GOSI in Saudi Arabia: What Foreign Employers Pay for Social Insurance

GOSI — the General Organization for Social Insurance — is one of those Saudi compliance items that doesn't feel real until you get the first monthly invoice. For a foreign company hiring in Saudi Arabia, GOSI is a mandatory cost that must be factored into every offer letter and payroll model you build.

This article explains exactly how GOSI works for foreign employers: which branches apply, what you pay, and how Saudi and non-Saudi employees are treated differently.

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What Is GOSI?

GOSI administers Saudi Arabia's social insurance system. Every employer in Saudi Arabia — including foreign companies — must register with GOSI the moment they hire their first employee. There is no minimum headcount threshold. One hire means full registration.

GOSI's current framework is governed by the Social Insurance Law (Royal Decree M/273, 2024). The law covers three branches, and not all branches apply equally to Saudi and non-Saudi workers.

Register at: gosi.gov.sa

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The Three GOSI Branches

Branch 1: Annuities (Retirement, Disability, Survivors)

Applies to: Saudi nationals only
Full rate: 22% of contributory wage (employer + employee, split equally)
Phase-in schedule:

Period from Law's effective date	Total rate	Employer share	Employee share
Months 1–12	18%	9%	9%
Months 13–24	19%	9.5%	9.5%
Months 25–36	20%	10%	10%
Months 37–48	21%	10.5%	10.5%
Month 49 onward	22%	11%	11%

Non-Saudi workers are not covered by the annuities branch.

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Branch 2: Occupational Hazards and Additional Compensations

Applies to: ALL workers — Saudi and non-Saudi
Rate: 2% of contributory wage
Paid by: Employer only (employee pays nothing for this branch)

This is the only GOSI branch that applies to expatriate (non-Saudi) employees. It covers work injuries, occupational disability, and death.

Penalties for non-compliance: GOSI's Board of Directors can increase the contribution rate to up to double (4%) for employers who repeatedly refuse to comply with safety and health instructions.

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Branch 3: Unemployment Insurance

Applies to: Saudi nationals only
Rate: 2% of contributory wage (split equally — 1% employer, 1% employee)
Note: The initial rate under the new law is set at 1.5% total (0.75% employer, 0.75% employee) — subject to adjustment by Council of Ministers resolution

Non-Saudi workers are fully excluded from the unemployment insurance branch.

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What Non-Saudi Employees Actually Get From GOSI

Despite being excluded from two of the three branches, non-Saudi workers do receive meaningful protection under the occupational hazards branch:

Benefit type	What non-Saudi workers receive
Work injury medical care	Full coverage for treatment duration
Temporary disability	100% of daily wage (home treatment) or 75% (hospital at GOSI expense)
Permanent total disability	Lump sum: 84× the monthly benefit
Permanent partial disability	Lump sum: 60× the monthly benefit
Death (work injury)	Lump sum: 84× the monthly benefit payable to family
Body repatriation	GOSI covers transport to home country

Key distinction: Saudi workers receive monthly ongoing benefits for disability and death. Non-Saudi workers receive a one-time lump sum — not monthly payments.

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The Wage Cap

GOSI contributions are calculated on the contributory wage — which is based on the basic salary (the Regulations may include certain allowances). There is a hard cap:

Contributions are not calculated on any salary above SAR 45,000. For a Saudi employee earning SAR 80,000/month, GOSI is calculated as if the salary were SAR 45,000.

The cap is set by law and can only be changed by Council of Ministers resolution after an actuarial study.

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What Foreign Employers Actually Pay: A Model

Assume a team of:

• 3 Saudi employees at SAR 20,000/month each
• 5 non-Saudi employees at SAR 15,000/month each

Group	Count	Salary	Branches	Employer rate	Monthly employer cost
Saudi	3	SAR 20,000	Annuities (9%) + Occ. hazards (2%) + Unemployment (0.75%) = 11.75%	11.75%	SAR 7,050/month
Non-Saudi	5	SAR 15,000	Occ. hazards only (2%)	2%	SAR 1,500/month

Total monthly employer GOSI cost: SAR 8,550
Annual: SAR 102,600

This is before the annuities rate increases to 11% at the full rate — at full rate, the Saudi employer contribution alone becomes SAR 2,200/month per Saudi employee at SAR 20,000 salary.

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How Payment Works

The employer is responsible for paying both the employer share and the employee share to GOSI each month. The employer then deducts the employee's share from the employee's wages at the time of payment.

Payment is due monthly. Late payments attract fines.

GOSI compliance certificate: To conduct commercial dealings in Saudi Arabia (including government tenders), your company needs a current GOSI compliance certificate. A company behind on GOSI payments loses access to government contracts.

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Registration Obligation

As soon as you hire your first employee — one employee — you are legally required to register with GOSI. There is no grace period and no minimum headcount exemption.

What triggers the registration:

• Hiring a Saudi national → full three-branch registration
• Hiring a non-Saudi national → occupational hazards branch registration

Failure to register and contribute from the first hire means back-contributions, penalties, and potential personal liability for the company's management.

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GOSI vs. End of Service Benefit (EOSB)

GOSI and the End of Service Benefit are separate obligations:

	GOSI	EOSB
What it is	Monthly social insurance contribution	Lump sum due when employment ends
Who manages it	GOSI	Employer directly (no external fund)
Applies to non-Saudis?	Only occupational hazards branch	Yes — all employees
Can be avoided?	No	No
Cost	2-13% of salary per month	~1 month salary per year of service

EOSB accrues every month an employee is employed. It must be paid when employment ends regardless of the reason. Most foreign companies underestimate their EOSB liability in Year 1 projections.

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Practical Steps for a New Foreign Employer

1. Register on gosi.gov.sa before or immediately when hiring your first employee
2. Determine whether each hire is Saudi or non-Saudi — different branch coverage applies
3. Set up payroll to automatically calculate and deduct employee GOSI contributions
4. Pay GOSI monthly — do not let arrears accumulate
5. Maintain your GOSI compliance certificate for any government or tender work

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Model Your Saudi Payroll Costs Before You Hire

GOSI, EOSB, and Nitaqat compliance together mean that hiring a Saudi employee costs significantly more than the base salary. For accurate Year 1 hiring budgets, you need to factor all three.

Daleel covers your GOSI obligations and gives you an indicative Year 1 cost model based on your sector, headcount, and nationality mix — before you hire.

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Sources: Social Insurance Law (Royal Decree M/273, dated 26/12/1445H / July 2, 2024); GOSI official mandate (gosi.gov.sa).