The Saudi Hiring Playbook: Q&A on Compliance and Workforce Setup

“What happens if the General Manager is not onboarded as the first employee? Can this step be delayed until the business is operational? And when hiring a new employee, what are the risks if Iqama expires before the employment start date?”

These are some of the common questions companies face when expanding into Saudi Arabia.

We’ve prepared this guide to answer key questions around hiring and employment compliance in Saudi Arabia, helping businesses new to the market navigate regulatory requirements, manage risk, and establish operations compliantly from day one.

1. GM Onboarding: First Step to Compliant Business Setup in Saudi Arabia

As a rule of thumb, the first person your company in Saudi should hire is the General Manager (GM). Ignoring this step renders the entire business setup process noncompliant.

Whether the GM is the ultimate owner, a shareholder, or a founder, once they hold a Saudi resident ID (Iqama), they are typically treated as an employee. It is therefore critical that all government platforms are updated accordingly and that all standard employment compliance requirements are met in a timely manner.

Q: What does the GM onboarding process look like?

Similar to standard hiring practices, establishing a GM’s legal employment requires creating a work contract linked to their Iqama ID on Qiwa, with the Iqama tied to your sponsorship, and completing their registration with GOSI.

Once the GM is fully registered on all government portals, health insurance must be provided and maintained. After the GM is set up in the payroll system, they are paid on a month-to-month basis in compliance with the Wage Protection System (WPS)—a requirement that continues for as long as the GM is employed with the company.

Q: Does a GM still need a work contract and health insurance if they are not a resident of Saudi Arabia?

A: Registering a contract through Qiwa is a core compliance requirement. Without a registered work contract, the individual is not considered fully eligible to work in Saudi Arabia. In that case, the system will issue alerts and flag your company as noncompliant.

Over time, it can impact the company's overall compliance score and restrict the ability to hire additional employees or issue new contracts.

Health insurance is also mandatory. The Council of Health Insurance (CHI) requires all residents with valid IDs to have health insurance coverage. Even if a General Manager holds a global insurance policy, a locally registered policy is still required. Failure to do so can result in issues with Iqama renewals, operational disruptions, and potential penalties.

Q: Why is onboarding a General Manager (GM) so critical for compliance?

A: Proper onboarding of a General Manager, including the issuance of their Iqama, is essential as it dictates your ability to hire both Saudi and non-Saudi staff. Without it, you cannot issue work visas or transfer employees. Furthermore, you will be unable to maintain your Saudization certificate, which is mandatory to qualify for government tenders.

2. Navigating Requirements for Hiring Saudi and Non-Saudi Employees

After the GM is onboarded, the next stage is hiring staff. Procedures vary depending on whether the employee is a Saudi national or a non-Saudi, and for non-Saudis, whether they are located inside or outside the Kingdom.

Q: Is it legally mandated to hire a Saudi national right after a GM?

A: This depends on your business requirements and objectives. For instance, if you need a Saudization certificate—which is required for projects or tenders—you won't be able to obtain it without at least one Saudi national employed in your company. In such cases, the practical approach would be to hire a Saudi as your first employee to meet those criteria.

Additionally, when setting up a new entity, there is usually an allowance period during which you may still be able to issue a limited number of work visas. However, once that allowance period ends, you must hire a Saudi national to unlock additional visas and maintain compliance.

This allowance is valid only if no expatriate employees are onboarded during this period, since the quota for additional expatriate hires is zero. Companies intending to hire expatriates early must also employ at least one Saudi national to stay compliant.

Hiring Saudi vs. Non-Saudi: How does the process differ?

A: Hiring Saudi nationals is a straightforward process. First, the candidate is formally offered the role. The work contract is then initiated through Qiwa, with the job title, salary, and contract type clearly specified. The employee receives a notification to review and approve the contract; once approved, they are officially onboarded.

Following onboarding, the employee must be registered with GOSI. Health insurance must also be arranged, as it is mandatory for all full-time employees.

Finally, the employee is added to the payroll system, with monthly salary payments processed in compliance with the Wage Protection System (WPS). When the employment relationship ends, offboarding is handled through Qiwa. This includes terminating the contract, managing notice periods, removing the employee from GOSI, and settling all end-of-service benefits.

Hiring non-Saudi employees residing in the Kingdom follows a similar process but requires additional steps primarily managed by the employer. The employer is legally required to perform a sponsorship transfer and renew the Iqama. If the parties decide to part ways, the employer must either facilitate a transfer to a new sponsor or process a Final Exit visa (canceling the Iqama) if the employee is leaving Saudi Arabia.

A different approach is followed when hiring non-Saudis residing outside the Kingdom, involving three critical stages:

Stage 1: Visa Issuance: A work visa or invitation is issued and attested by the relevant Saudi authorities. A delegated travel agency in the candidate’s country of origin is then nominated to support visa processing and travel arrangements.
Stage 2: Document Preparation & Stamping: This stage focuses on preparing the candidate's documents, including medical examinations, police clearances, and the attestation of educational degrees. All necessary information is submitted through the Qualification Verification Process (QVP). Once approved, a visa appointment is scheduled, and the visa stamp is placed on the passport, making the employee ready for travel.
Stage 3: Arrival & Residency: Once the employee arrives in Saudi Arabia, they must complete a local medical examination and fingerprinting. A work permit is then obtained—a prerequisite for issuing the Iqama. Simultaneously, the employer must ensure the employee has health insurance. After the Iqama is issued, the company completes standard HR compliance as mentioned above.

Q: What if an employee’s Iqama is about to expire or has already expired when we transfer their sponsorship?

A: A sponsorship transfer does not automatically renew or extend an employee’s Iqama. From a regulatory perspective, the transfer and the renewal are two distinct actions; transferring the sponsorship to your entity does not "reset" or change the existing expiration date.

Once the transfer is complete, your company assumes full responsibility for the residency. You must then actively renew the Iqama to ensure continued legal status. Note that the new expiration date will be determined by the date of renewal rather than the original expiry.

Key consideration: It is critical to track these dates during the hiring process. If a transfer is completed but the Iqama is not immediately renewed, the employee’s status could expire shortly after joining, leading to operational disruptions, fines, or a block on government portal services.

Hiring Blockers: When Things Go Wrong?

Taking a holistic view, it is vital to approach the hiring process with a "compliance-first" mindset. In practice, when companies ignore or delay these regulatory steps, they will receive automated alerts and compliance warnings from government portals.

Over time, these delays can cause your compliance score to drop significantly. Recovering that score requires far more time and effort than maintaining it, often leaving you unable to activate new hiring requests or scale your team effectively.

Improper onboarding leads to several operational and regulatory hurdles. These are immediately reflected on government portals, can trigger employee complaints, and create significant legal or regulatory exposure for the company.

Q: What are typical government portal compliance triggers and their implications?

A: Understanding government portal compliance triggers is paramount for businesses to navigate regulatory obligations effectively.

GOSI: Incorrect employee data (salary due dates, start dates) can lead to penalties, backdated contributions, late payment fees, and blockage from obtaining GOSI certificates, which are essential for tenders, projects, and vendor registrations.

Mudad (Payroll/WPS): Delayed registration, incorrect salary entries, or late payments can suspend services and, in severe cases, block all employment-related services, causing operational disruptions.

Qiwa & Saudization: Failing to meet Saudization requirements or hire enough Saudi nationals can place your company in a high-risk "red zone," limiting your ability to hire, issue visas, or access government incentives. Remaining in the red zone for more than eight weeks may block systems for up to 26 weeks, making recovery difficult.

Contract Authentication & Health Insurance: Unsigned or unauthenticated contracts, or failing to issue health insurance on time, can result in fines, blockages, or difficulties renewing Iqamas and work permits.

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