Saudi Arabia Labor Laws

May 6th 2024

The Kingdom of Saudi Arabia, renowned for its economic growth and development, operates within a comprehensive legal framework governing labor laws and regulations. These laws establish the foundation for the relationship between employers and employees, safeguarding workers’ rights while delineating the responsibilities of employers.

The labor laws in Saudi Arabia cover various aspects including employment contracts, working hours, wages, termination of service, and measures against discrimination. Understanding these regulations is of paramount importance for both employers and employees to ensure compliance, fair treatment, and a harmonious work environment.

This Article Covers:

What is an Employment Contract according to Saudi Labor Law?

According to Article 50 of the Saudi Labor Law, “An employment contract is an agreement reached between an employer and an employee. The employee agrees to work under the employer’s management or supervision in exchange for a wage. This contract forms the basis of the relationship between the employee and their workplace and both parties must adhere to its terms. Should there be any changes to the contract during the course of the employee’s tenure, consent must be obtained from both the employee and employer.

It is essential for the employee to understand the contract terms and how they align with the general rules and provisions of labor law. This law regulates the contractual relationship before, during, and after the contract’s termination. All conditions and mechanisms conflicting with the provisions of labor law are considered void. The labor law ensures that the contractual relationship is transparent and leaves no room for doubt or ambiguity.

There are certain requirements that Saudi Labor Law specifies for employment contracts, outlining the rights and obligations of both employers and employees. Below are some key points that employment contracts should outline:

  • Written Contract: The Saudi Labor Law mandates providing a written employment contract to employees. This contract must include details of employment terms and conditions, including job description, salary, working hours, probation period (if any), benefits, and termination conditions.
  • Duration and Renewal: The contract must specify the duration of employment, whether fixed-term or open-ended. In the case of fixed-term contracts, the duration and renewal terms must be clearly stated.
  • Probation Period: The law allows for a probationary period not exceeding 90 days, during which either party can terminate the contract without notice. Terms of the probation period must be mentioned in the contract.
  • Compensation and Benefits: The contract should specify the salary, allowances, bonuses, and any other entitlements the employee is eligible to receive. It should also detail overtime pay, if applicable.
  • Working Hours and days off: The contract must define the regular working hours on a daily or weekly basis, as well as days off and any applicable regulations for overtime work.
  • Termination Conditions: Clear procedures for termination by either party should be outlined in the contract, including notice periods and any end-of-service or termination benefits.
  • Employee Rights: The contract should address employee rights concerning annual leave, sick leave, maternity leave (if applicable), and other entitlements as per Saudi Labor Law.
  • Employer Obligations: Employer responsibilities regarding workplace safety, providing a conducive work environment, and compliance with labor laws and regulations should be included in the contract.

It’s important to note that Saudi Labor Laws may be subject to updates and revisions, thus consulting legal experts or relevant authorities is advised to ensure compliance with the latest regulations when drafting or reviewing employment contracts in Saudi Arabia.

Guidelines for Creating an Employment Contract under Saudi Labor Laws

The employment contract unified template, as developed by the Ministry of Human Resources and Social Development, must primarily include the following information:

  • Employer’s name and location.
  • Employee’s name, nationality, proof of identity, and residential address.
  • Agreed-upon salary (including benefits and allowances).
  • Nature of the work, its location, and the date of joining.
  • Duration if it’s unspecified (for non-Saudis).

Furthermore, according to Article 52, both parties to the contract may add additional clauses that do not contradict the law, its regulations, and the decisions made based on it. Additionally, the employment contract must be written in duplicate copies retained by both parties. If the contract is not written, it is still considered valid, and the employee can prove its existence and the rights arising from it by any means of evidence. Either party can request the contract to be put in writing at any time. In the case of government employees and public institutions, the appointment decision or order shall serve as the contract, according to Article 51.

Methods for the employee to prove their contract and work may include:

  • Attendance and leave records.
  • Bank transactions.
  • Copy of their salary slip.
  • Acknowledgment of employment acceptance.
  • Job offers sent to them.
  • Correspondence between them and the hiring manager or employer.

What are the Time Management Laws in Saudi Arabia?

Time management laws in Saudi Arabia encompass regulations governing working hours, rest periods, overtime, and days off for employees across various sectors. These laws are designed to ensure fair and favorable working conditions while protecting the rights of both employers and employees.

  • Standard Working Hours: According to Saudi labor laws, standard working hours for most employees are eight hours per day, totaling 48 hours per week, usually distributed over six days. However, during the month of Ramadan, working hours for fasting Muslim employees may be reduced to six hours per day or 36 hours per week.
  • Breaks: Employees are entitled to breaks during their working hours. The law mandates a mandatory break of no less than 30 minutes after every five consecutive hours of work. These breaks are not considered part of the total working hours.
  • Overtime Regulations: Any work performed outside of standard working hours is classified as overtime. Employers are required to compensate employees for overtime work at a rate not less than 150% of their regular hourly wage. Alternatively, compensatory leave arrangements may be made between involved parties.
  • Weekly Day Off: Friday is the designated weekly day off for most employees in Saudi Arabia. However, some industries or job roles may have different days off based on operational needs.
  • Public Holidays: Employees are entitled to paid leave on officially recognized public holidays in Saudi Arabia. However, some essential services may require employees to work during holidays, with compensation or alternative days off provided in return.
  • Special Cases and Industry-specific Regulations: Certain sectors, such as healthcare and emergency services, operate under different working hour regulations due to the nature of their work. Shift work or irregular working hours may be common in such industries.

These time management laws aim to enhance employee well-being, maintain a work-life balance, and ensure fair compensation for work performed beyond regular working hours. Compliance with these regulations helps create a harmonious and productive work environment in Saudi Arabia while safeguarding the rights of 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 years for males and 22 years for females. However, minors below the age of fifteen may be employed according to the provisions of Article 10 of the regulations.
  • Workers must undergo a medical examination from an accredited authority to prove their fitness for the job.
  • The worker should possess academic or practical qualifications suitable for the vacant position applied for.
  • Applicants must provide a certificate attesting to their good conduct and behavior.
  • Female workers must adhere to a specified dress code in official work premises.

Distinct Labor Regulations for Non-Saudi Employees

  • Non-Saudi workers are limited to fixed-term contracts that can be renewed or converted into open-ended contracts, unlike Saudi workers who can enter into open-ended contracts.
  • Non-Saudi workers need to complete additional procedures and submit specific documents, such as ministry approval, a valid work permit, and a passport valid for at least 6 months.
  • According to Article 33 of the regulations, non-Saudi workers are required to possess professional competencies not available among the citizens of the country, or that the existing workforce does not meet the need. They may also be classified as regular workers needed by the country.

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

Employment, labor, and termination laws in Saudi Arabia constitute a comprehensive framework designed to regulate the relationship between employers and employees, ensure fair treatment, protect rights, and establish clear guidelines for termination of service. These laws largely fall under Saudi Labor Law (Royal Decree No. M/51), which defines various aspects of employment practices and termination procedures.

Employment Laws in Saudi Arabia

  • Employment Contracts: The Saudi Labor Law mandates written employment contracts specifying conditions such as job description, compensation, working hours, benefits, and termination terms. Contracts can be either open-ended or fixed-term, with clear provisions for renewal and termination.
  • Probation Period: Employers may establish a probation period of up to 90 days. During this period, termination may occur without prior notice.
  • Working Hours and Breaks: Standard working hours are typically eight hours per day, totaling 48 hours per week, with Friday as the weekly rest day. Employees are entitled to breaks after every five consecutive working hours.
  • Overtime Regulations: Any work beyond standard working hours is considered overtime, compensable at a rate not less than 150% of the regular hourly wage, or through compensatory leave.
  • Employee Rights: The Saudi Labor Law grants employees rights such as annual leave, sick leave, maternity leave, and end-of-service gratuities based on length of service.

Labor Laws in Saudi Arabia

  • Workplace Safety and Health: Employers are obligated to maintain a safe working environment, comply with health and safety regulations, and provide necessary training and protective equipment for employees.
  • Non-Discrimination and Equal Treatment: Labor laws in Saudi Arabia emphasize workplace equality and prohibit discrimination based on gender, religion, nationality, or disability.
  • Unionization and Collective Bargaining: While unionization is restricted, collective bargaining is allowed for certain sectors under specific conditions.

Termination Laws in Saudi Arabia

  • Termination Procedures: Termination may occur through mutual agreement, at the end of a fixed-term contract, during the probation period, or for just cause. The law specifies notice periods based on length of service.
  • End-of-Service Benefits: Employees terminated after completing two years of service are entitled to end-of-service gratuities calculated based on their length of service and final salary.
  • Unlawful Termination: Unlawful termination may result in compensation for the employee or reinstatement to their position, depending on the circumstances.

What are the Payment Laws in Saudi Arabia?

Payment laws in Saudi Arabia constitute a crucial aspect of the country’s legal framework, aiming to ensure fair compensation for employees, regulate payment methods, and establish clear guidelines for wage-related matters. These laws primarily fall under Saudi Labor Law (Royal Decree No. M/51), governing various aspects of payment, including wage structure, deductions, and timely salary disbursal.

Wage Structure and Payment Laws

  • Minimum Wages: Saudi Arabia doesn’t have a nationally mandated minimum wage. Instead, wage rates are typically determined through negotiations between employers and employees or based on industry standards.
  • Salary: Employers are required to pay salaries to employees on a regular basis, usually on a monthly basis unless otherwise stipulated in the employment contract.
  • Components of Compensation: Salaries in Saudi Arabia often comprise the basic salary and allowances (such as housing, transportation, and other benefits), as well as overtime compensation.
  • Overtime Pay: Overtime work is compensated at a rate not less than 150% of the regular hourly wage, as mandated by Saudi Labor Law.

Deductions and Withholdings

  • Permissible Deductions: Employers are permitted to make deductions from employees’ wages for reasons such as taxes, social security contributions, and legally allowable deductions as agreed upon in the employment contract or permitted by law.
  • Prohibited Deductions: Some deductions, such as those made without employee consent, those reducing wages below the minimum threshold, or those unrelated to employment, are prohibited under Saudi Labor Law.

End-of-Service Bonus

  • Calculation of Benefits: Employees who have completed two years of service are entitled to an end-of-service Bonus. These benefits are calculated based on the employee’s length of service and final salary.
  • Payment Upon Termination: In the event of termination, employees are entitled to receive their end-of-service bonus within a specified period, as outlined in the labor law.

Legal Framework and Compliance

The payment laws in Saudi Arabia aim to protect employees’ rights and ensure fair and timely compensation. Employers are legally obligated to comply with these laws, and failure to do so may result in penalties, fines, or legal repercussions.

What are Saudi Arabia’s Laws for Overtime?

Overtime work laws in Saudi Arabia constitute an important aspect of labor regulations in the country, governing compensations, restrictions, and procedures surrounding work hours that exceed the standard work schedule. These laws are elaborated within Saudi Labor Law (Royal Decree No. M/51), which provides guiding principles to ensure fair treatment of employees and appropriate compensation for overtime work.

Overtime Work Regulations

  • Definition of Overtime Work: Overtime work refers to any work performed outside the specified standard working hours in the employment contract or as stipulated in labor laws.
  • Compensation Rate: According to the Saudi Labor Law, overtime work must be compensated at a rate not less than 150% of the employee’s regular hourly wage. This rate is higher than the standard wage to acknowledge the extra effort and time contributed by the employee.
  • Maximum Hours of Overtime Work: The law imposes restrictions on the number of hours of overtime work that an employee can undertake. Typically, the total of regular working hours plus overtime hours should not exceed certain limits per week, ensuring employees are not excessively fatigued.
  • Calculation of Overtime Work: Overtime compensation is calculated based on the employee’s regular wage. For example, if the employee’s regular wage is SAR 30 per hour, they must receive at least SAR 45 per hour for each overtime hour worked.
  • Alternative to Overtime Pay: In some cases, employers and employees may agree to compensatory time off instead of cash compensation for overtime work. This arrangement should be mutually agreed upon and documented in the employment contract.

Employer Obligations and Compliance

Employers in Saudi Arabia are responsible for ensuring compliance with overtime work regulations, including accurately recording the overtime hours worked by employees and paying them promptly or compensating for these extra hours. Non-compliance with these laws may lead to legal consequences, fines, or penalties for employers.

Exceptions and Special Circumstances

Some industries or job roles may have exemptions or specific regulations regarding overtime work due to the nature of the work. For example, essential services such as healthcare or emergency services may require employees to work irregular hours or shifts.

What are the Leave/Break Laws in Saudi Arabia?

Leave and break regulations in Saudi Arabia are crucial components of labor laws in the country, designed to ensure employees receive sufficient time off, including annual leave, official holidays, and other types of leave, to maintain a healthy work-life balance. These laws primarily fall under Saudi Labor Law (Royal Decree No. M/51) and aim to protect the rights of employees while specifying employers’ responsibilities regarding leave entitlements.

Annual Leave Entitlement

  • Duration of Annual Leave: According to Saudi Labor Law, employees are entitled to annual leave after completing one year of continuous service with the employer. The duration of annual leave is typically calculated based on the employee’s length of service, with longer periods granted for increased years of service.
  • Calculation of Leave: The standard entitlement for annual leave in Saudi Arabia is usually 21 days per year for employees who have completed one to five years of service. The entitlement may increase with additional years of service, up to a maximum of 30 days per year.
  • Utilization of Annual Leave: Employees are entitled to utilize their annual leave within agreed-upon periods negotiated between the employer and the employee, taking into account operational requirements and mutual benefits.

Official Holidays and Days off

  • Official Holidays: Saudi Arabia recognizes numerous official holidays, including religious and national holidays. Generally, employees are entitled to paid leave on these holidays, although some essential services may require employees to work during these periods, compensating them accordingly.
  • Weekly Day off: Friday is the designated weekly day off for most employees in Saudi Arabia. However, some industries or specific job roles may have different rest days depending on operational needs or agreements outlined in the employment contract.

Sick Leave and Other Types of Leave

  • Sick Leave: Saudi Labor Law permits paid sick leave, providing employees with the necessary time off to recover from illnesses or injuries. Employers are usually required to compensate employees during their sick leave, according to specific conditions stipulated in the law.
  • Other breaks: Employees are entitled to mandatory breaks during their working hours of not less than 30 minutes after every five consecutive hours of work. These breaks are separate from annual leave entitlements and aim to ensure employees have time to rest and recharge during the workday.

Employer Obligations and Compliance

Employers in Saudi Arabia are responsible for ensuring compliance with leave and rest regulations, including accurately recording employees’ leave entitlements, granting leave as mandated by law, and providing compensation where applicable.

What are the Child Labor Laws in Saudi Arabia?

Child labor laws in Saudi Arabia are important safeguards aimed at protecting the rights, safety, and well-being of children, ensuring they are not exploited or engaged in work that could jeopardize their education, health, or development. These regulations are established under various statutes, Royal Decree No. M/51, and other provisions that prohibit child labor and delineate guidelines for the employment of minors.

Prohibition of Child Labor

  • Minimum Working Age: Saudi labor laws strictly prohibit the employment of children under the age of 15. This provision aligns with international standards set forth in agreements such as the International Labor Organization Convention concerning the Minimum Age for Admission to Employment.
  • Restrictions on Hazardous Work: The law prohibits minors under the age of 18 from engaging in specific hazardous or strenuous work that could endanger their health, safety, or moral development.
  • Education and Training: Legislation emphasizes the importance of education for children and encourages employers to support minors’ educational endeavors by refraining from employing them in a manner that conflicts with their schooling.

Exceptions and Regulations Regarding the Employment of Minors

  • Apprenticeships and Vocational Training: Minors aged between 15 and 18 may engage in certain types of work, such as apprenticeships or vocational training programs, provided the work does not harm their health or development.
  • Working Hours and Conditions: For employed minors, Saudi labor laws impose restrictions on working hours, ensuring their work does not interfere with their education and allows for adequate rest and leisure.
  • Employer Responsibilities: Employers hiring minors bear the responsibility of ensuring the safety, well-being, and suitable conditions for these young workers, as well as compliance with regulations to protect their rights and welfare.

Enforcement and Penalties

  • Regulatory Authorities: The Ministry of Human Resources and Social Development oversees the enforcement of child labor laws in Saudi Arabia, conducting inspections and taking measures to ensure compliance with regulations.
  • Penalties for Violations: Employers found in violation of child labor laws may face penalties, fines, or legal consequences, underscoring the dangers of engaging minors in unauthorized or hazardous work.

Conclusion

In Saudi Arabia, labor laws and regulations serve as pillars supporting fair employment practices and protecting workers’ rights. These laws not only regulate the relationship between employers and employees but also significantly contribute to fostering a productive and equitable work environment. Compliance with these laws is essential for companies and institutions, fostering a culture of respect, fairness, and compliance within the workforce. As Saudi Arabia continues its journey toward progress, ensuring effective enforcement and adherence to labor laws will remain central to maintaining a balanced and thriving labor market.

Important Cautionary Note

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