, exact leave allowances, notice requirements and end of service formulas, is set out in implementing regulations issued under the law and reviewed from time to time by the regulator. Treat the law as a baseline: a written contract or company policy can always be more generous, but it cannot lawfully offer less.
The Ministry of Human Resources and Social Development is responsible for interpreting and enforcing the law day to day, largely through the Qiwa platform for contract registration and permits, with unresolved disputes moving on to specialised labour courts.
The law has been through a series of modernisation reforms in recent years, particularly around contract mobility and digital administration, so employers should treat it as a living framework rather than a document to read once and file away.
Saudisation (Nitaqat)
Saudisation (Nitaqat) is Saudi Arabia’s policy requiring private employers to employ a minimum share of Saudi nationals relative to their size and sector.
Under Saudisation (Nitaqat), every private employer is placed into a colour coded band, from strong compliance down to restricted, based broadly on how many Saudi nationals it employs relative to its total workforce and its industry. Bands are recalculated periodically and can differ sharply between sectors, since some industries have a much smaller pool of qualified Saudi candidates to draw on than others.
A company’s band is not just a badge, it directly affects practical things such as its ability to sponsor new work permits, renew existing ones, and access certain government services. Slipping into a weaker band tends to create a compounding problem: it becomes harder to hire the expatriate specialists that might have helped fix the underlying gap.
Because of this, Saudisation status is a genuine workforce planning input, not an afterthought. Hiring plans, succession planning and even where a role sits in the org chart increasingly get shaped by their effect on the nationality mix, alongside skills and cost.
Sick leave
Paid time off for illness or injury under the Labour Law, which pays at a different rate depending on how long the absence lasts.
Sick leave in Saudi Arabia works in tiers rather than a single flat rate: an initial stretch of absence is paid in full, a further stretch beyond that is paid at a reduced rate, and any absence beyond that runs unpaid, all subject to an overall ceiling within a defined period.
Employers can reasonably require medical certification from an accredited source before treating an absence as sick leave, both to protect the employee’s entitlement and to keep the record straight for payroll.
Illness can also interact with other protections, for example around dismissal during certain sensitive periods, so a pattern of sick leave should generally prompt a supportive conversation and careful process rather than an automatic response.
Standard working hours
The maximum ordinary hours an employee in Saudi Arabia may be required to work in a day or week under the Labour Law, beyond which overtime rules apply.
The Labour Law sets caps on ordinary daily and weekly working hours, along with an entitlement to a weekly rest day, and requires a premium rate of pay for hours worked beyond those caps. The exact figures sit in the implementing regulations rather than being fixed once and forgotten, so employers should check current guidance rather than relying on memory.
Hours are shortened further for the whole of Ramadan (see Ramadan working hours), which is one of the more predictable annual scheduling changes an HR team has to plan around.
Because working hours feed directly into overtime pay, attendance monitoring and shift planning, getting the baseline right is the starting point for a wide range of other payroll and workforce calculations.
Unemployment Insurance System (SANED)
The Unemployment Insurance System (SANED) is Saudi Arabia’s unemployment insurance scheme, which pays eligible Saudi employees a temporary income if they lose their job involuntarily.
The Unemployment Insurance System (SANED) is funded through contributions collected alongside ordinary social insurance contributions via GOSI, rather than being a separate payroll process for employers to manage day to day.
Eligibility generally depends on a contribution history and on the job loss being involuntary, so resignation or dismissal for cause typically will not qualify. Where a claim is accepted, payments are temporary and taper down over a limited claim period rather than continuing indefinitely.
Because eligibility traces back to GOSI contribution records, this is another reason accurate, on time registration matters: an employee who was never correctly registered has no contribution history to draw a claim from later.
Wage Protection System (WPS)
The Wage Protection System (WPS) is an electronic system requiring Saudi employers to pay wages through approved banking channels so the government can verify that people are paid the correct amount, on time, every cycle.
Under the Wage Protection System (WPS), an employer submits a salary payment file to its bank each pay cycle, which is checked against the wage and contract information already registered for that employee. Consistent mismatches, late payment or non payment show up as a compliance problem rather than staying a private matter between employer and employee.
The consequences of falling out of compliance are not merely administrative: persistent WPS failures can lead to restrictions on new work permits, visa renewals and other government services, which quickly ripples into recruitment and Saudisation planning.
Because the system depends on accurate underlying data, WPS compliance is really a test of whether payroll, the registered employment contract and the actual bank transfer all agree with one another, which is exactly why many employers lean on a dedicated payroll platform rather than assembling the file by hand.
Women in the workforce
The rights, protections and reforms that shape how women participate in Saudi Arabia’s labour market, an area that has changed significantly in recent years.
The Labour Law establishes a principle of equal pay for equal work, alongside specific protections for women around maternity leave and job security connected to childbirth. Employers above a defined size are also required to provide childcare arrangements for employees’ children.
A range of earlier restrictions, including requirements for a male guardian’s permission to work or travel, and limits on which sectors and roles women could take up, have been progressively removed. This has coincided with a substantial rise in female labour force participation across the Kingdom.
Because this area continues to evolve, employer policies and manager assumptions built on older restrictions can quickly go out of date. It is worth treating this as a living part of company policy rather than something settled once and left alone, and revisiting it periodically against current guidance.