Labor Laws in Saudi Arabia
The labor laws in Saudi Arabia are the basic statutory framework that regulates the relationship between the employee and the employer, ensuring a fair and balanced work environment that preserves mutual rights and duties.
This page targets private-sector workers, employers, human resources, job seekers, and expatriates, through a simplified and documented explanation of the approved regulations.
What Are the Labor Laws? And Why Were They Issued?
The labor laws are an integrated system of legislation that ensures a balance in the relationship between the employee and the employer, and clearly defines rights and obligations. They aim to:
- Achieve justice
- Job security
- Regulate the Saudi labor market
- Achieve justice
- Job security
- Regulate the Saudi labor market
The most prominent of these laws include the following:
The Labor Law regulates the relationship between the employee and the employer, and includes contracts, wages, working hours, leave, and termination of service.
The Saudi Social Insurance Law provides insurance protection for workers in the public and private sectors, and covers retirement, work injuries, and unemployment.
It allows establishments to employ Saudis with specified working hours without a permanent commitment, while counting them in the Saudization rates.
It regulates the relationship between employers and domestic workers, and defines the rights, duties and contracting conditions.
It criminalizes covering for irregular workers, and punishes anyone who enables a non-Saudi to work on his own account.
It requires establishments to register and pay employees' wages through banks to ensure transparency and prevent delay or manipulation of wages.
It grants some expatriates permanent or temporary residency without a sponsor, which affects their contractual relationship with employers.
It criminalizes the exploitation of labor in forced or inhumane work, and guarantees the rights and protection of victims.
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Scope of Application of the Saudi Labor Law
The Saudi Labor Law covers multiple categories of workers and contracts within the Kingdom, and excludes some special categories that are subject to other regulations. The following are the categories covered by the law in detail:
Key Themes of the Labor Laws
The labor laws in Saudi Arabia include a set of core themes that regulate the details of the relationship between the employee and the employer.
Below are the most important of these themes in a simplified and integrated way:
The Relationship Between the Employee and the Employer
Includes:
- Signing contracts
- Clarity of contract terms
- Conditions and durations of probation periods
- The statutory controls for transferring an employee between establishments or changing the profession
The law regulates these relationships to ensure stability and fairness for both parties.
Financial Rights
The law covers:
- Details of basic wages and allowances (transport, housing)
- The mechanism for paying salaries monthly, and overtime that is calculated at 150%.
- It specifies due dates and the mechanism for grievance over delay.
Leave
The law includes details of the various leave an employee is entitled to:
- Annual (21-30 days)
- Sick leave, maternity leave, paternity leave
- Hajj
- Paternity
It also defines the conditions for requesting it and calculating its payments.
Disciplinary Procedures
When a violation occurs by the employee, the law defines the degrees of penalties:
- Starting with a written warning
- Passing through deduction
- Reaching lawful dismissal
And it requires precise statutory minutes and procedures before any decision.
Termination of the Contract
This theme regulates
- Cases of ending the employment relationship, whether by resignation or dismissal
- Termination of the contract by agreement of the parties
And it explains when the employee is entitled to an end-of-service benefit, or compensation in case of unlawful dismissal.
Resolving Labor Disputes
The labor law provides graduated mechanisms for resolving disputes that ensure the protection of the rights of the employee and the employer.
- They begin with attempts at amicable settlement
- Then move to the competent labor committees according to facilitated judicial procedures
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Selected and Explained Articles from the Saudi Labor Law
What the article stipulates:
The employer may not terminate the contract without an end-of-service benefit, notice or compensation except in specific cases, provided that he gives the employee the opportunity to state his objection before the dismissal.
What the article stipulates:
If either party to the employment contract terminates the contract for an unlawful reason, the injured party is entitled to compensation determined by the competent judicial body, taking into account the type of contract, the period of service, the wage and the extent of the harm. In the case of indefinite-term contracts, compensation is calculated as the equivalent of fifteen days' wage for each year of service. If the contract is fixed-term, the compensation is the equivalent of the wage for the remaining period of the contract, unless the contract includes a specific compensation clause, in which case it is applied.
What the article stipulates:
When the employment relationship ends, the employer must pay the employee a benefit based on the length of his service at his last wage. The benefit is calculated as half a month's wage for each of the first five years, and a full month's wage for each subsequent year after the five years. Fractions of a year are calculated in proportion to the time the employee has spent.
What the article stipulates:
All establishments in Saudi Arabia work to attract and employ Saudi citizens and provide them with training and qualification, and the percentage of Saudi workers in the workforce is not usually less than 75% of the total employees of the employer. If this cannot be achieved due to the absence of competencies or qualifications, the Ministry may temporarily reduce the percentage according to controls.
What the article stipulates:
The employment contract must be written in two copies, each party keeping one, and documented statutorily according to the regulations. The contract is considered valid even if it was not written, and in this case the employee alone has the right to prove the existence of the contract and his rights by all means of proof. Either party may request that the contract be written at any time. As for government bodies, the appointment order issued by the competent body is considered in place of the written contract.
Comparison Between the Labor Laws and the Administrative Laws in Saudi Arabia
Although both regulate the work environment, the labor laws in Saudi Arabia differ fundamentally from the administrative laws in terms of scope of application, rights, and legal reference. The following table shows the most important differences to help you distinguish precisely.
| Item | Labor Laws in Saudi Arabia | Administrative Laws in Saudi Arabia |
|---|---|---|
| Statutory scope | Regulates the relationship between the employee and the employer in the private and non-governmental sector. | Regulates the relationship between the government employee and the official administrative bodies. |
| Primary legal reference |
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|
| Supervising body |
|
|
| Types of contracts | Individual contracts: written or electronic via the electronic employment contract. | Job appointment decisions are not considered traditional contracts, but are based on the general employment law. |
| Method of ending the relationship | Resignation, dismissal, contract expiry — subject to the labor judiciary and articles such as Articles 77 and 80. | Termination of service, retirement or by disciplinary decision — subject to the administrative oversight bodies, not the labor judiciary. |
| Financial rights | Wages, allowances, end-of-service benefit, compensation for arbitrary dismissal, subject to wage protection. | Salaries according to the job scale, annual raises, end of service under the government financial system. |
Frequently Asked Questions About the Legal Consultation Request Service
What are the most important updates to the Saudi Labor Law?
Updates to the labor laws in Saudi Arabia include developing the flexible work system, strengthening wage protection mechanisms, and adopting the unified electronic employment contract. Judges’ powers in the labor judiciary were also strengthened, and all operations were linked to the Qiwa platform to facilitate transactions and oversight.
Can an employee's profession be changed after signing the contract?
According to the Saudi Labor Law, an employee may not practice a job other than the one registered in the work permit. The labor laws in Saudi Arabia stress officially updating the profession before changing jobs, especially for expatriates. This is among the employer’s duties, and entails an obligation under the Social Insurance Law.
Can an employee be dismissed without warning?
The labor laws in Saudi Arabia permit dismissing an employee without warning in specific cases set out in the Saudi Labor Law, particularly Article 80, such as:
- Repeated absence without a legitimate reason.
- Assault or serious breach of duties.
- Documentation of the violation by the employer.
- Otherwise, it is considered arbitrary dismissal and entitles the employee to compensation through the labor judiciary.
What happens when a foreign worker's contract ends?
After the employment contract ends, the foreign worker has the right to move to another employer, or to a final exit. The labor laws in Saudi Arabia apply the provisions of the Social Insurance Law and the end-of-service benefit if its conditions are met, and it is preferable to end the relationship through the Qiwa platform to ensure rights.
Is overtime calculated in Ramadan?
Yes, the labor laws in Saudi Arabia and the Saudi Labor Law confirm that overtime is calculated in Ramadan, according to the following rules:
- Reduction of regular working hours during Ramadan.
- Any additional hour is calculated as overtime.
- Overtime pay equivalent to 50% of the basic wage.
- It is paid with the monthly salary.
- It is subject to wage protection oversight.
Is the sponsorship system still applied in Saudi Arabia?
The contractual relationship was restructured through the initiative to abolish the sponsorship system and replace it with a flexible system governed by the labor laws in Saudi Arabia and documented through the Qiwa platform. Services are transferred automatically after the end of the employment contract, and the employee is allowed job mobility with controls without the permission of the previous employer.
What are the employee's rights during the probation period?
The labor laws in Saudi Arabia define the employee’s rights during the probation period under the Saudi Labor Law, and include:
- The probation period must be stated in the employment contract.
- It must not exceed 90 days, extendable with written consent.
- Either party may terminate the contract without an end-of-service benefit.
- It is counted within the period of service if the contract continues.
- It is registered through the Qiwa platform to ensure rights.
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