Since February 2025, employee transport in Saudi Arabia has become a legal requirement. Many private sector companies are still operating under policies based on the previous rules.
The latest amendments revised 38 existing articles and introduced 2 new ones, making this the largest update to Saudi Labour Law since 2015. Employers who have not reviewed their transport policies after the amendments came into effect may face regulatory risks.
Their End-of-Service Benefits (EOSB) liability can also continue to increase with each passing month.
This article focuses on private sector employers operating under the Saudi Labour Law, how smart employers are fulfilling this obligation, and what next steps should employers take.
Key Takeaways
- From 18 February 2025, private sector employers in Saudi Arabia must provide employee transport through company-arranged transportation or a cash allowance for commuting. This requirement is part of the Saudi Labour Law.
- Fixed transport allowances are included when calculating the Actual Wage for End-of-Service Benefits (EOSB). As employees stay longer and the workforce grows, this can increase the employer's EOSB liability over time.
- Employers who provide managed transportation as an in-kind benefit can meet the requirements of Article 61 without adding transport allowances to the payroll base.
What Did the 2025 Amendment Actually Change?
Effective 18 February 2025, the Ministry of Human Resources and Social Development (MHRSD) confirms employers must provide transport from home to work or pay a cash allowance with wages.
This rule applies to all private sector employers under Saudi Labour Law, regardless of company size, industry, or employee nationality.
One important point is that Executive Regulations have not yet been issued. These will define exact amounts and compliance rules. Employers should follow updates from the Ministry of Human Resources and Social Development and keep policies safe until final rules are published.
Does the Law Allow a Shuttle Instead of Cash?
Yes, Article 61 allows employers to provide either a managed shuttle service or a cash transport allowance to meet compliance requirements under Saudi Labour Law. For most employers with 50 or more employees, a structured shuttle service is often the more cost-efficient option, especially for daily workforce movement.
If transport is provided in-kind through a managed corporate shuttle service, it is considered compliant and there is no need to pay an additional cash allowance. Cash transport allowances are generally around 10% of basic salary, sometimes 10 to 15% depending on role and sector. This is based on market practice, as no fixed statutory rate has been issued under the Executive Regulations yet.
From an HR perspective, both options remain valid under the law, but from Operations view, the cost impact should be evaluated carefully over time.
See car allowance vs. corporate shuttle for Saudi employers for a detailed cost comparison of both routes.
Does Transport Allowance Count Toward EOSB and GOSI?
This depends on whether you are looking at EOSB or GOSI, as both follow different rules in Saudi Labour Law.
For EOSB, a fixed monthly transport allowance is included in the employee’s actual wage. That means it is added into the end-of-service benefit calculation. Only variable pay is treated differently under Article 86, so a fixed allowance stays part of the EOSB base.
For GOSI, the approach is different. Transport allowance is not included in the contribution calculation. GOSI contributions are calculated on basic salary plus housing allowance only, while transport payments are left out.
This split matters for cost planning. For example, if a company pays SAR 800 per month as transport allowance to 200 employees, it does not increase GOSI costs. However, it adds EOSB liability on that SAR 800 for each employee, every month they stay with the company.
The transport allowance does not affect GOSI costs, but it does add to EOSB liability over time for every employee.
What Happens if an Employer Does Not Comply?
Employees can file a case with the Labour Court if an employer does not comply with Article 61. The 2025 amendments also gave MHRSD stronger powers to enforce compliance and protect employee rights.
Companies that do not comply may also face limits on issuing or renewing work permits. This creates a serious risk, especially for businesses that rely on expatriate employees.
The better approach is to review transport arrangements early instead of waiting for complaints. HR teams should check whether the company provides transport, a cash allowance, or nothing at all. If neither is provided, the risk starts immediately.
If transport is written in the employment contract, the situation becomes more serious. It creates both a legal duty under Article 61 and a contract-based obligation. If the employer fails to meet it, the employee can raise both claims in the Labour Court, which increases the company’s exposure beyond a standard regulatory breach.
What Is the Difference Between the Two Allowances?
"بدل النقل" usually refers to the transport allowance for employees using personal cars. It may cover fuel, maintenance, and other car-related expenses. Whereas, "بدل المواصلات" refers to support for employees using public transport to travel to work.
Under Saudi Labour Law, Article 61 does not separate these two terms. Both are accepted as transport support. In most companies, "بدل النقل" is commonly used, even if employees do not use personal vehicles. For compliance, either term works as long as transport support is provided.
How Are Smart Employers Fulfilling the Obligation?
Paying a fixed 10% transport allowance to all employees is the most expensive way to meet Article 61. This applies even if employees do not commute far or use company transport.
For example, a company with 300 employees and an average basic salary of SAR 8,000 spends SAR 240,000 every month on transport allowance. This amount also becomes part of each employee’s EOSB calculation.
This cost builds up quietly every month and increases long-term financial liability. Therefore, the wise option is to choose a corporate mobility service platform that allows employers to provide transport in kind instead of cash.
Employers can be in compliance with Article 61 without increasing payroll costs and the cost depends on actual rides instead of total headcount. Through this structured process, even the routes are planned based on where employees live, not fixed schedules that run regardless of demand.
Real Business Impact
G4S reduced monthly transport costs by 18% after switching to Swvl’s mobility platform. SAB Bank also achieved 95% on-time arrivals for its Riyadh workforce using Swvl’s shuttle service. These results come from reducing unused capacity and managing transport under one system. It improves reliability while keeping compliance aligned with Article 61.
Swvl provides TGA-compliant employee shuttle services across Saudi Arabia. It includes route optimization, live tracking, and seat usage reporting through its dashboard.
For industrial operations, fleet planning for Saudi facilities helps control transport costs and improve efficiency.
Request a demo to see how Swvl supports Article 61 compliance for your workforce.
What Should Employers Do Next?
Employers should review current transport policies before regulations become stricter. If a cash allowance is being paid, calculate the EOSB cost it creates across employees.
If transport is already provided, confirm that the service is fully compliant with TGA standards. If no transport system exists, action should be taken immediately.
FAQ
Is transport allowance mandatory in Saudi Arabia?
Yes, the transport allowance has been made mandatory for employees from 18 February 2025, as part of an amendment in the Labour Law. This made transport support a legal requirement for all private sector employers.
How much is the transport allowance in Saudi Arabia?
There is no fixed legal amount in the Executive Regulations yet. In the market, it is usually around 10% of basic salary. Employers can decide the amount if it is fair and reasonable. In some sectors and senior roles, it can go up to 10 to 15%.
Does transport allowance count toward EOSB in Saudi Arabia?
Yes. A fixed monthly transport allowance is included in the employee’s actual wage under Saudi Labour Law. It is part of the EOSB calculation. Only variable pay is excluded under Article 86, so fixed transport allowance is included.
Is transport allowance included in GOSI contributions?
No. GOSI is calculated only on basic salary and housing allowance. Transport allowance is not part of the GOSI contribution base. This is often misunderstood in payroll processing in Saudi Arabia.
Can an employer provide a company shuttle instead of a cash allowance?
Yes. Providing managed transport in-kind fully satisfies the Article 61 obligation. If physical transport is provided, the employer is not required to also pay a cash allowance. This approach also removes the transport component from the EOSB payroll base, reducing long-term liability.
Is a transport allowance taxable income in Saudi Arabia?
No. There is no personal income tax in Saudi Arabia. Transport allowance, whether given in cash or as transport service, is not taxed for employees. This applies to both Saudi nationals and expatriates.
Saudi Labour Law sets a clear standard for employee transport, and employers who plan it strategically can reduce payroll costs, improve attendance, and manage EOSB impact more effectively.
Instead of relying on cash allowances, many companies are shifting to mobility service platforms that meet Article 61 efficiently and control long-term costs. To explore a compliant and cost-effective transport solution, connect with Swvl’s team today.