Saudi labor law is constantly evolving to ensure the protection of all actors in the world of work. This law contemplates each element of the relationship that must exist between companies and workers. Therefore, it is of the utmost importance that both parties are aware of their rights and duties under this legislation.
In this article, you will find details of salient elements of labour law Saudi Arabia, such as which workers it covers. In addition, you will learn what the law says about permits, benefits, working hours, and trial periods, among others. Let us see:
1. Who does cover the labour law in Saudi Arabia?
2. Employment contracts in Saudi labour law
3. What does labor law in Saudi Arabia say about working hours?
4. Benefits for workers in the labor law KSA
5. Permits and licenses for workers
6. Termination of the contract according to Saudi labor law
7. End of Service Benefits in Saudi Arabia
8. How can we help you with the labor law of Saudi Arabia?
1. Who does cover the labour law in Saudi Arabia?
All labour laws in Saudi Arabia are established to govern the employment relationship between an employer and its workers. Thus, employees in the country have their labor rights protected through this law. In this case, expatriate workers who work in companies or establishments fall within this protection.
However, workers who perform the following jobs are not covered by this law:
- Domestic service workers, such as drivers, maids, and gardeners, among others.
- Workers in the agricultural industry in companies with less than 10 workers.
- People who work on ships with loads of less than 500 tons.
- Employees with a short-term work visa.
In addition to those mentioned, other provisions remark workers who are not covered by labour law Saudi Arabia.
2. Employment contracts in Saudi labour law
Saudi labor law states that there must be a written employment contract between the employer and the employee. In addition, in said contract, the company must specify its duration, which is generally two years. Likewise, the agreement must be in Arabic but it can be in another language, although in disputes Arabic will prevail.
Additionally, the employment contract must clearly include the following elements:
- Name and address of employer and employee
- The position
- Agreement Duration
- The agreed salary
- The provision of free food or meal allowance
- Work hours
- Assignments
- Holidays
- Health insurance
- End-of-Service Benefits
- Dispute Settlement Mode
In addition, the labor law Saudi specifies other elements which must be included in the employment contract. In this case, we will detail the ones mentioned and some others in the following sections so that you know each one of them.
2.1 Trial period
One of the elements that can be reflected in the employment contract is the trial period for potential employees. By provision of Saudi Arabia labor law, this period cannot exceed 90 days (3 months). However, both parties can agree to an extension of this period, which should not exceed 180 days.
In addition, during this period, Saudi labor law determines that either party (employee or employer) can terminate the contract. In this case, the employee will not receive any type of compensation or benefit for the end of service. Furthermore, the worker must bear the cost of his return ticket to his country of origin.
2.2 Renewal of the employment contract according to the KSA labor law
Saudi labor law establishes that fixed-term contracts will end on the date determined therein. In this case, the employer must cover the repatriation expenses of the worker. However, if both parties continue to implement the agreement, the law considers the contract to be renewed for one with no specified duration.
Thus, if the aforementioned occurs, the duration of the contract will be the same as the validity of the work permit. However, an agreement may contain a clause that determines the renewal of the contract for an equal or a specified term.
On the other hand, a fixed-term contract becomes one for an indefinite term if the employer renews it for two immediate terms. The same will happen if the duration of the original agreement and the renewal period add up to three years. This occurs with whichever of the two conditions is less and if the employer continues to implement the contract.
On the other hand, if the worker needs to return home when the labor agreement expires, he must give prior notification. In this case, the notice period varies according to the type of agreement:
- For fixed-term contracts, the notice period is 30 days.
- For indefinite-term agreements, the notice period is 60 days.
In both cases, the worker and the employee must count these days before the contract termination date.
3. What does labor law in Saudi Arabia say about working hours?
Regarding working hours, Saudi labor law determines that working hours consist of 8 hours per day and 48 hours per week. However, during Ramadan, the working hours of Muslim workers decrease to 6 hours per day and 36 per week. Also, the rest day is Friday but the employer can request to change this day for any of its employees.
On the other hand, the working day must include a mandatory 30-minute rest period. In addition, the company cannot force an employee to work for more than 5 continuous hours. Likewise, working hours cannot exceed 12 hours a day, and overtime is paid at 150% of the common salary.
4. Benefits for workers in the labor law KSA
In various circumstances, Saudi Arabia labour law requires businesses in the country to offer benefits to their workers. In this case, the services cover lodging, food, and medical insurance, among others. Here are some details about these benefits:
- Accommodation. In this case, the company must provide accommodation or a rental contribution as established in the work agreement.
- Feeding. In the same way, the Saudi Ministry of labor law establishes that the company must provide food or a subsidy to the worker.
- Payment of fees. Employees must bear the following expenses:
- Recruitment expenses
- Medical tests
- Iqama
- Fines for delays
- Entry and exit visa
- Medical insurance. Employers are also required by Saudi Arabian labor law provisions to provide their workers with health insurance. This includes the medical examination before obtaining the Iqama for the worker, that is an obligated requirement for obtain the permit.
5. Permits and licenses for workers
Workers in Saudi Arabia have the right to receive the licenses established by Saudi labor law. Each of these licenses must also be reflected by the company in the labor agreement of the expatriate worker. The permits established in the law that a worker can enjoy in the country are the following:
- Annual leave of 21 days for workers with one year of service completed. However, workers with 5 years of service in the same company may receive 30 days.
- The worker can receive sick leave with the first 30 days paid and 3/4 of the salary for the next 60 days. However, during the last 30 days, you will not receive any kind of payment.
- The workers will receive 10 weeks of maternity leave divided into 4 weeks before childbirth and 6 after it. In this situation, the payment will be half the salary for 1 year of service and full salary for 3 years.
- Paternity leave consists of 3 days for the birth of the child of the worker.
- For the death of a spouse or a child, the employee will receive a 5-day leave. However, female employees whose husband passes away will receive a leave of 15-130 days depending on their religion.
- The worker will receive a paid leave of 10 to 15 days to perform the Hajj, after completing two years of service.
- The labor law of Saudi Arabia grants three paid holidays, Saudi National Day, Eid al-Fitr, and Eid al-Adha. However, if the worker must work any of those days, he must receive overtime pay.
6. Termination of the contract according to Saudi labor law
Labor law Saudi Arabia sets out the reasons for which an employment contract can be terminated. In addition, these reasons may be by mutual agreement between the interested parties or for other reasons. These circumstances are the following:
- By mutual agreement during the trial period
- The worker failed the medical exam
- By mutual consent
- Expiration of the contract term
- At the discretion of both parties in permanent contracts
- When the worker reaches retirement age
On the other hand, the company may dismiss the worker without prior notice for assaulting the employer or any company personnel. In addition, the employer may terminate the contract if the worker does not comply with his contractual obligations. Other reasons include bad labor practices, and unjustified absence during the periods established by law, among others.
For his part, the employee can terminate his contract without prior notice in any of the following cases:
- The employer does not fulfill its contractual obligations
- Commits fraud in contract agreements
- Assigns the worker tasks not established in the agreement
- Assaults or insults the worker or their relatives
- The employer does not eliminate safety risks of which it is aware
- Accuse the worker as the cause of the termination of the contract
These and other reasons are clearly stated in the labour law in Saudi Arabia. In addition, in case there is no justification for terminating the contract, the affected party will receive compensation. This must be paid in full by the other party.
7. End of Service Benefits in Saudi Arabia
Once the contract is terminated, the worker may receive benefits for termination of service but only after 2 years of work. In this case, you will receive 15 days of salary for each year of work less than 5 years. However, you will receive a salary of one month for each year that you exceed the top 5.
On the other hand, Saudi labor law establishes some conditions for the payment of end-of-service benefits. Apart from the normal conditions mentioned, it also determines the following:
- In case of resignation, the worker will receive 1/3 of the benefit for a service of between 2 and 5 years. You will receive 2/3 of the award for 5 to 10 years of service and the full amount for 10 years or more.
- If the worker resigns due to force majeure, he will receive the full benefit. In addition, the workers will have this same right if their contract ends within 6 months of their marriage. You will also receive it within 3 months after having a baby.
Likewise, the Saudi labor law for final exit determines that the worker must receive a payment within 7 days. However, if the worker terminates the agreement, the employer must make the payment within two weeks.
8. How can we help you with the labor law of Saudi Arabia?
Saudi labor law establishes the rules and regulations that establish the labor relations between a company and an employee. It establishes both the rights of the worker, as well as those of the employer, and the duties of both. Therefore, both parties must know each of these aspects to avoid legal inconveniences.
For these reasons, at PEO Middleast we offer our services to advise you in any employment situation. In addition, we can not only guide you but also offer you the following services:
- PEO
- Employer of record
- Human Resources Management
- Remote Employee Hiring
- Payroll services
- Hiring of contractors
- Global Immigration
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Our experience covers every aspect of employment, including Saudi labour law. Therefore, contact us so that we can provide you with the best service through the number +971 43 316 688. In addition, we have the email [email protected] so that you receive the answers you need.
Saudi Arabia has a lot to offer in the workplace and you can be a part of it by visiting thetalentpoint.com. There you will find great job options, which you can opt for by sending your CV to [email protected].
