The two pricing models, and how to compare them
Provider fees are the smallest part of EOR cost and the most advertised. The statutory employer stack is the biggest part and the least advertised. Compare fully loaded monthly cost per employee, never the headline fee.
| Model | How it works | Watch for |
|---|
| Fixed fee per employee | A flat monthly management fee per person, independent of salary. | Favors senior salaries. Check onboarding fees, deposits, and offboarding charges quoted separately. |
| Percentage of payroll | The fee scales with gross salary. | Favors junior salaries. Confirm whether allowances, bonuses, and variable pay are inside the percentage base. |
| Pass-through costs | Government fees, insurance, and visa charges billed at actuals. | Ask whether actuals are marked up and demand receipts-level transparency. |
Whichever model a provider uses, require one number in writing: the fully loaded monthly cost for your specific employee, salary, and location. That single discipline removes most pricing surprises.
Saudi Arabia: the statutory employer stack
These are the layers a compliant Saudi employer, including an EOR, carries per employee. This is what your fee actually pays to administer:
| Cost layer | Basis | Note |
|---|
| GOSI contributions | Percentage of wage, per gosi.gov.sa | Around 2 percent for non-Saudi employees; materially higher combined rates for Saudi nationals. |
| Work permit and expatriate levy | Per non-Saudi employee, per HRSD and Qiwa schedules | A recurring per-head government charge many budgets miss. |
| Iqama issuance and renewal | Per employee, per year | Plus dependent fees where family members are sponsored. |
| Medical insurance | Per employee, mandatory | Priced by age, coverage class, and dependents. |
| End-of-service benefit accrual | Half a month's wage per year for the first five years, then a full month | A real liability under the Saudi Labor Law, even though no monthly invoice arrives. |
| Qiwa, Mudad, and WPS administration | Monthly | Contract registration and wage file compliance; misses damage the employer's compliance score. |
Verify live rates and levies with GOSI and Qiwa, as of 2026.
EOR or entity: the honest break-even
EOR buys speed and compliance before your structure exists. It stops being the right answer at the point where the structure would pay for itself.
- Choose EOR when you need people working in weeks, headcount is a handful, or your MISA registration or UAE license is still in progress.
- Choose your own entity when you sign local contracts in your own name, issue VAT invoices, pursue government tenders, or plan to hold staff for 18 months or longer.
- Run the comparison as arithmetic: total EOR fees over 18 months versus entity setup plus running costs from the Saudi formation cost guide or the UAE setup cost guide.
- Plan the exit on day one. Staff hired through an EOR should have a defined transfer path onto your entity, a sequencing question covered in Saudi vs UAE setup.
For compliant EOR delivery across both markets, use Incorporated EOR services.
FAQ
How much does an employer of record cost in Saudi Arabia?
Providers price either a fixed monthly fee per employee or a percentage of gross payroll. Your total monthly cost is gross salary plus statutory employer costs, including GOSI contributions, work permit and iqama fees, the expatriate levy where applicable, medical insurance, and end-of-service accrual, plus the provider fee. Ask every provider to quote those layers separately.
How much does an employer of record cost in the UAE?
The same two pricing models apply. On top of gross salary, budget the visa issuance stack, MoHRE work permit fees where relevant, mandatory health insurance, Wage Protection System payroll administration, and end-of-service accrual, plus the provider fee. As one published benchmark, a standard free zone visa issuance charge is AED 3,750.
What should an EOR fee include?
The legal employment relationship, compliant contracts, visa and work permit sponsorship, payroll processing and statutory filings, wage system compliance, and employee file administration. Anything quoted as extra, such as onboarding fees, deposits, or offboarding charges, belongs in your comparison before you sign.
How does an employer of record work?
The EOR is the legal employer on paper. It holds the employment contract, sponsors the visa, runs payroll, and makes statutory filings, while you direct the employee's day-to-day work. You are the manager; the EOR is the compliance infrastructure.
When is EOR better than setting up an entity?
EOR wins when you need compliant hires in weeks, when headcount is small, or when your license is still in progress. Your own entity wins once you sign local contracts in your own name, issue VAT invoices, or hold more than a handful of staff for 18 months or longer.
What hidden EOR costs should I check?
Onboarding and offboarding fees, security deposits per employee, currency conversion margins on payroll funding, charges for allowances and variable pay runs, and pass-through government fee markups. Ask for a fully loaded monthly cost per employee in writing.