Payroll Outsourcing in Kingdom of Saudi Arabia

• Hassle-free employee onboarding and paperwork
• Cost-effective payroll outsourcing solutions
• Greater ease of international expansion
• Have your payroll managed by reputable firm in KSA

Why Outsource Payroll in Saudi Arabia?

When your employees receive their salary payments on time, they can focus more on work and perform better, compared to when payroll errors ruin their day. The lack of stress and anxiety when paid accurately also makes your employees more likely to stick with your business for longer. However, building a positive work environment is not easy, especially when expanding to new territories.

The payroll processing tasks vary, the applicable taxes are different, and there is an entirely new set of regulations governing your business. In such a scenario, it is not practical for all businesses, especially small businesses, to set up their in-house payroll team for payroll functions.

By outsourcing your payroll management, you can take the stress off your shoulders and simplify administrative tasks. Edge’s payroll outsourcing solutions in Saudi Arabia take care of several aspects of your core business functions, so you don’t have to. Even better, the cost to outsource payroll to us will be much lower than building a human resources (HR) department from scratch.

Stay Complaint Government Regulations

The local laws and regulations governing companies across different sectors in Saudi Arabia are challenging to understand. This can lead to unintentional violation of important rules mandatory for payroll compliance.

At Edge, we make managing payroll process easier by guiding companies to better understand government laws related to employment, salaries, applicable taxes, and more. As an efficient outsourced payroll provider, we ensure you always stay compliant with the existing rules and regulations.

The Benefits Of Edge’s Payroll Processing Services

Error-Free Payroll

When it comes to choosing Saudi Arabia payroll outsourcing services, cost savings become a huge consideration. At Edge, part of our core function is handling all complex and time-consuming payroll processing tasks, including onboarding new employees, processing payroll benefits and deductions, and filing tax reports, so you can enjoy seamless and error-free payroll management.

Superior Data Security

Our data encryption technology ensures the optimum security of your company’s sensitive data (including employee details, contact information, salary, etc.) No payroll data is shared with third parties. Rest assured, your Saudi Arabia payroll functions are in safe hands.

Tailored Solutions

As a trusted payroll provider, we offer you the flexibility to choose a payroll outsourcing model that works for you. This means you get to choose the payroll frequency, payroll process, and other aspects according to your business needs. You will have direct access to valuable employee insights and can keep track of your company proceedings seamlessly.

Edge’s Saudi Arabia Payroll Outsourcing Services

When you are getting started with expansion, the tasks associated with global payroll processing and local regulations might seem difficult to manage and time-consuming. Partnering with a reliable Saudi Arabia payroll outsourcing company with a good track record makes the job much easier. Here’s how our payroll services in Saudia Arabia work.

Step 1: Our payroll professionals collect all existing employee data (residents and non-residents) in your company, including their service tenure and current job role.

Step 2: Our team sits down to work out the principal salary amounts, employee benefits, social security status, legal formalities, and income taxes for each of your employees. The data is then entered into our payroll software.

Step 3: From here on, the process gets simpler. At the beginning of each month, we process the payroll for all your employees(as per their designation and  after deducting their taxes, insurance, etc.)

Step 4: The employees receive a copy of their salary payslips, while you receive the cumulative and individual insights every month.

Step 5: We also review the company tax dues and legalities, ensuring complete regulatory compliance.

Saudi Arabia Payroll Laws and Employee Benefits

In Saudi Arabia, the rights of both resident and non-resident employees are protected via their robust social security system. Employment contracts and their terms govern almost all your business and employee rights. For this reason, it is important to learn about the payroll process in Saudi Arabia, the various regulations, and drafting employment contracts before entering the corporate market.

دورة استحقاق الرواتب

Companies in Saudi Arabia can choose to compensate their employees either weekly or monthly. Generally, companies find it more convenient to run payroll monthly, making it the most common option.

Work Time Regulations

The Government of Saudi Arabia mandates the upper limit of working hours for employees at 48 hours weekly or 8 hours daily (whichever is suitable for an organization). In exceptional cases, 11 hours per day is the maximum limit.

All work done over and beyond the 48-hour weekly limit accounts for overtime. The company needs to compensate the employee according to the overtime protocols for the same.

A special provision is set in place at the time of Ramadan, where the working hours for Muslim employees are reduced to 6 hours daily or 36 hours weekly.

Overtime Mandate

The overtime compensation rules for full-time employees working in Saudi Arabia are as follows:

• The employer should pay 1.5 times the basic salary for the first two hours. After that, the employee is entitled to 2 times the regular wage for each added hour.
• Working hours per day cannot exceed 11 at any cost (including overtime hours).
• Any work that exceeds the weekly limit of 48 hours is considered overtime. The employees should be compensated accordingly.
• Friday is considered a holiday. Any work done by employees on Friday is automatically regarded as overtime.

Types Of Work Leave For Employees

Workers in Saudi Arabia are entitled to various categories of work leave under specific circumstances.

1. Annual Leave – Employees gain access to 21 days of paid annual leave after being recruited for one year. This number increases to 30 days per year after five years of service to the same company.
2. Paid Sick Leave – In general, no sick leaves are available to employees in their probationary period (unless there is a medical emergency). Often, the rate of pay and duration of leave varies in different companies. These guidelines can be directed by the institution internally. For extended periods of leave, the company might ask for a medical certificate to validate the claims.
3. Parental leave – There are no statutory guidelines for paternity leave in Saudi Arabia. However, there are certain criteria laid down by the Labour law for maternity leave benefits:

Any female employee working for more than a year in an organization is entitled to:

• Full employee salary for the first 30 days
• 75% of her salary for the next 60 days
• Unpaid leave for the next 30 days

Tax Provisions In Saudi Arabia

The payroll taxes in the KSA are different for working individuals and businesses.

Working Individuals

Income taxes aren’t a thing in KSA and don’t apply to working Saudi nationals. However, expatriate workers pay annual residency fees, locally known as Iqama fees. Another form of indirect tax, called Zakat, is calculated as 2.5% of one’s wealth above a certain threshold, but it does not apply to non-Muslims.

Businesses And Institutions

The tax treaties mandate businesses to pay quite a few payroll taxes.

Value Added Tax (VAT) – The standard VAT rate is 15%. Businesses with annual revenues exceeding SAR 375,000 are required to register for VAT and charge it on eligible goods and services. Certain services, including financial services and healthcare, are exempted from VAT.

Corporate Income Tax – Earlier, no corporate income tax was levied on companies operating in the KSA. However, recent changes have introduced a form of corporate tax. The Saudi Arabian government extracts 20% tax from the profits of companies operating within the kingdom, with certain exceptions.

Withholding Tax – Saudi Arabia has launched withholding tax on certain payments made to non-residents, including dividends, interest, royalties, fees for services, etc.

Custom Duty – It is charged on the export and import of goods to and from the country. The rates vary with the type of good and industry involved.

Miscellaneous Taxes – These include certain variables such as municipal taxes, stamp duties, and Saudi social insurance tax.

Severance Pay And Termination Of Employee Contracts

This is a special eligibility for workers whose contracts are terminated after one year of service for no valid reason. In such cases, the employee should receive 15 days of his regular wages. If the employee has served more than five years, he should be paid one month of the regular wage at the time the employment ends.

For example, if a company chooses to close its operations in the KSA, all its employees are eligible for severance pay. Saudi Arabian nationals might enjoy additional severance terms agreed upon in their employment contract.

Termination can be initiated either by the employers or the workers. Both of them should adhere to the conditions mentioned in the contract and proceed with the notice period as required.