Saudi Arabia has a well-defined legal framework, governing employment relationships. Saudi Labor Law aims to protect both employers and employees. It outlines employment’s rights, obligations, and conditions. Understanding these laws is crucial for an employee or an employer in the Kingdom alike. It helps maintain a fair and balanced working environment.
In this guide, we talk about it in detail, we break down:
- Key aspects of Saudi Labor Law, including
- Employee contracts, rights, and recent updates.
- How PEO Middle East assist in this regard
What Are the Saudi Arabia’s Employment Laws?
Saudi Arabia’s employment regulations is governed by the Saudi Labor Law. The law was issued under Royal Decree No. M/51 of 23 Sha’ban 1426 (September 27, 2005). It outlines the rules surrounding:
—> Employment contracts
—> Working hours
—> Wages
—> Leave entitlements, and more.
Significant reforms were made in the year 2021. It introduces improved worker protections and allows more freedom for employees. It is designed for foreign workers. For instance, Resolution No. 51848/1442 came into effect in March 2021. It introduced various amendments that provide more flexibility for employees. They can now easily change their jobs and exercise their rights effectively.
Key Aspects of Saudi Arabia Labor Law Employers Must Know in 2024
Recent Reforms in Saudi Labor Law
Recent changes to the labor laws have focused on providing employees with more autonomy and clarity in the workforce. Below are the notable updates under Resolution No. 51848/1442:
Job Mobility:
Employees can now leave their jobs without employer consent. They can do so when their contract ends.
Notice Periods:
Workers who worked in Saudi Arabia for one year can leave their jobs. Their contract period must still valid. However, they have to serve a 90-day notice period.
New Job Search Process:
Employees can search for new jobs and submit transfer requests. In addition, they can notify their current employer using an electronic portal.
Flexibility for Employers:
Employers can terminate employees on indefinite contracts for valid reasons. These can be misconduct or any other valid reason. Workers with a monthly salary have a 60-day notice period. For others, the 30-day notice period is a must. Before expiry, fixed-term contracts can be terminated for just cause
These changes aim to modernize the labor market. It also ensures fair treatment of all Saudi workers.
Saudi Arabia’s General Employment Laws
Saudi labor regulations apply to Saudi nationals and expatriates alike. However, certain differences depend on the employee’s nationality. The key provisions of the Saudi Labor Law include:
Age and Employment Restrictions
Minimum Age for Employment:
To get employment, male workers must be 21 years old. On the other hand, females must be 22 years old. Minors under 18 can’t work in hazardous jobs. In addition, children under 15 years old can’t be employed. They are not even allowed to enter a workplace.
Medical Examination:
All employees must undergo a medical examination. The step ensures they are fit for the job.
Dress Code for Female Workers
In the workplace, female employees must follow specific dress codes. It includes the following details:
- Females can wear long-sleeved tops or dresses.
- Clothing must have high necklines and be loose-fitted.
- Full-length skirts or loose-fitting trousers are allowed
For all genders, these regulations create a respectful yet equitable workplace.
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Labour Regulations for Saudi Nationals: Saudisation
Saudi Arabia introduced the Saudisation policy, known as Nitaqat. According to this, companies must hire a certain percentage of Saudi nationals. The aim is to reduce unemployment while boosting the local economy. The 2024 updates to Saudisation regulations reinforce this policy with the following criteria:
Business Classification and Size:
Saudisation requirements vary. It is based on business classification and employee numbers
Minimum Quota for Saudi Nationals:
- Businesses with fewer than 5 employees must employ at least 1 Saudi national.
- International companies must have a Saudi national in a key management role. The position next to the General Manager.
- Companies with 100 employees or more should have at least 30% Saudi nationals in their workforce.
Organizations meeting the Saudisation quota will receive a Green status or Premium. This gives them access to block visas. However, companies that fall short of these quotas are given a Red status. This means they have limitations in hiring expatriates.
Expatriate Employee’s Labour Regulations
Expatriates are 66% of Saudi Arabia’s workforce. Therefore, the government has enacted specific regulations. The purpose is to boost fair treatment and protect their rights. Below are key rules regarding expatriate employment:
Work Permits and Iqama
Expats can live and work in Saudi Arabia by Iqama which is a residency permit. Employers must obtain and renew work permits when required. They are required to issue Iqama visas for expatriate workers. In addition, expats must work within the limits of their work permit. They cannot change their profession without following the legal procedures. Also, expatriates must have a Saudi sponsor. It is the responsibility of their employer to obtain an Iqama and work permit.
Changes Under the 2024 Saudi Labor Law Employment Contract
The Saudi Labor Law 2024 introduced several key changes for expatriates:
Written Contracts:
Expatriate workers must have a written work contract with a fixed term.
Job Restrictions:
Without legal approval, workers cannot change jobs. Also, employers must follow rules when allowing employees to work for others.
Work Restrictions:
Expats must not be employed in roles other than what their work permit specifies.
Working Hours and Time Management Laws
The Saudi Labor Law governs working hours, rest periods, and overtime to ensure employees maintain a good work-life balance:
Standard Working Hours:
The working hours are 8 hours per day. The standard timing equals to 48 hours per week. However, they are reduced to 6 hours per day during Ramadan. This equals 36 hours per week.
Rest Periods:
Employees must take at least 30 minutes of rest. They can take a break after 5 continuous working hours.
Overtime:
Employees get overtime pay at 150% of their regular hourly wage. However, both parties may agree on compensatory time off alternatively. This can be taken instead of monetary compensation.
Weekly Rest Day:
Friday is the official rest day. Still, some companies may choose a different day off. Workers are entitled to at least one full day of rest per week.
Public Holidays:
Saudi Arabia recognizes several public holidays. Employees can get paid leave on these days.
Additional Rights and Employer Obligations
Employers have various additional responsibilities under Saudi Labor Law to ensure employee welfare:
Anti-Discrimination Laws
The law includes provisions to prevent discrimination based on:
- Race
- Gender
- Nationality
- Religion
- Disability
Employers must create an inclusive workplace. An atmosphere that is free of bias.
Health and Safety Regulations
- Employers must conduct safety training. This way, they ensure employee’s protection
- Workplaces must be equipped with necessary safety gear. These must comply with health regulations.
- Clear emergency protocols must be in place. These include fire drills and evacuation plans.
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Annual Leave and Public Holidays
Saudi Arabia’s employees are entitled to:
- 21 days of paid annual leave after 1–5 years of service. This increases to 30 days after five years of service.
- Employees get paid leave on Saudi national holidays. These are for Eid al-Fitr, Eid al-Adha, and National Day.
Social Security and Health Insurance
Employers are required to:
- Register employees with the GOSI.
- Provide health insurance to employees. This ensures that they have access to medical care.
Leave Entitlements
Workers are entitled to the following leave types:
Sick Leave:
Employees can avail up to annual 30 days of paid sick leave.
Maternity Leave:
Female workers receive paid maternity leave of 10 weeks.
Paternity Leave:
Male employees are granted paid paternity leave of 3 days
Bereavement Leave:
Employees may receive 5 days if the death of a close family member happens.
Hajj Leave:
Muslim employees avail of 10 days of paid leave. These are granted to perform the Hajj pilgrimage after two years of service.
Payroll Rules and Compensation
The kingdom does not have a minimum wage in the private sector. However, the public sector has a minimum wage of SAR 3,000 per month. For instance, the key payroll regulations include:
Payment of Wages:
Employers must pay wages at least once a month timely. Payments must be made in Saudi Riyals. It can be in other currencies too if agreed to.
Deductions from Wages:
Employers can deduct from wages for:
- Taxes
- Social Security, and
- Fines
However, the deductions must communicated to the employee.
Employment Contracts under Saudi Labor Law
An employment contract is a legally binding agreement. It binds both the employer and employee together. All employment contracts must be:
—> In writing and signed by both parties.
—> Clear about the terms of employment. These include compensation, working hours, and rights. These are specified under Saudi Labor Law.
Conclusion
Saudi Labor Law understanding is crucial for employers and employees. The law ensures compliance and protects their rights. Staying informed about the latest updates is important. Especially with the recent reforms in labor laws. This helps avoid any legal issues. Employers should check their contracts are aligned with the law. Similarly, workers must be aware of their rights. The rights must be under the new regulations.
Getting assistance from experts like PEO Middle East will prove to be a good decision. Let yourself be aware of the current reforms without making any effort. With experts, you can streamline processes in minutes. Rest assured have compliance with Saudi Labor Laws effectively today!
Hire PEO Middle East: Get Instant Assistance to Understand Saudi Employee Contract
PEO Middle East is an emerging agency in the Middle East. The experts have a deep understanding of the local laws of Saudi Arabia and thus deliver easy help to those looking for easy assistance. No matter if you’re an expat or a Saudi National, we hold your hand to understand every single detail regarding your employment contract. Now, doing jobs in the kingdom becomes easy when you have professionals on your side. Be aware of your rights timely by getting our guidance or otherwise, you’ll be far behind knowing the current reforms of law. Contact us today and we’ll guide you on the path to success. Remember, as an employer you can also take our consultation. We not only assist Saudi employees but our services are for Saudi employers as well.
