If you are operating a company in Saudi Arabia, you must give your employees their respective benefits and employee compensation. Therefore, learning about the Saudi Arabia compensation rules is essential if you will hire employees and workers from Saudi Arabia.
Furthermore, being aware of Saudi Arabia compensation laws and regulations will help you avoid non-compliance and the consequences it leads to. And here, we will explain everything you need to know about the benefits and compensation for employees in Saudi Arabia. Here are the details that we will cover regarding this topic:
- Guaranteed benefits in Saudi Arabia
- Saudi Arabia Benefits Management
- Restrictions for Benefits and Compensation
- Saudi Arabia Competitive Benefits Planning
- Saudi Arabia Employee Benefits Plans
- Requirements for Employee Benefits in Saudi Arabia
- Designing Saudi Arabia Employee Benefits Plans
- Why choose Connect Resources as your ally?
1. Guaranteed benefits in Saudi Arabia
The best way to ensure that your company provides all employee benefits is by getting Saudi Arabia benefit outsourcing services. But if you cannot opt for using these services, you must know about all benefits outlined in the employment laws. Having the necessary knowledge and complying with these regulations will help you avoid consequences such as fines and other penalties.
When it comes to the guaranteed benefits in Saudi Arabia, you will discover that these statutory benefits include:
- A reduced workday (6 hours) during Ramadan (only for Muslim employees).
- 21 days of paid vacation.
- Time off for public holidays. The government announces these holidays each year.
In some cases, it is possible to increase the number of days for paid vacation. This number increases to 30 days if the employee has been working for a company for 6 years or more.
Apart from these, Muslim employees who have worked for a company for at least 2 years can get another benefit. They are entitled to leave for the Hajj if they meet the condition we previously mentioned. And they can take this type of leave only once within 5 years of employment. Also, you should know that this leave cannot extend to more than 10 days as per the Saudi Arabia law.
2. Saudi Arabia Benefits Management
If you desire to attract top talent when hiring in Saudi Arabia, your benefits management must be strong and efficient. Therefore, you should not only include the benefits we previously mentioned, but also some additional perks to attract more candidates. For example, most employers usually include the following benefits when running their Saudi Arabia benefit management:
- Housing allowances.
- Transportation allowances.
- Money to cover education costs.
- Mobile phones.
- Supplementary health insurance.
- Plane tickets to go home for vacation.
- Retirement plans.
Moreover, it is recommendable to include in your benefits plan an additional 25 percent on top of employees’ gross salary. Plus, it is also vital for employers to outline any supplemental benefits that they will provide in an employment contract.
3. Restrictions for Benefits and Compensation
You should know that there are certain restrictions when it comes to compensation and benefits in Saudi Arabia. For example, when running your benefits management plan, there is a particular restriction you should consider, which is sick leave.
Employees in Saudi Arabia can take up to 4 months of sick leave as long as they meet the requirements/conditions. For instance, if an employee needs to take this type of leave, they must provide a medical certificate.
By providing the required medical certificate, they can get 100 percent of their pay during the first 30 days. Then, from 31 to 90 days, they will obtain 75 percent of their pay. And from 91 to 120 days, they will not receive any payment for taking this time off. This is a type of law your company must comply with to avoid penalties and issues with your employees.
4. Saudi Arabia Competitive Benefits Planning
To get the best results when recruiting and hiring in Saudi Arabia, you have to create a competitive benefits plan. This is the only way you can attract the best workers and optimize and improve your business exponentially. And besides competitiveness, your program must also include full compliance with the regulations related to the Saudi Arabia work environment.
On the other hand, remember that in some cases, you will also need to provide other resources to your employees. For instance, work visas and permits are some elements your company will probably need in order to hire new employees. By providing Saudi Arabia work visas and competitive benefits, your company will surely stand out among other Saudi Arabia companies.
5. Saudi Arabia Employee Benefits Plans
It is vital that your benefits program offers practical value for your workers as it will ensure international business growth. And to offer the most suitable benefits, resources, and optimal support for your employees, you must identify their needs first. In case you are carrying out a Saudi Arabia recruiting process, offering a competitive benefits plan will be favorable.
Furthermore, you should also know that providing excellent benefits will not only help your company but also your employees. In other words, these benefits will support your employees throughout different events in their lives in case they require it. As a result, a competitive benefits program will make your employees feel appreciated, ensuring a healthy employer-employee relationship and environment.
Apart from the mandatory benefits, employers can also include fringe benefits to support their employees’ quality of life. For example, these are some options to consider:
- Mental health support.
- Fitness or wellness events.
- Business travel reimbursements.
- Performance awards and bonuses.
- Bonuses for child care and education.
- Relocation assistance.
6. Requirements for Employee Benefits in Saudi Arabia
The benefits we mentioned before are only additional perks that you can offer to your Saudi Arabia employees if necessary. However, according to the national labour laws in Saudi Arabia, there are other provisions that are mandatory benefits for employees. Therefore, if you do not offer these mandatory employee benefits, there may be costly consequences for your business, including penalties.
The most important benefits that you must always include in your benefits program and Saudi Arabia payroll are paid leaves. And when it comes to the types of paid leaves in Saudi Arabia, you can find the following:
- Public holiday leave.
- Vacation leave.
- Sick leave.
- Maternity leave.
- Paternity leave.
- Marriage leave.
- Leave in the event of the death of a family member.
- Leave for Hajj (only valid for employees with more than 2 years of service).
And, of course, another mandatory benefit that your benefits plan must include is reduced workdays for Muslim employees during Ramadan. By offering these benefits, you will ensure compliance with the national regulations and optimal support for your employees as well.
7. Designing Saudi Arabia Employee Benefits Plans
The benefits program that you must provide may look different depending on many factors, including the nature of your business, location, etc. For example, the employee benefits offered by a company and a subsidiary in Saudi Arabia will not be the same. Due to the nature of their business structure, the requirements are different, which makes different their respective benefits plans.
Nonetheless, there are some fundamental guidelines that you must follow whether you operate a Saudi Arabia subsidiary or company. There are three main steps that you have to follow in order to create an effective benefits program. Below you will learn more about them.
7.1. Set your goals and establish your budget
The first step you must follow during the planning process is understanding what you want to achieve. In addition, it is essential to take into consideration the available budget you have to carry out your plan. Once you have considered these elements, you can determine your program’s scope, goals, and methods to remain competitive in the industry.
On the other hand, if you desire to get the best results, you should consult with stakeholders and specialists too. Plus, it is also recommendable to evaluate your financial resources and identify your program goals to set an appropriate scope. And once you have a clear idea of your goals and budget, you will start shaping your benefits program.
7.2. Identify all employee needs
To provide compensation and benefits in Saudi Arabia, you will need to conduct an assessment to identify your employees’ needs. You can do this by researching local companies’ offerings, as well as learning about your employees’ expectations during the process. In order to discover your employees’ needs and expectations, you can apply any of these methods:
- Conduct interviews with local employees. These can either be group or individual interviews.
- Post surveys or mail questionnaires asking employees about their critical concerns in the economy and their benefits needs.
7.3. Start developing your benefits plan
After setting your goals, establishing your budget, and identifying your employees’ needs, you can now start developing your plan. Make sure to include all the data you collected during the research process to optimize your employee benefits program correctly. This way, you will appropriately address all key needs of your workers.
8. Why choose Connect Resources as your ally?
Connect Resources is the best HR services provider that you will find in all countries across the Middle East. Our specialists provide a variety of HR services for companies that operate in Saudi Arabia, the UAE, and other locations. For example, we offer payroll outsourcing solutions that will help you stick to the rules related to payroll in Saudi Arabia.
And in case you need to hire new employees, we can also provide you with the most effective recruitment services. With our services, it will be easier to comply with all rules related to Saudi Arabia recruiting and hiring processes. Feel free to contact us by calling us at (971) 433-16688 or sending an email at email@example.com to learn more about our HR solutions.