The Kingdom of Saudi Arabia (KSA) is undergoing significant saudi arabia labour law reforms aimed at creating a fairer and more inclusive job market, as part of these efforts, the Saudi Council of Ministers has introduced various amendments to the Labour Law of 2005 and these changes, set to take effect on February 18, 2025, reflect the country’s commitment to enhancing labour rights, fostering inclusivity, and ensuring better working conditions for all employees.

These amendments are designed to provide more clarity on employment contracts, resignation policies, equal opportunities, and various other aspects of labour regulations. This article offers a comprehensive overview of the key modifications that will shape the future of employment in Saudi Arabia.

Ensuring Rights for Persons with Disabilities

With the issuance of Cabinet Decision No. 110 of 1445, the Saudi government reaffirmed its commitment to ensuring equal rights for Persons with Disabilities, this decision guarantees their access to various services, including employment opportunities, without discrimination. 

Article 10 specifically highlights that employers must provide equal opportunities for individuals with disabilities, ensuring their full participation in the workforce. 

By eliminating discriminatory practices, this amendment aligns with global standards on inclusivity, reinforcing Saudi Arabia’s commitment to diversity and workplace equality.

Promoting Workplace Inclusivity and Equal Opportunities

Cabinet Decision No. 416 of 1444 underscores a long-term national policy aimed at fostering equality in the workplace. 

This policy introduces a ten-year phased implementation plan, which includes enforcing non-discrimination regulations, assessing the impact of inclusivity measures, and increasing the participation of underrepresented groups in the workforce. 

By addressing workplace disparities and promoting equal treatment across both private and public sectors, this initiative strengthens Saudi Arabia’s labour market and creates a more balanced and diverse employment environment.

Enhancing Administrative Processes with Online Services

The Ministry of Human Resources and Social Development (MHRSD) launched an online service certificate facility in November 2023 to move toward digital transformation. 

Available through the Qiwa electronic platform, this service streamlines administrative processes for private sector employees and employers alike. 

By simplifying employment verification and improving accessibility to official documentation, this digital initiative enhances efficiency, reduces bureaucracy, and ensures that employment procedures are more transparent and easily manageable.

Increase in Social Security Pension Benefits

One of the most impactful changes in recent labour law updates is the increase in social security pensions.

In November 2023, the MHRSD announced a substantial 20% rise in monthly pension payments, raising the amount from SAR 1,100 to SAR 1,320. 

Additionally, pension benefits for dependents increased to SAR 660 per eligible dependent. This change is designed to provide financial relief to retired workers and their families, improving their overall quality of life and ensuring a stronger social safety net.

Reduced Penalties for Labour Law Violations

Ministerial Decision No. 75913 of 1445H introduced a new table of violations and penalties, significantly reducing fines for various labour infractions. 

Some penalties were reduced by over 90% compared to the 2021 labour penalties schedule and this change aims to encourage compliance while alleviating the financial burden on businesses, fostering a regulatory environment that prioritizes guidance and corrective measures over excessive penalties.

Key Amendments to the Saudi Labour Law

Here are the Key Amendments to the Saudi Labour Law

Clarification of Employment Contract Terms

New definitions have been added to Article 2 of the Labour Law to enhance clarity and a key addition is the definition of “Manpower activity,” which refers to providing labour services through licensed establishments. 

Additionally, the definition of “Resignation” has been formalized, ensuring that resignations are made voluntarily and without coercion. 

These definitions provide better legal clarity for employers and employees, reducing potential disputes regarding employment terms.

Contract Duration for Non-Saudi Nationals

Under the revised Article 37, if a non-Saudi national is employed on an indefinite-term contract, the duration will automatically be considered a one-year fixed-term contract, renewable for the same period. This amendment eliminates the previous uncertainty where contracts were based on the expiration of work permits, and penalty for breaking employment contract in saudi arabia, creating a more structured and predictable saudi arabia new employment rules for expatriate workers.

Strengthening Employee Training Policies

Employers are now required to develop and implement training programs for Saudi nationals, focusing on technical, administrative, and vocational skills. 

This measure aims to enhance the local workforce’s capabilities and ensure that Saudi employees are equipped with the necessary skills to contribute effectively to their industries. The Executive Regulations will provide further details on these training requirements.

Extended Probation Period

Employers and employees can now agree to extend the probation period to 180 days from the previous 90 days. 

This amendment provides both parties with a longer assessment period to evaluate job suitability.

 During this period, either party has the right to terminate the contract without penalties, allowing for greater flexibility in employment arrangements.

Employer Responsibilities for Accommodation and Transport

A new statutory obligation mandates that employers must either provide accommodation and transportation for employees or compensate them with a cash allowance. 

This amendment aims to ensure fair living conditions for workers, particularly those in roles that require relocation or extensive commuting.

End of Service Benefits Under Saudi Labour Law

End-of-service benefits (ESB) are a crucial entitlement for employees in saudi labour law end of service, ensuring financial security upon the termination of their employment. 

Under the Saudi Labour Law, employees who have completed two years of continuous service with their employer are eligible for ESB, with the amount calculated based on their final salary and length of service. 

The standard formula provides half a month’s wage for each of the first five years of service and a full month’s wage for each subsequent year. 

Employees who resign after completing at least two years but less than five years of service are entitled to one-third of the total ESB, while those with five to ten years receive two-thirds. Full benefits are granted to employees with more than ten years of service. 

However, exceptions apply in cases of dismissal for gross misconduct. The recent amendments to the new saudi labor law are expected to clarify further aspects of ESB calculations, ensuring greater transparency and consistency in its implementation.

Strengthened Protections Against Workplace Discrimination

Employers must now ensure that there is no discrimination based on race, colour, gender, age, disability, marital status, or any other criteria. 

These protections extend to both job applicants and existing employees, reinforcing the country’s commitment to equal opportunities in the workplace.

Introduction of a Right to Appeal Against Disciplinary Actions

Under the revised Article 72, employees now have 30 days to appeal disciplinary actions internally. If the employer does not respond within 15 days, the employee has the right to escalate the appeal to the Labour Court within 30 days.

 This provision ensures fairness and provides employees with a structured mechanism to challenge unjust disciplinary actions.

Resignation and Notice Period Adjustments

Resignation is now formally recognized as a valid reason for termination under Article 74. Employees who resign will be entitled to all benefits stipulated under the Labour Law. 

Additionally, Saudi nationals wishing to resign from indefinite-term contracts are now required to provide 30 days’ notice instead of the previous 60 days, making the resignation process more flexible.

Family-Related Leave Enhancements

The amendments introduce several improvements to leave policies, including:

• Paternity Leave: Fathers are entitled to three days of paid paternity leave within seven days of childbirth.
• Bereavement Leave: Employees can now take three days off following the death of a sibling, in addition to existing provisions for immediate family members.
• Maternity Leave: Paid maternity leave has been extended to 12 weeks, with at least six weeks mandated post-childbirth.

New Overtime Regulations

Employers and employees can now mutually agree to compensate overtime hours with additional time off instead of extra pay. 

The Executive Regulations will provide more details on how this provision will be applied.

The 2025 amendments to the Saudi Labour Law mark a significant step toward modernizing the employment framework in the Kingdom. 

These changes reflect a commitment to inclusivity, fair labour practices, and an improved work environment. 

Businesses operating in Saudi Arabia should review their contracts, policies, and handbooks to align with the new regulations.

For expert legal assistance in adapting to these amendments, Batic Law Firm is here to help. Our dedicated team of legal professionals is well-versed in Saudi employment law and can provide comprehensive guidance to ensure your business remains compliant and well-prepared for the future.