Country profiles

Business Environment

Doing Business

Traveling and Living

BLF internationally

Change country

Market information

Best trading countries Import-Export flows Market reports search Professional reviews Consumption Data Business alert

Home > Country profiles > Operating a Business

Saudi Arabia: Operating a Business

Legal Forms of Companies | The Active Population in Figures | Working Conditions | The Cost of Labor | Management of Human Resources

Legal Forms of Companies

Types of Companies and Capital (Max/Min)	Number of Partners/Shareholders and Liability
The Sole Proprietorship is a single-partner company. No minimum capital.	1 person The individual entrepreneur is liable for debts the company on his personal possessions.
Sharikat Al-Mossahamah (S.A.M) is a Public Limited Company. Minimum SAR 10 million.	Minimum 5 partners. Liability is limited to the amount contributed.
SHARIKAT ZAT MASSOULIYYAH MAHDOOAH (S.M.M) is a Private Limited Company. Minimum SAR 2 million.	Minimum 5 partners. Liability is limited to the amount contributed.
Sharikat Tadhamou is a General Partnership Company Minimum SAR 500,000	Minimum 2 partners. Liability is unlimited.
Sharikat Tawsiyah Bel-ashom - Ashom is a partnership limited by shares. Minimum SAR 1 million.	Minimum 2 partners and maximum 50. At least one partner must have an unlimited liability. Liability of other partners is limited to the amount contributed.

Search a Company or a Financial Report: Arabian Travel Directory

Business Setup Procedures

Setting Up a Company	Saudi Arabia	Middle East & North Africa
Procedures (number)	4.00	8.10
Time (days)	5.00	20.00

Source: Doing Business.

For Further Information: Consult Doing Business Website, to know about procedures to start a Business in Saudi Arabia.
The Ministry of Commerce and Industry, for Business licenses.
The Competent Organization: Ministry of Commerce and Industry

Ministry of Finance

Department of Zakat and Income Tax

Recovery Procedures

Principle: Saudi Arabia has written a commercial law that is generally applied consistently. Law allows debtors to conclude financial settlements with their creditors through committees under the Saudi Chambers of Commerce and Industry or through the Board of Grievances.
Bankruptcy Laws: The country has written a bankruptcy law that was enacted by Royal Decree no. N/16 dated 4/9/1416H (corresponding to 1/24/96). It is called Regulation on Bankruptcy Protective Settlement.

The Active Population in Figures

	2010
Labor Force	7,337,000

Source: CIA - The world factbook

	2009	2010
Total activity rate	-	54.50%
Men activity rate	79.80%	-
Women activity rate	21.20%	-

Source: UN - United Nations

Employed Persons, by Occupation (% of Total Labor Force)	2005
Agriculture	12.0%
Industry	25.0%
Services	63.0%

Source: International Labor Union (ILO).
CIA, The World Fact Book

For Further Statistics: Ministry of Economy and Planning
Central Department of Statistics (CDS)
For Further Information About the Labor Market: ILO, International Labor Organization

Working Conditions

Opening Hours
Legal Weekly Duration: 8 hours a day or 48 hours a week. The number of working hours may be raised to 9 hours a day where the workman does not work continuously, such as seasonal establishments, hotel, snack bars, restaurants, etc.
Maximum Duration: In the month of Ramadan actual working hours shall not exceed 6 hours a day or 36 hours a week, exclusive of the intervals reserved for prayer, rest, and meals.

Working Rest Day: Friday
Paid Annual Vacation: 20 days with full wages payable in advance on completion of 1 year of service. 30 days when the workman completes 5 continuous years.
Retirement Age: 60 years for men and 55 years for women.
Child Labor and Minimum Age For Employment: 14 years is the minimum age for employment.
18 years for working in a mine or a quarry.

The Cost of Labor

Pay

Minimum Wage: No minimum wage.
Average Wage: Average monthly gross earnings is SAR 2,461 (USD 656).
Other Forms of Pay
Pay For Overtime: normal wage + 50%
Pay For Rest Days Worked: Double the normal wage

Social Security Costs

The Areas Covered: Employer provided health insurance is mandatory for companies employing 500 or more people. Contribution toward social insurance and vocational risk insurance are also to be paid by the employer.
Contributions: Contributions Paid By the Employer: 11%
Contributions Paid By the Employee: 9%
Competent Organization: General Organization for Social Insurance (GOSI)

Management of Human Resources

Recruitment

Method of Recruitment: Direct recruiting is the most popular method of recruitment. However, Internet is also fast becoming popular hiring tool.
Recruitment Agencies: Saudi Arabia has no nationally-organized job centers, and it's the responsibility of the Ministries of Labor and Social Affairs to deal with employment.
Recruitment Websites: SaudiSearch.com
4International Careers and Jobs

The Contract

Type of Contract: Broadly there are two types of contracts: Permanent and Fixed-term.

Majority of the contacts for foreigners in the labor sector are of fixed-term, while as for the locals these are of permanent type.

The number of 'temporary contracts' is very low.

Breach of Contracts

Retirement

The contract can be terminated by agreement of the two parties, at end of period of contract, at the request of either part in case of indefinite term contract or in case of force majeure.

Dismissals

According to the Saudi law, an employer has a right to terminate the services of an employee without giving a reason, though this position has been weakened through various court orders.

However, employees cannot be dismissed while they are on sickness leave or disablement leave or on maternity leave.

Other Possible Methods

• Collective dismissals due to economic reasons.

• Disciplinary dismissals

• Resignation as per the terms of contract.

Labor Laws

Summary of Saudi Arabia Labor Law

Dispute Settlement

Conciliation Process

Legal Framework

Labor Offices attempt to amicably resolve the dispute between the worker and the employer.

Incase the attempt is futile, complaints referred to the one of the two commissions- the Preliminary Commissions for Settlement of Labor Disputes, the High Commission for Settlement of Labor Disputes.

The commissions settle these cases on the basis of Labor Laws.

Procedure

Islamic Law (the Sharia) forms the basis for Labour Laws in the country. Visit the below given links:

Saudia-online.

Judicial Structures

Legal Framework: Islamic Law (the Sharia) is the main source of law in Saudi Arabia.
Competent Legal Body: There are thirty seven Labor Offices in the country. In case of failure of dispute settlement the case can be referred the Preliminary Commissions and High Commission.

Social Partners

Social Dialogue and Involvement of Social Partners: The labor law does not provide for collective bargaining. However, the companies that employ more than 100 Saudis are allowed to form "labor committees." There are 15 labor committees registered in the Kingdom.
Regulation Bodies: Ministry of labor

Any Comments About This Content? Report It to Us.

Learn more about Operating a Business in Saudi Arabia on Globaltrade.net, the Directory for International Trade Service Providers.

TERMS & CONDITIONS | SITEMAP | FAQ | VIDEOS | CONTACT