Saudi Arabia’s labor market is transforming rapidly in 2025 with the introduction of key updates to the Kingdom’s labour law framework. These reforms, driven by Vision 2030 and overseen by the Ministry of Human Resources and Social Development (MHRSD), aim to build a fairer, more efficient, and business-friendly work environment for both employers and employees.

Whether you’re a business owner, HR manager, or job seeker, staying informed of these changes is critical for remaining compliant and competitive in today’s evolving Saudi workforce.

At Yaqoot Manpower Services, we have distilled the most important updates and provided practical insights to help organizations navigate them confidently — based on trusted industry knowledge and official guidance.

Why Labour Law Reforms Matter in 2025?

Labour law updates in Saudi Arabia are not merely administrative shifts; they are part of a larger effort to:

• Increase private sector participation
• Improve worker protections and rights
• Simplify contract processes
• Digitize employment relationships
• Align with global labor standards

These changes also reflect the Kingdom’s push to attract foreign investment and reduce its reliance on public sector jobs by encouraging private employment and entrepreneurship.

Key Saudi Labour Law Changes in 2025

Below is a breakdown of the most relevant labour law updates employers and employees need to know:

1. Resignation and Acceptance Timelines

In 2025, resignation procedures have been clarified to reduce disputes and delays:

• When an employee submits a resignation, the employer must respond within 30 days.
• If there’s no formal response, the resignation is considered automatically accepted.
• Employees have the right to withdraw their resignation within 7 days of submission.

This change enhances transparency and ensures resignation processes are fair and time-bound.

2. Extended Probation Period

The probation period for new hires has been officially extended from 90 days to 180 days. This extension allows employers to better evaluate a candidate’s performance while giving new employees more time to adjust.

Either party can still terminate the employment during this probation without advance notice or compensation.

3. Working Hours and Overtime Regulations

The law continues to enforce 8 working hours per day or 48 hours per week for most employees. During Ramadan, Muslim employees work 6 hours per day or 36 hours per week.

Other working hour regulations include:

• A mandatory 30-minute break after every 5 hours of continuous work.
• Overtime pay is set at 1.5 times the regular hourly wage.
• If agreed, employers may offer compensatory leave instead of overtime pay.
• Work on official public holidays must be treated and compensated as overtime.

Employers should ensure time tracking systems are updated to record hours accurately and fairly.

4. Comprehensive Leave Policy Updates

The 2025 reforms have provided more clarity on various types of leave:

a) Annual Leave

Employees are entitled to 21 paid days per year, increasing to 30 days after five years of continuous service.

b) Sick Leave

• Employees can now receive up to 120 days of sick leave per year, broken down as:
  • 30 days fully paid
  • 60 days at 75% pay
  • 30 days unpaid
• During the probation period, employees may take sick leave only after 90 days of employment.
• Employers are not allowed to terminate an employee while they are on approved sick leave.

c) Maternity and Paternity Leave

• Female employees are entitled to 14 weeks of maternity leave, including 6 weeks mandatory post-childbirth.
• Nursing mothers are granted 1 hour of paid nursing time daily for up to one year.
• Fathers can now avail 3 days of paternity leave within the first 7 days after childbirth.

d) Marriage and Bereavement Leave

• 5 days of paid leave are granted for marriage.
• In the event of a spouse, parent, or child’s death: 5 days of paid leave.
• For the death of a sibling: 3 days of leave.

e) Hajj Leave

• Muslim employees with two or more years of continuous service are entitled to 10–15 days of paid Hajj leave, once during their employment.

f) Iddah Leave

• Muslim women receive 4 months and 10 days of paid leave after the death of a husband.
• Non-Muslim women receive 15 days of paid leave under similar circumstances.

5. Fixed-Term vs. Indefinite Contracts

Clear distinctions have been reinforced between contract types:

• Fixed-term contracts expire on a predetermined date or project completion.
• If renewed more than three times or extended beyond four years, they may convert into indefinite contracts.
• Only Saudi nationals can be employed on indefinite contracts under current guidelines.
• Employers must provide 30–60 days’ notice when terminating indefinite contracts and offer compensation equal to 15 days of wages per year of service.

For HR teams, properly defining contract terms and renewal strategies is crucial to staying compliant.

6. Termination Guidelines and End-of-Service Benefits (EOSB)

Labour law updates include stricter regulations on termination and EOSB calculations:

• Termination during probation is permitted, but not allowed during sick or maternity leave.
• EOSB must be calculated fairly based on final salary and years of service, and in accordance with updated leave laws.
• Employers must provide documentation and justification for dismissal in most cases.

EOSB transparency is increasingly important as employees become more aware of their legal entitlements.

7. Digitalization of Labour Processes

Saudi Arabia continues to enhance transparency and efficiency through digital platforms such as:

• Qiwa: Central platform for contract management, Saudization status, and worker transfers.
• GOSI: Social insurance records and contribution tracking.
• Mudad: Wage protection system ensuring timely and documented salary payments.

Employers are legally required to use these platforms for contract registration, salary reporting, and employee data verification.

What These Changes Mean for Employers?

At Yaqoot Manpower Services, we advise all companies to take the following proactive steps:

1. Review Contracts and HR Policies

Update employment contracts to reflect new rules on resignation, leave, and working hours.

2. Train HR and Payroll Staff

Ensure teams are well-informed about changes to EOSB, overtime, and leave entitlements.

3. Adopt Digital Platforms

Fully integrate with MHRSD-mandated platforms (Qiwa, GOSI, Mudad) to maintain compliance.

4. Revisit Saudization Planning

With rising compliance checks, companies must track and plan for Saudization targets more strategically.

5. Conduct a Legal Audit

Evaluate your current HR processes for potential non-compliance or legal risks, especially in termination procedures.

How Yaqoot Manpower Services Can Help?

As a trusted manpower and HR outsourcing agency in Saudi Arabia, Yaqoot Manpower Services offers end-to-end support to help businesses align with the latest legal requirements:

• Workforce planning and recruitment (Saudi and expatriate)
• Saudization compliance strategy
• Contract drafting and policy design
• HR audit and legal risk management
• Integration with Qiwa, GOSI, and Mudad systems

With over a decade of industry experience, our team stays ahead of regulatory changes to ensure our clients are always compliant and competitive.

Final Thoughts

The 2025 Saudi labour law updates reflect the Kingdom’s commitment to economic transformation and a modernized labor environment. For employers, this means updating policies and practices. For employees, it offers stronger protections and better clarity.

Compliance isn’t just a legal obligation — it’s a cornerstone of sustainable business success in Saudi Arabia.

Partner with Yaqoot Manpower Services to ensure you remain informed, compliant, and future-ready.