Ultimate Guide Regarding Saudi Arabia Labour Law

Ultimate Guide Regarding Saudi Arabia Labour Law - 1

Saudi Arabia’s labour law follows a regular update to ensure the security of all participants in the labour market. This comprehensive legislation covers every aspect of the contractual relationship between employers and employees. It is important for both parties to be aware of their rights and responsibilities as highlighted in this regulation.

This blog will provide you with valuable insights into essential elements of Saudi Arabia’s labour law, including the protection of different categories of workers. It also explores the provisions about benefits, work permits, work schedules, and trial periods among other things.  By getting this type of information individuals can ensure compliance with the law and make informed decisions in the labour market.

Areas which are covered under Saudi Arabia’s labour law?

In Saudi Arabia labour law govern the employment contract between companies and their workers, ensuring the protection of workers’ rights across the country. This legal framework extends to foreign employees engaged in employment with businesses or other establishments.

In Saudi Arabia labour regulations govern the employment contract between companies their workers, ensuring the protection of workers’ rights across the country. This legal framework extends to foreign employees engaged in employment with businesses or other reputed organizations.

The areas and jobs which are not covered under the labour law of Saudi Arabia

  • The workers who are employees in the agriculture sector-related work.
  • Domestic workers who are doing the job of drivers, maids, and gardeners
  • The employees who are on temporary work visa.


Ultimate Guide Regarding Saudi Arabia Labour Law - 2

Saudi Arabia Labour Law about Employment Contracts

According to  Saudi Arabia labour law, it is mandatory for both employer and employee to have a valid and signed employment contract. The contract must specify the duration of the agreement, usually set for two years. While the contract can be in a language other than Arabic. It is required to be in Arabia, and in case of any dispute, the Arabia version will take precedence.

However, Saudi Arabia’s labour law specifies that the employment agreement must explicitly include certain important components that are given below:

  • The employer’s and employees’ complete addresses and their names
  • Job title
  • Work schedules
  • Salaries decision
  • Medical coverage
  • Perks and privileges
  • Meal allowances
  • Agreement term
  • Dispute resolution mode

Furthermore, the labor law in Saudi Arabia specifies additional components that must be included in the employment contract. To ensure full understanding, the following sections will describe the existing requirements as well as introduce a few additional components that should be considered.

  1. Renewal of employment contract following the Saudi Arabia labour law

As per the following Saudi Arabia labour law, long-term contracts automatically expire on the specified date. In such cases, the company is responsible for covering the employees’ repatriation costs. However, if both parties continue to fulfill the terms of original agreements without specifying different renewal duration. The contract is deemed to continue indefinitely. The duration of the contract will then align with the validity of the work permit unless there is a provision in the contract specifying a different renewal duration.

In the correspondence of a short-term contract is extended for two consecutive periods or if the total duration of the initial contract and its renewal reaches three years, the contract becomes one with an indefinite period of time. This conversion occurs if the employer continues to comply with the contract’s term. Subject to whichever condition is shorter. 

In addition, if an employee needs to return home before the contract’s expiration, it is necessary to provide advance notice to the employer. The notice period varies depending on the type of contract: 30 days for fixed-term contracts and 60 days for contracts with an indefinite length. Both the employer and the employee must calculate and adhere to these notice periods before the contract’s termination date in both scenarios.

  1. Employees’ Trial Period

The employment contract in Saudi Arabia may include a trial period for prospective employees, as per labour regulations. The duration of this trial period is limited to 90 days. However both the employer and employee have the option to extend this period, with a maximum extension of 180 days.

Furthermore, it is important to note that either party, whether the employer or the employee has the right to terminate the contract term during this trial period. In such cases, the workers will be released without any form of payment or compensation. Additionally, the employee is responsible for covering the costs of their return flight to their home country.

Saudi Arabia labour law

Saudi Labour Law Benefits Provision to the Employee

The Saudi Arabia labour law provides several benefits and protections for employees. Here are some key employee benefits outlined in the labor law:

End-of-Service Benefit: Employees are entitled to an end-of-service benefit, also known as a termination benefit, upon the completion of their employment contract. The benefit amount is based on the length of service and the employee’s salary.

Paid Annual Leave:

 Employees are entitled to paid annual leave based on their length of service. The duration of annual leave varies depending on the employee’s years of service, with longer service periods granting more leave days.

Sick Leave:

Employees are entitled to sick leave with full pay for a certain duration, depending on the illness or injury. The exact duration and conditions for sick leave are specified in the labor law.

Overtime Pay:

 If employees are required to work beyond their regular working hours, they are entitled to overtime pay or compensatory time off in accordance with the labor law.

Public Holidays:

 Employees are entitled to paid leave on public holidays as per the labor law. The specific public holidays and conditions for eligibility are defined by the government.

Work Injury Compensation:

In the event of a work-related injury or occupational disease, employees are entitled to compensation and medical care as per the labor law.

These are some of the key employee benefits provided by the labor law in Saudi Arabia. It is important for both employers and employees to familiarize themselves with the specific provisions of the labor law to ensure compliance and understanding of their rights and entitlements.

Working hour according to Saudi Arabia labour law

According to the Saudi Arabia labour law, the maximum working hours per week should not exceed 48 hours or 8 hour per day. However, during the month of Ramadan Muslims employees work reduced hours of 6 hours per day and 36 hours per week. In addition, Friday is designated as week off day. Although employees have the right to request a schedule modification.

It is mandatory for employers to provide a 30-minute break within the working day. The Employers are not allowed to make the workers work continuously for more than 5 hours. On the other hand, if employees wanted to work beyond their regular hours. They are entitled to overtime compensation at a rate of 150% of their regular wage.

Saudi labor law regarding Termination of Contracts

Saudi labor law provides regulations regarding the termination of employment contracts. Here are some key points outlined in the labor law regarding contract termination:

Termination by the Employer: The employer has the right to terminate an employment contract under certain circumstances, such as the employee’s misconduct, poor performance, or violation of contractual obligations. However, proper procedures and justifications must be followed as per the labor law.

Termination by the Employee: Employees also have the right to terminate their employment contract by providing advance notice to the employer, as specified in the labor law. The notice period varies depending on the type of contract, with fixed-term contracts typically requiring shorter notice periods compared to contracts with indefinite lengths.

End of Service Benefits: In the event of contract termination, employees are entitled to end-of-service benefits, also known as termination benefits. The amount is calculated based on the length of service and the employee’s salary. These benefits are typically paid by the employer to the employee upon contract termination.

Unilateral Termination: Unilateral termination by either party without valid reasons or following proper procedures can lead to potential legal consequences. The labor law provides protection against arbitrary or unfair termination.

It is important for both employers and employees to adhere to the regulations outlined in the labor law when it comes to contract termination. Seeking legal advice or consulting with relevant authorities can provide further guidance in ensuring compliance with the law and protecting the rights of both parties involved.

Concluding Remarks

In concluding remarks, developing your understanding of Saudi Arabia’s labour law is vital for both employees and employers in Saudi Arabia. This comprehensive legislation provides proper guidance regarding contracts, working hours, employment benefits, termination of contracts and etc. By understanding and complying with labour law, both employers and employees can ensure a fair and lawful working environment. Staying updated with all the updates with any changes to the law and seeking legal advice, when needed will help maintain a harmonious relationship and protect the rights of all parties involved. In short, fully understanding Saudi Arabia’s labour law is crucial for making a productive and respectful work environment in the kingdom.



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