Saudi Arabia is well-known for its rapid economic progress and operates under a detailed legal framework that governs labor laws and regulations. These laws set the rules for interactions between employers and employees, ensuring workers’ rights are protected and outlining the duties of employers.

Saudi labor laws cover many aspects, such as employment contracts, working hours, wages, termination procedures, and anti-discrimination measures. Understanding these laws is crucial for both employers and employees to ensure fairness, legal compliance, and a positive work environment.

What is an Employment Contract According to Saudi Labor Law?

According to Article 50 of the Saudi Labor Law, an employment contract is a formal agreement between an employer and an employee. The employee agrees to work under the employer’s direction for a wage.

 This contract defines the working relationship and both parties must follow its terms. Any changes to the contract during the employee’s time must be agreed upon by both the employee and the employer.

Employees need to understand the terms of their contract and how they fit with the overall labor laws. The law governs the contract from start to finish and any terms that conflict with these laws are not valid. The labor law ensures that the contract is clear and unambiguous.

Here are key requirements for employment contracts under Saudi Labor Law:

• Written Contract: The law requires a written contract outlining job details, salary, working hours, probation period, benefits, and termination conditions.
• Duration and Renewal: Contracts must state if they are fixed-term or indefinite. Fixed-term contracts should specify the length and renewal terms.
• Probation Period: A probation period of up to 90 days is allowed, during which either party can terminate the contract without notice. This should be mentioned in the contract.
• Compensation and Benefits: The contract should detail salary, allowances, bonuses, and other entitlements, including overtime pay if applicable.
• Working Hours and Days Off: Regular working hours and days off, along with any overtime regulations, should be defined in the contract.
• Termination Conditions: The contract must outline procedures for termination, including notice periods and end-of-service benefits.
• Employee Rights: It should cover rights related to annual leave, sick leave, maternity leave, and other entitlements under Saudi Labor Law.
• Employer Obligations: Responsibilities for workplace safety, creating a good work environment, and complying with labor laws should be included.

Saudi Labor Laws can change, so it’s wise to consult legal experts to ensure compliance with the latest regulations when drafting or reviewing employment contracts.

Guidelines for Creating an Employment Contract under Saudi Labor Laws

The Ministry of Human Resources and Social Development provides a standard contract template that should include:

• Employer’s name and location.
• Employee’s name, nationality, identity proof, and address.
• Agreed salary, including benefits and allowances.
• Job description, work location, and start date.
• Contract duration, especially for non-Saudi employees.

Article 52 allows both parties to add extra clauses as long as they do not contradict the law. The contract must be in duplicate, one copy for each party. Even if not written, the contract is valid, and the employee can prove its existence and rights through various evidence forms. The contract can be requested in writing at any time. For government employees, an appointment order or decision serves as the contract according to Article 51.

Employees can prove their contract and employment through:

• Attendance and leave records.
• Bank statements.
• Salary slips.
• Employment acceptance acknowledgment.
• Job offers.
• Correspondence with the employer.

What are the Time Management Laws in Saudi Arabia?

Saudi Arabia’s time management laws cover working hours, rest breaks, overtime, and days off to ensure fair working conditions and protect both employers and employees.

• Standard Working Hours: Most employees work eight hours a day, up to 48 hours a week, spread over six days. During Ramadan, hours may be reduced to six per day or 36 per week for fasting employees.
• Breaks: Employees are entitled to at least a 30-minute break after every five hours of work. These breaks are not counted as part of the working hours.
• Overtime Regulations: Work beyond standard hours is considered overtime, which must be paid at 150% of the regular rate. Alternatively, compensatory leave can be arranged.
• Weekly Day Off: Friday is the typical day off. Some sectors may have different days off based on their needs.
• Public Holidays: Employees get paid leave on public holidays. Essential services may require work during these times, with compensation or alternative days off.
• Special Cases: Sectors like healthcare may have different working hour regulations due to their nature, including shift work or irregular hours.

These regulations help ensure a balanced work-life environment, fair compensation, and a productive workplace, benefiting both employers and employees.

What is the Labor Law for Saudis and Non-Saudis?

Agreed-Upon Work Conditions for Saudis and Non-Saudis

Workers must meet the minimum age requirement of 21 for males and 22 for females. However, minors aged 15 and above may be employed under the provisions of Article 10 of the regulations.

Workers must undergo a medical examination from an authorized body to ensure they are fit for the job.

Workers should have the necessary academic or practical qualifications for the position they are applying for.

Applicants need to provide a certificate confirming their good behavior and conduct.

Female workers must follow a specific dress code at official work sites.

Distinct Labor Regulations for Non-Saudi Employees

Non-Saudi workers are limited to fixed-term contracts, which can be renewed or changed to open-ended contracts. In contrast, Saudi workers can have open-ended contracts.

Non-Saudi workers must complete additional procedures, such as obtaining ministry approval, having a valid work permit, and holding a passport valid for at least six months.

As per Article 33, non-Saudi workers must have professional skills not available among Saudi citizens or the existing workforce. They may also be categorized as necessary workers for the country.

What are the Laws Regarding Employment, Work, and Termination of Service in Saudi Arabia?

Employment, labor, and termination laws in Saudi Arabia provide a detailed framework to regulate employer-employee relationships, ensure fairness, protect rights, and set clear rules for ending employment. These laws are primarily found in Saudi Labor Law (Royal Decree No. M/51).

Employment Laws in Saudi Arabia

• Employment Contracts: Saudi Labor Law requires written contracts that detail job roles, pay, working hours, benefits, and termination conditions. Contracts can be open-ended or fixed-term with clear renewal and termination provisions.
• Probation Period: Employers may set a probation period of up to 90 days, during which termination can occur without notice.
• Working Hours and Breaks: The standard workday is eight hours, totaling 48 hours per week, with Friday as the weekly day off. Employees are entitled to breaks after every five consecutive hours of work.
• Overtime Regulations: Any work beyond regular hours is considered overtime and must be paid at a rate of at least 150% of the regular hourly wage. Alternatively, compensatory time off can be arranged.
• Employee Rights: Employees are entitled to annual leave, sick leave, maternity leave, and end-of-service benefits based on their length of service.

Labor Laws in Saudi Arabia

• Workplace Safety and Health: Employers must ensure a safe working environment, adhere to health and safety regulations, and provide necessary training and protective gear.
• Non-Discrimination and Equal Treatment: Saudi labor laws promote equality and prohibit discrimination based on gender, religion, nationality, or disability.
• Unionization and Collective Bargaining: Unionization is limited, but collective bargaining is permitted in certain sectors under specific conditions.

Termination Laws in Saudi Arabia

• Termination Procedures: Termination can occur by mutual agreement, at the end of a fixed-term contract, during the probation period, or for valid reasons. Notice periods are specified based on length of service.
• End-of-Service Benefits: Employees who have worked for at least two years are entitled to end-of-service benefits calculated based on their length of service and final salary.
• Unlawful Termination: Unlawful termination may lead to compensation or reinstatement, depending on the situation.

What are the Payment Laws in Saudi Arabia?

Payment laws in Saudi Arabia are essential for ensuring fair employee compensation, regulating payment methods, and setting guidelines for wages. These laws are part of Saudi Labor Law (Royal Decree No. M/51).

Wage Structure and Payment Laws

• Minimum Wages: Saudi Arabia does not have a national minimum wage. Wages are usually determined through employer-employee negotiations or based on industry standards.
• Salary: Employers must pay salaries regularly, usually monthly unless stated otherwise in the employment contract.
• Components of Compensation: Salaries typically include a basic amount plus allowances (like housing and transportation) and overtime pay.
• Overtime Pay: Overtime work must be paid at a rate of at least 150% of the regular hourly wage.

Deductions and Withholdings

• Permissible Deductions: Employers can deduct wages for taxes, social security, and other legally approved reasons.
• Prohibited Deductions: Deductions that are not consented to by the employee, those that reduce wages below the legal threshold, or those unrelated to employment are not allowed.

End-of-Service Bonus

• Calculation of Benefits: Employees who complete two years of service are eligible for an end-of-service bonus based on their service duration and final salary.
• Payment Upon Termination: Employees must receive their end-of-service bonus within the period specified by labor law upon termination.

Legal Framework and Compliance

Saudi payment laws are designed to protect employees’ rights and ensure they are paid fairly and on time. Employers must follow these laws, and failure to comply can result in penalties or legal action.

What are Saudi Arabia’s Laws for Overtime?

Overtime laws in Saudi Arabia are part of labor regulations that govern extra work hours beyond the standard work schedule. These rules are detailed in Saudi Labor Law (Royal Decree No. M/51) and ensure fair treatment and compensation for overtime.

Overtime Work Regulations

• Definition of Overtime Work: Overtime refers to work performed beyond the regular working hours set in the employment contract or labor laws.
• Compensation Rate: Overtime must be paid at a rate of at least 150% of the regular hourly wage.
• Maximum Hours of Overtime Work: There are limits on the total hours of overtime worked per week to prevent excessive fatigue.
• Calculation of Overtime Work: Overtime pay is based on the regular hourly rate. For example, if the regular rate is SAR 30 per hour, the overtime rate must be at least SAR 45 per hour.
• Alternative to Overtime Pay: Employers and employees can agree on compensatory time off instead of cash payment for overtime hours. This arrangement must be documented in the contract.

Employer Obligations and Compliance

Employers must ensure they follow overtime regulations, accurately record overtime hours, and pay employees accordingly. Failure to comply can result in legal consequences, fines, or penalties.

Exceptions and Special Circumstances

Some industries, like healthcare or emergency services, may have different overtime regulations due to the nature of their work, including irregular hours or shifts.

What are the Leave/Break Laws in Saudi Arabia?

Leave and break regulations in Saudi Arabia are crucial for ensuring that employees get adequate time off, including annual leave, official holidays, and other types of leave. These regulations, outlined in Saudi Labor Law (Royal Decree No. M/51), aim to protect employees’ rights and clarify employers’ responsibilities regarding time off.

Annual Leave Entitlement

• Duration of Annual Leave: According to Saudi Labor Law, employees earn annual leave after completing one year of continuous service. The length of leave typically increases with the number of years worked, up to a maximum of 30 days per year.
• Calculation of Leave: Generally, employees with one to five years of service are entitled to 21 days of annual leave. This can increase based on additional years of service.
• Utilization of Annual Leave: Employees should use their annual leave within the agreed time frame, considering both operational needs and mutual agreements with their employer.

Official Holidays and Days Off

• Official Holidays: Saudi Arabia observes several official holidays, including religious and national ones. Employees usually receive paid leave for these holidays. However, some essential sectors may require employees to work during these times, with appropriate compensation provided.
• Weekly Day Off: Most employees get Fridays off, though some industries or roles might have different days off based on their operational needs or specific agreements in their employment contracts.

Sick Leave and Other Types of Leave

• Sick Leave: Employees are entitled to paid sick leave under Saudi Labor Law, allowing them to recover from illness or injury. Employers are generally required to pay employees during their sick leave, according to the law’s provisions.
• Other Breaks: Employees must take a break of at least 30 minutes after working five consecutive hours. These breaks are separate from annual leave and are meant to help employees rest during their workday.

Employer Obligations and Compliance

Employers must follow leave and break regulations, including properly recording employees’ leave entitlements, granting leave as required, and providing necessary compensation.

What are the Child Labor Laws in Saudi Arabia?

Child labor laws in Saudi Arabia are designed to protect children’s rights and ensure they are not exploited or involved in work that could harm their education, health, or development. These regulations are set out under various statutes, including Royal Decree No. M/51.

Prohibition of Child Labor

• Minimum Working Age: Saudi labor laws ban the employment of children under 15 years old, following international standards like the International Labor Organization Convention on Minimum Age for Employment.
• Restrictions on Hazardous Work: Minors under 18 are not allowed to work in hazardous or strenuous jobs that could endanger their health, safety, or moral development.
• Education and Training: The law supports children’s education and encourages employers to avoid employing minors in ways that conflict with their schooling.

Exceptions and Regulations Regarding the Employment of Minors

• Apprenticeships and Vocational Training: Minors aged 15 to 18 can participate in apprenticeships or vocational training, provided the work is safe and does not interfere with their health or development.
• Working Hours and Conditions: For minors who are employed, labor laws set limits on working hours to ensure that their work does not disrupt their education and allows them adequate rest.
• Employer Responsibilities: Employers hiring minors must ensure their safety, well-being, and suitable working conditions, and comply with regulations protecting young workers’ rights.

Enforcement and Penalties

• Regulatory Authorities: The Ministry of Human Resources and Social Development is responsible for enforcing child labor laws in Saudi Arabia, conducting inspections, and ensuring compliance.
• Penalties for Violations: Employers who violate child labor laws may face fines or other legal consequences, emphasizing the importance of avoiding unauthorized or dangerous work involving minors.

In Saudi Arabia, labor laws and regulations are essential for fair employment practices and protecting workers’ rights. These laws regulate employer-employee relationships and contribute to creating a productive and fair work environment. Adhering to these laws is crucial for businesses and organizations, promoting a culture of respect and fairness in the workplace. As Saudi Arabia continues to advance, enforcing and following these labor laws will be key to maintaining a balanced and thriving labor market.

Last updates in labor laws in Saudi Arabia 2024

On Tuesday, the Saudi Council of Ministers approved significant changes to the Labor Law. These amendments are designed to create a more attractive work environment and support sustainable development goals aligned with Saudi Vision 2030.

The Ministry of Human Resources and Social Development announced that the amendments cover 38 articles, including the deletion of seven articles and the addition of two new ones. These changes align with the Saudi employment market strategy and international agreements ratified by the Kingdom. The new regulations will take effect 180 days after their publication in the official Gazette.

Objectives of the Amendments

The primary goals of the amendments are to:

• Improve the labour market in Saudi Arabia
• Enhance job stability
• Protect the rights of all parties involved in the employment relationship
• Develop human resources
• Increase training opportunities for workers
• Create more job opportunities for Saudi citizens

Key Changes and Additions

Vacation and Labor Contracts: Expanded provisions on vacations and labor contracts.

Definitions and Procedures: Added definitions for terms like resignation and assignment, and specified procedures for resignation

Grievance Procedures: Revised grievance procedures for workers

Penalties: Introduced penalties for employing workers without a license from the Ministry

Training Policies: Mandated that employers develop policies for employee training and qualification to enhance skills

Maritime Work: Revised provisions related to maritime work

How Batic Law Firm Can Help You

We specialize in navigating the recent amendments to the Saudi Labor Law. Our services include:

Advising on New Regulations: We help you understand and implement the latest changes in labor laws.

Contract Services: We draft and review employment contracts to ensure compliance.

Dispute Resolution: We assist in resolving employment disputes and grievances.

Compliance and Training: We support you in creating effective training policies and maintaining regulatory compliance.

Let us handle the complexities of labor law so you can focus on your business and contact Batic Law Firm today for expert legal support.