Saudi Arabia Labor Laws Archives - Yaqoot Manpower Services

20Mar

What Every Worker in Saudi Arabia MUST Know Before Signing a Contract

Starting a new job in Saudi Arabia can be exciting. Whether you’re a local or an expat, one of the most important things you’ll do before starting work is sign an employment contract. This contract is not just a piece of paper. It’s a legal agreement that explains your rights, your responsibilities, and how your job will work.

If you don’t read it carefully, or don’t understand what it says, you might face problems later. That’s why we wrote this simple, clear guide to help you understand everything you MUST know before signing a work contract in Saudi Arabia.

1. What Is an Employment Contract?

An employment contract is a written agreement between you and your employer. It lists important details about your job like:

Your job title
Your salary
Your working hours
Your vacation days
How long the job will last
The rules you must follow
And what happens if you leave or get fired

This contract is a legal document, which means it can be used in court if there’s a problem. So, never treat it like “just paperwork.”

2. Types of Employment Contracts in Saudi Arabia

There are two main types of contracts:

a. Fixed-Term Contract

This contract is for a specific amount of time — for example, 1 year or 2 years. It ends automatically when the time is up, unless you and your employer both agree to renew it.

b. Unlimited (Open-Ended) Contract

This contract doesn’t have an end date. It continues until either you or your employer decide to end it, by giving proper notice.

Important: If you’re an expat on a work visa, your contract usually matches the duration of your Iqama (residency permit).

3. What Should Be Included in Your Contract?

Your contract should clearly include:

Full name and details of both the worker and the employer
Start date and (if fixed) end date
Job title and job description
Salary details, including any bonuses or allowances (housing, transport, etc.)
Working hours (standard is 8 hours/day, 48 hours/week; fewer during Ramadan)
Overtime pay rules
Leave entitlements (annual leave, sick leave, public holidays)
Notice period for resignation or termination
Probation period (usually up to 90 days)
End of service benefits

If anything is missing or not clear, ask for it to be added or explained before you sign.

4. What Language Will the Contract Be In?

In Saudi Arabia, the official language is Arabic. So, even if your employer gives you a copy in English, the Arabic version is the one that counts in legal matters.

Tip: Always get a trusted translation if you don’t read Arabic well.

5. Understand Your Rights Under Saudi Labour Law

The Saudi Labour Law protects both workers and employers. Here are some of your key rights:

1. Right to a Written Contract

Your employer must give you a written contract within 90 days of starting work.

2. Right to Fair Wages

Your salary should be paid on time, at least once a month. Delayed wages are illegal.

3. Right to Rest and Leave

You’re entitled to:

21 days of paid annual leave (increases to 30 days after 5 years)
11 official public holidays
Sick leave (up to 30 days paid, more under certain conditions)
Maternity and paternity leave (for eligible workers)

4. End of Service Benefits

When your contract ends, you may get a lump sum payment, depending on how long you worked and how your contract ended.

6. Beware of These Red Flags

Here are some warning signs to watch for in a job contract:

No clear salary mentioned
Vague job title or description
Unusual or unfair penalties for quitting early
No mention of overtime or leave
Promises made verbally but not written in the contract

If it’s not in writing, it doesn’t count. Always make sure everything you agreed on is written in the contract.

7. Probation Period: What Does It Mean?

Most jobs in Saudi Arabia include a probation period. This is a short time (up to 90 days) when the employer can test your work. During this time:

You can be let go without full end-of-service benefits
You can resign more easily
You should still receive your salary and basic rights

If your employer wants to extend this period, it must be agreed to in writing — and can only go up to 180 days max (with mutual consent).

8. Notice Period: How to Leave Your Job the Right Way

If you want to leave your job, or if your employer wants to end your contract, there must be a notice period — usually 30 to 60 days, depending on your contract.

Leaving without notice may mean:

You lose some or all of your end-of-service benefits
You may be banned from working in Saudi Arabia again (if you’re an expat)

Always give written notice and follow the legal process to protect yourself.

9. Can the Employer Change the Contract Later?

Not without your written agreement. If your employer wants to change your job title, pay, or working hours, they must:

Get your permission in writing
Create a new contract or addendum
Ensure changes follow labour law

If they force changes without your consent, you can file a complaint with the Ministry of Human Resources and Social Development (MHRSD).

10. Know Where to Go for Help

If you have a problem with your employer, or your contract is being violated, you can contact:

MHRSD (Ministry of Human Resources and Social Development)
Website: www.hrsd.gov.sa
Labor Disputes Courts: For serious cases where legal action is needed
Your Embassy (if you’re a foreign worker in Saudi Arabia): They can offer guidance and protection

Also, the Musaned platform (for domestic workers) helps with contracts, complaints, and visa issues.

Final Thoughts

Before you sign any contract in Saudi Arabia, take a deep breath, sit down, and read it carefully. Don’t be shy to ask questions or ask for changes. A good employer will understand that you want to protect your rights.

Here’s a quick checklist before you sign:

Read every part
Get it in writing
Make sure it’s in Arabic (or translated)
Ask about salary, leave, and overtime
Understand your notice period
Keep a copy for yourself

Whether you’re a cleaner, engineer, teacher, or IT expert, your contract is the foundation of your job. Treat it seriously — and you’ll start your work journey in Saudi Arabia with confidence and peace of mind.

Need Help Understanding a Work Contract in Saudi Arabia?

If you’re unsure, talk to a legal advisor or labor consultant before signing. It’s better to ask now than regret later.

19Feb

Employer Rights & Responsibilities in Saudi Arabia: A Complete Guide

Understanding employer rights and responsibilities in Saudi Arabia is crucial for businesses operating in the Kingdom. Whether you are a local business owner or a foreign company looking to expand, knowing the legal framework helps in maintaining compliance, ensuring fair treatment of employees, and fostering a productive work environment.

This detailed guide provides an easy-to-understand overview of employer rights and obligations under Saudi labor law.

Employer Rights in Saudi Arabia

Employers in Saudi Arabia have specific rights granted under the Saudi Labor Law, which allows them to manage their workforce effectively while protecting business interests. Below are some key rights:

1. Hiring and Termination

Employers have the right to hire employees based on their business needs while following Saudi Arabia’s Saudization (Nitaqat) program, which encourages the employment of Saudi nationals.
Termination of employees is allowed, provided it follows legal procedures, such as giving proper notice and ensuring valid reasons, such as misconduct, repeated violations, or business closure.
Employers can put employees on probation for a maximum of 90 days, extendable by another 90 days, to evaluate their performance before confirming permanent employment.

2. Setting Work Conditions

Employers can define work schedules, responsibilities, and workplace rules as long as they comply with labor laws.
Working hours should not exceed 8 hours per day or 48 hours per week, except during Ramadan when Muslim employees work a maximum of 6 hours per day.
Employers can implement overtime, provided they pay employees an extra 50% of their regular hourly wage for overtime work.

3. Managing Employee Conduct

Employers have the right to enforce workplace policies related to dress code, behavior, attendance, and safety standards.
Disciplinary actions such as warnings, salary deductions, or termination can be taken if an employee violates company policies.

4. Intellectual Property & Confidentiality

Employers can enforce confidentiality agreements to protect business secrets and sensitive information.
In some cases, employers can claim ownership of an employee’s work, such as inventions or creative projects, if developed during employment and related to the business.

5. Sponsorship & Residency (Iqama) Control

Employers sponsor foreign employees by providing work permits and residency (Iqama) under the Kafala (sponsorship) system.
Employers have the right to request exit re-entry permits for expatriate workers and control employment transfers, though recent reforms allow more worker mobility.

Employer Responsibilities in Saudi Arabia

While employers have rights, they also carry significant responsibilities to ensure fair treatment of employees and compliance with labor laws. Below are the key responsibilities:

1. Providing a Written Employment Contract

Employers must provide employees with a written contract that outlines job duties, salary, working hours, and other conditions.
Contracts should be in Arabic (or bilingual) and registered in the labor system for legal validity.

2. Paying Salaries on Time

Employers must pay employees their wages on time, usually monthly, through a bank transfer system known as the Wage Protection System (WPS).
Any delay in payment can result in fines or legal action from labor authorities.

3. Ensuring a Safe Work Environment

Employers must comply with occupational health and safety regulations to provide a secure workplace.
They must supply safety gear, conduct risk assessments, and take measures to prevent workplace accidents.
In case of workplace injuries, employers must compensate employees as per labor law provisions.

4. Providing Annual Leave & Holidays

Employees are entitled to a minimum of 21 days of paid annual leave, increasing to 30 days after five years of service.
Public holidays, such as Eid Al-Fitr and Eid Al-Adha, must also be granted as per labor regulations.
Sick leave is also mandatory, with employees entitled to 120 days of leave (full pay for the first 30 days, 75% for the next 60 days, and unpaid leave for the remaining 30 days).

5. Granting End-of-Service Benefits (ESB)

Employers must provide an end-of-service gratuity to employees based on their years of service.
Employees with two to five years of service receive one-third of one month’s wage per year; those with five to ten years receive two-thirds; and those with over ten years get a full month’s wage per year of service.

6. Non-Discrimination & Fair Treatment

Employers must treat employees fairly, regardless of nationality, gender, or religion.
Harassment or discrimination in the workplace is prohibited and can lead to legal consequences.

7. Facilitating Employee Resignations & Transfers

Employers must allow employees to resign by following the notice period stated in the contract.
Under recent labor reforms, foreign employees can switch jobs without employer approval after completing their contract or serving the required notice period.

Legal Consequences for Non-Compliance

Employers who fail to comply with Saudi labor laws may face penalties, including:

Fines and legal actions for delayed wages, lack of contracts, or safety violations.
Business license suspension in extreme cases of labor law violations.
Blacklisting of the company, preventing further hiring of foreign workers.

Conclusion

Understanding employer rights and responsibilities in Saudi Arabia is vital for running a legally compliant and successful business. Employers must balance their authority with fair treatment of employees while following labor regulations. By ensuring timely salary payments, providing safe work conditions, and respecting legal obligations, businesses can build a strong and reputable workforce in the Kingdom.

For employers looking to streamline their recruitment and HR processes, partnering with a reliable manpower agency in Saudi Arabia can simplify compliance and ensure smooth workforce management in Saudi Arabia.

Get in touch with Yaqoot Manpower Services in Saudi Arabia if you need some professional help whether you are an employer looking for manpower supply or a job seeker looking for job consultancy in the kingdom.

10Feb

The Ultimate Guide to Labor Law Compliance in Saudi Arabia for Foreign Investors

Introduction

Saudi Arabia is one of the largest economies in the Middle East and a prime destination for foreign investment. With its Vision 2030 plan, the country is actively diversifying its economy, creating new opportunities for businesses worldwide. However, if you are a foreign investor planning to set up a business in Saudi Arabia, understanding and complying with labor laws is crucial to running a successful operation.

In this detailed and step-by-step guide, we will break down the key aspects of labor law compliance in Saudi Arabia in a clear and easy-to-understand way, ensuring that you stay within the legal framework while managing your workforce effectively.

Understanding Saudi Labor Law

The Saudi Labor Law governs employment relationships in the Kingdom and is enforced by the Ministry of Human Resources and Social Development (MHRSD). It applies to all private-sector employees, including foreign workers. The law covers recruitment, employment contracts, wages, working hours, termination policies, and more.

1. Employment Contracts

All employees in Saudi Arabia must have a written employment contract in Arabic, detailing key terms such as:

Job title and responsibilities
Salary and benefits
Working hours and leave entitlements
Contract duration (fixed-term or indefinite)

If a dispute arises and the contract is not in Arabic, the Arabic version prevails.

2. Work Permits and Iqama (Residence Permit)

Foreign workers in Saudi Arabia must have a valid work permit and Iqama, issued by the employer through the Ministry of Interior. Employers are responsible for:

Sponsoring employees and ensuring visa compliance
Renewing work permits and Iqamas before expiry
Covering costs related to work permits and medical insurance

Without an Iqama, a foreign worker cannot legally work or access basic services.

3. Saudization (Nitaqat System)

Saudi Arabia has a workforce nationalization program called Nitaqat, which mandates that companies hire a certain percentage of Saudi nationals. The program classifies businesses into categories (Platinum, Green, Yellow, and Red) based on their compliance level.

Foreign investors must carefully plan their recruitment strategy to meet Saudization requirements, or they may face penalties, such as:

Restrictions on hiring new foreign workers
Non-renewal of work permits for current employees

4. Working Hours and Overtime

The standard workweek is 48 hours (8 hours per day, 6 days a week).
During Ramadan, Muslim employees work 6 hours per day.
Overtime pay is 150% of the regular wage for extra hours worked.
Friday is the designated weekly rest day, though employers may assign another day.

5. Wages and Payroll Compliance

Employers must pay salaries through the Wage Protection System (WPS), ensuring transparency and timely payments. Key payroll regulations include:

Salaries must be paid at least once a month.
The minimum wage for Saudi employees is 4,000 SAR to be counted under Saudization quotas.
Employers must contribute to social insurance (GOSI) for employees.

6. Leave Entitlements

Employees are entitled to:

Annual leave: 21 days (increases to 30 days after five years of service)
Sick leave: Up to 120 days (first 30 days fully paid, then partial payments)
Maternity leave: 10 weeks (fully paid for Saudi women, partially paid for others)
Public holidays: Typically, Eid and National Day holidays

7. Employee Termination and End-of-Service Benefits

Termination must follow legal procedures to avoid labor disputes. Common reasons for termination include:

Resignation (employee must give notice)
Employer-initiated termination (must have a valid reason)
Contract expiration

Upon termination, employees are entitled to end-of-service benefits (ESB) based on their tenure:

Half a month’s salary per year for the first five years
One full month’s salary per year after five years

8. Health and Safety Regulations

Employers must provide a safe and healthy work environment by:

Conducting regular safety training
Providing protective equipment when needed
Reporting workplace injuries to authorities

The Ministry of Human Resources and Social Development enforces workplace safety regulations, and non-compliance can lead to fines or legal action.

Key Compliance Challenges for Foreign Investors

1. Navigating Saudization Requirements

Balancing the hiring of foreign and local workers can be challenging. Working with recruitment agencies can help businesses meet Saudization targets efficiently.

2. Keeping Up with Regulatory Changes

Saudi labor laws evolve frequently, requiring businesses to stay updated. Engaging with local legal experts can help foreign investors ensure compliance.

3. Payroll and Taxation Issues

Handling salaries, social insurance, and taxes correctly is crucial. Employers should implement payroll management systems or outsource payroll services for compliance.

4. Handling Disputes and Legal Issues

Labor disputes should be resolved through mediation before escalating to the labor courts. Employers should maintain clear employment policies to prevent conflicts.

Conclusion

For foreign investors, understanding Saudi Arabia’s labor laws is essential for a smooth business operation. Ensuring compliance with employment contracts, work permits, Saudization, wages, and termination policies will protect your business from legal issues and foster a productive work environment.

Partnering with HR and legal experts can simplify the compliance process, allowing you to focus on growing your business in Saudi Arabia.

By staying informed and proactive, foreign investors can successfully navigate labor law requirements and build a thriving workforce in the Kingdom.

If you’re looking for manpower supply company in Saudi Arabia, contact us or call us at +966 56 400 3762 to discuss your manpower needs.