Pillar guide · Updated 20 June 2026
An Employer of Record (EOR) lets a foreign company hire in Saudi Arabia without setting up a Saudi entity. The EOR is the legal employer on paper — sponsoring the visa, running payroll, paying GOSI — while the worker delivers for the foreign client under a services agreement. This is Tamra's operational guide to EOR mechanics, costs, and the legal boundaries every EOR engagement must respect.
An EOR holds the MISA licence, the MHRSD labour quota, the GOSI registration, and the Qiwa contract. The worker's Iqama is sponsored by the EOR. Payroll runs through the EOR's bank via Mudad. End-of-service entitlements accrue to the EOR's GOSI account. The foreign client receives the worker's services under a master services agreement; there is no direct employment relationship.
An EOR is not a staffing agency, not a contractor arrangement, not a ‘license rental’. The EOR is the legal employer with full Saudi labour-law obligations. The client controls day-to-day work and outputs but cannot legally sign Saudi employment contracts, hold the visa, or run payroll from offshore.
EOR fits four scenarios: testing the Saudi market before committing to an LLC, hiring 1–30 staff while the parent entity is being incorporated, parking executives in KSA during a long incorporation window, and project-based hiring where the duration doesn't justify a full entity.
EOR stops being the right answer when (a) headcount exceeds 30, (b) the engagement runs over 24 months, (c) the worker must sign contracts on behalf of the foreign parent in Saudi Arabia, or (d) the parent needs a CR to bid on Saudi government tenders. At that point, an LLC or RHQ is the appropriate next step.
Step 1: Tamra reviews the role, profession code, salary band, and Saudization position. Step 2: Tamra files the MHRSD quota and issues the block visa to the candidate. Step 3: MOFA stamps the visa at the candidate's embassy; candidate enters KSA.
Step 4: candidate completes Saudi medical and Jawazat biometrics. Step 5: Tamra issues the Iqama on Muqeem and activates CCHI insurance. Step 6: monthly payroll runs via Mudad with full GOSI deductions, English/Arabic payslips, and a 15-day client invoice cycle.
Time to first paycheque: 6–10 weeks from signed engagement to candidate first month payslip. Tamra's median is 7 weeks.
EOR pricing is typically a percentage of monthly salary (12–18%) or a flat per-employee monthly fee (SAR 1,800–3,500). The fee covers: sponsorship, Iqama issuance and renewal, GOSI contributions, end-of-service accrual, Mudad payroll, CCHI insurance, English/Arabic contracts, and standard HR support.
Pass-through costs not included: actual salary, MHRSD labour levy (SAR 9,700/year), CCHI insurance premium (SAR 1,800–6,000/year depending on tier), and end-of-service payouts at termination. Total employer burden lands typically at 22–28% on top of the gross salary.
The client controls work outputs but does not have the legal authority of an employer. Specifically: the client cannot sign or amend the Saudi employment contract, cannot terminate the worker (the EOR does, on the client's request), cannot run payroll, cannot pay the worker directly, cannot demand work from the worker for a different legal entity than the one named in the MSA, and cannot let the worker sign Saudi contracts on behalf of the foreign parent.
Crossing these lines triggers ‘joint and several employment’ exposure under Saudi Labour Law — the foreign client becomes liable for Saudi labour obligations despite not being the legal employer. Tamra's MSA explicitly maps each control to the right legal party so the EOR shield holds up to MHRSD scrutiny.
Every Saudi employment ends with an EOSB calculation: half a month's salary per year for the first five years, one month per year thereafter, paid at termination. The EOR accrues the EOSB monthly and pays it on exit. Tamra's payroll system shows the live EOSB liability in the client portal so the client can plan terminations against real cash impact.
Resignation by the worker reduces EOSB to a third (under 2 years), two-thirds (2–5 years), or full entitlement (5+ years). Dismissal for cause may eliminate EOSB but requires a documented MHRSD-grounded reason.
Three common alternatives: incorporating an LLC, engaging an independent contractor, or hiring through a UAE entity and seconding. Each has compliance edges.
LLC: right answer above 30 hires or for tender-eligible work; takes 6–8 weeks to incorporate and adds ongoing overhead. Contractor: high risk in Saudi Arabia — independent-contractor classification is narrow, and a misclassified contractor triggers retro GOSI and tax exposure. UAE secondment: only works for short trips on visit visas — paying salary from outside KSA for work performed in KSA is non-compliant and Mudad flags it.
| Item | Monthly (SAR) | Notes |
|---|---|---|
| Gross salary | 25,000 | Pass-through |
| GOSI employer contribution (12%) | 3,000 | Capped at SAR 45k salary |
| End-of-service accrual | ~1,040 | Half month per year first 5 |
| CCHI medical insurance | 300–500 | Pass-through, tier-dependent |
| MHRSD labour levy | ~810 | SAR 9,700 ÷ 12 |
| Tamra EOR fee | ~3,000–4,500 | Typical band |
| All-in employer burden | ~33,200–34,850 | ≈33–39% above gross |
An EOR is a Saudi-licensed entity that becomes the legal employer of a worker on behalf of a foreign client. The EOR holds the visa, sponsors the Iqama, runs payroll, and remits GOSI. The client controls day-to-day work under a master services agreement.
Yes, when structured correctly. The EOR must hold a valid MISA licence, MHRSD quota, and CR. The arrangement must respect Saudi Labour Law — the EOR is the legal employer and the foreign client cannot exercise direct employer powers (hire, fire, contract, pay).
Typical fee is 12–18% of gross monthly salary or a flat SAR 1,800–3,500 per employee per month. Pass-through costs (GOSI, EOSB, CCHI, labour levy) add ~22–28% on top. For a SAR 25,000 salary, expect SAR 33,000–35,000 total monthly employer burden.
6–10 weeks from signed engagement to the candidate's first Saudi payslip. Tamra's median is 7 weeks. The bottleneck is usually the candidate's visa stamping at the Saudi embassy in their country.
Yes — Iqamas sponsored under the EOR can be transferred to a newly incorporated LLC via Qiwa with no service interruption. Tamra runs this transition for every client that incorporates after starting on EOR.
In Saudi Arabia, PEO (co-employment) is not a recognised structure. The Saudi-compliant model is EOR — the EOR is the sole legal employer. ‘PEO’ marketing in KSA usually refers to EOR under a different label.
Only with explicit EOR consent and a separate Qiwa contract. The Iqama is bound to one sponsor; concurrent work for a second client requires a multi-employer arrangement that few EORs offer.
The EOR is obligated to pay end-of-service per Saudi Labour Law and either transfer the Iqama to another sponsor or process final exit. Notice periods, leave balances, and EOSB are settled per the contract. Tamra runs a 30-day glide-path to minimise worker disruption.
No — IP assignment is structured in the master services agreement between client and EOR, mirrored in the employment contract between EOR and worker. The IP flows through to the client as part of the deliverables. Tamra's standard MSA pre-assigns all employment-related IP to the client.
All nationalities Saudi Arabia issues work visas to — which is effectively global. Some professions are restricted by Saudization for specific nationality bands, and the Tamra mobility desk maps the candidate's profession × nationality combination against current MHRSD policy before the quota is opened.
Our Riyadh team handles the live filings every day.
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