Saudi employment glossary: the terms behind employing people and avoiding headcount
A plain-English guide to the statutory and operational terms Saudi companies meet when they employ people locally, or use a managed B2B service contract instead. Each entry explains what the term means and why it matters for employer cost and headcount.
Last updated: 25 October 2026
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- Work Permit Fee (9,700 SAR) & Expat Levy (~800 SAR/month)
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The annual MHRSD/Qiwa work permit fee (رسوم رخصة العمل) and monthly expat levy (المقابل المالي للعمالة الوافدة) charged to private-sector establishments for each non-Saudi employee. In establishments above the Saudi-to-expat ratio threshold, the expat levy is SAR 800 per month (SAR 9,600/year) plus SAR 100/year work permit fee, totaling SAR 9,700 per year before the SAR 650/year Iqama renewal fee.
Why it matters: It adds roughly SAR 808–862 per month in fixed statutory government fees per foreign employee regardless of salary level. Under a remote B2B service contract, your company does not carry work permit or expat levy costs.
- End-of-service benefit (EOSB / مكافأة نهاية الخدمة)
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A statutory severance entitlement accrued over an employee's length of service under Article 84 of the Saudi Labor Law: half a month's wage for each of the first five years and one full month's wage for each year thereafter, calculated on the last gross wage.
Why it matters: It builds up as a mandatory balance-sheet liability (~4.17% to 8.33% of monthly gross salary) for every in-house employee. Because a managed B2B service involves no employment relationship on your side, your company carries zero EOSB liability.
- Employer of Record (EOR)
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A provider that is the legal employer of a person in a country and handles contracts, payroll, taxes and compliance, while the client directs the person's daily work.
Why it matters: It is a common way to employ people remotely without your own entity. It differs from a managed service, where the provider also supervises and audits the work under contractual SLAs.
- GOSI (General Organization for Social Insurance — 2% Non-Saudi Occupational Hazards)
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The Saudi authority that collects social insurance contributions from employers and employees. For non-Saudi employees, the employer pays a mandatory 2% occupational hazards contribution (فرع الأخطار المهنية) calculated on basic salary plus housing allowance; for Saudi nationals, higher statutory rates apply across annuities, SANED, and occupational hazards.
Why it matters: The employer's GOSI share is a recurring monthly statutory cost on top of salary and housing. Under a B2B service agreement with The Kabeer Co, no GOSI registration or contribution sits on your side.
- Headcount
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The number of people on a company's payroll.
Why it matters: Budgets, approvals and internal limits are set by headcount. In a managed B2B service, the delivery team is employed and supervised by the provider, so no one is added to your payroll or headcount.
- Iqama (Residency Permit)
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The residence permit for foreign nationals living and working in Saudi Arabia, issued and renewed annually via Absher Business / Muqeem (typically SAR 650/year) alongside the Qiwa work permit.
Why it matters: Visa, Iqama, and exit/re-entry permit costs recur for each foreign employee. Because our services are delivered remotely under a B2B agreement, your company does not carry visa or Iqama costs.
- Managed B2B service
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An arrangement where a provider takes responsibility for delivering a defined service: it resources, supervises and audits delivery of the service under a B2B service contract with contractual SLAs and service credits, and the client sends tasks and receives results, the audit and a monthly report.
Why it matters: This is the model of The Kabeer Co: each service delivered under a service contract, a single expensable B2B service invoice, a monthly QC-audited report, and no addition to your headcount.
- MHRSD (Ministry of Human Resources and Social Development)
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The Saudi ministry that sets and enforces labour rules.
Why it matters: Its rules decide contracts, permits, wages and many of the obligations of an employer.
- Nitaqat
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A Saudi programme that classifies companies into bands according to the share of Saudi nationals they employ.
Why it matters: A company's band can affect, for example, its ability to obtain work visas for foreign employees. Check the current rules.
- NTN (National Tax Number, Pakistan)
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The taxpayer identification number issued in Pakistan by the Federal Board of Revenue (FBR).
Why it matters: Pakistani businesses are identified by NTN. The Kabeer Co's registration details, including its NTN, are on the About page.
- Qiwa
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The Saudi labour-services platform operated under MHRSD, used for employment contracts, work permits (رخصة العمل), and Saudization certificates.
Why it matters: Local employment is administered through it, which is part of the compliance effort and cost of employing someone locally.
- Saudization
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The policy of increasing the share of Saudi nationals in private-sector jobs, backed by requirements that vary by activity and company size.
Why it matters: Some positions must be filled by Saudi nationals, so check whether the work is eligible for remote B2B service delivery.
- Service agreement (B2B service contract)
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A commercial contract between two companies for defined services and outputs to be delivered, not for the supply of people.
Why it matters: The Kabeer Co's international service agreement covers a service, its tasks, contractual SLAs with service credits, and a single monthly B2B service invoice that is fully expensable.
- Sponsorship (kafala)
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The traditional arrangement in which an employer in Saudi Arabia sponsors a foreign worker's residency and work status. Parts of it have been reformed under the Labor Reform Initiative.
Why it matters: It is one of the obligations that comes with employing foreign workers locally. Check current rules.
- Staff leasing (manpower rental)
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Supplying people to work under another company's direction.
Why it matters: Saudi regulation restricts renting manpower directly. This is why The Kabeer Co operates under a managed B2B service agreement instead of leasing people. Confirm what is permitted for your case.
- Wage Protection System (WPS / Mudad)
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A Saudi programme that tracks whether employers pay monthly wages through the banking system in full and on time as the employment contract states.
Why it matters: It is another monthly compliance duty for local employers.
- ZATCA (Zakat, Tax and Customs Authority)
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The Saudi authority responsible for tax, zakat and customs, including 15% VAT and Phase 1 / Phase 2 e-invoicing.
Why it matters: Finance teams must follow its rules for VAT return filing, e-invoicing, and statutory bookkeeping retention.
- ZATCA e-invoicing (Fatoora Phase 1 & Phase 2)
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The requirement to issue and store invoices in a structured electronic format (XML/PDF-A3 with cryptographic stamp, UUID, and QR code) and integrate with ZATCA's Fatoora platform.
Why it matters: Invoices that do not meet Phase 2 clearance/reporting rules can be rejected, so finance teams reconcile sales across Wafeq, Qoyod, Daftra, Rewaa, Foodics, Salla, and Zid before VAT filing.
This glossary is general information, not legal or financial advice. Rules, fees and rates change, so confirm current requirements with the official sources linked here or a qualified adviser.
See also the Saudi employee cost calculator, how our pricing works and how a managed service compares with recruitment, EOR and staff leasing.
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What is this glossary?
A short reference to Saudi employment and HR terms such as Iqama, GOSI, End-of-Service Benefits and the expat levy, with a plain-language explanation of each.
Is this glossary legal advice?
No. It is general information only; check official sources such as the Ministry of Human Resources and GOSI for current regulations.
How do I work out the true cost of an employee in Saudi Arabia?
Use the Saudi employee cost calculator to compare an in-house hire with a managed service contract from The Kabeer Co.