Saudi Arabia Labor Law Amendments: Preparing for Compliance

Saudi Arabia announced amendments to its Labor Law in August 2024, which will come in effect from February 2025 (that is, 180 days following publication in the official gazette). The amendments introduce enhanced worker protections, expanded employer obligations, and structured frameworks for contracts, aligning with the Kingdom’s Vision 2030 goals.

The Kingdom of Saudi Arabia Labor Law (KSA Labor Law), first enacted under Royal Decree (M/51) on 27 September 2005, has undergone significant amendments as of August 6, 2024. These updates, effective February 2025, introduce enhanced worker protections, expanded employer obligations, and new frameworks for employment contracts.

The labor law amendments aim to align with Saudi Arabia’s Vision 2030 by fostering job security, human capital development, and a conducive work environment. While the Implementing Regulations are yet to be released, employers must begin adapting to the key changes outlined below.

Expanded employer responsibilities and worker protections

The amendments introduce new definitions and clarify employer responsibilities, particularly in areas like grievance procedures, resignation processes, leave entitlements, contract terms, and working conditions. Specific focus has been placed on regulating outsourcing and introducing a structured framework for maritime employment contracts.

Key changes include introducing new definitions for “resignation,” defined as a written, voluntary termination of a fixed-term contract, and “manpower activity,” which refers to recruitment services provided by licensed agencies. Wage and compensation regulations now allow employers to offer compensatory leave for overtime with employee consent and require them to provide accommodation and transportation or equivalent allowances. The resignation process has been clarified with provisions on acceptance, employer’s right to delay, withdrawal, and a prohibition on postdated resignations.

Additionally, the amendments refine probation period terms, specifying duration, exclusions, and termination rights. Employees on ships under 500 tons are no longer exempt from the Labour Law.

For non-KSA nationals, contracts are fixed at one year, with automatic renewal. Leave policies have been improved, extending maternity leave to 12 weeks on full pay, introducing parental leave for male employees, and providing three days of bereavement leave for the death of a sibling.

Termination rules now include bankruptcy as a valid reason, and employees have more time to contest disciplinary actions. Furthermore, the notice period for terminating indefinite contracts has been revised, and specific updates have been made to Articles 2, 199, 178, and 230.

Overall, these changes reflect a progressive shift towards enhancing employee rights and improving workplace conditions.

Some key amendments and recommendations for employers in Saudi Arabia

Article 35

• Amendment: The Ministry may deny work permit renewals for breaches of any labor regulations, not just Saudization requirements.
• Effect on employers: Employers must strictly comply with all labor laws.
• Recommendation: Regularly review policies to ensure alignment with Saudization quotas and labor regulations.

Article 37

• Amendment: For non-Saudi employees, if a contract lacks a specified duration, it is deemed valid for one year and automatically renews for the same term.
• Effect on employers: Clear contract durations are mandatory for non-Saudi employees.
• Recommendation: Update existing contracts to specify terms explicitly.

Article 42

• Amendment: Employers are now required to develop comprehensive training and qualification policies for Saudi workers.
• Effect on employers: A more strategic approach to workforce development is needed.
• Recommendation: Create a detailed training plan tailored to Saudi employees.

Article 43

• Amendment: The Minister may set any percentage for Saudi worker training, with future regulations outlining specific criteria.
• Effect on employers: Flexibility in training quotas, subject to Ministerial regulations.
• Recommendation: Monitor and adapt training programs accordingly.

Articles 46, 48, and 51

• Amendment: Training contracts must be structured with clear objectives, roles, and performance evaluations.
• Effect on employers: Enhanced clarity and validity of training contracts.
• Recommendation: Revise or draft training contracts to align with the new standards.

Article 52

• Amendment: The Ministry will provide model forms for various employment contracts.
• Effect on employers: Easier adoption of compliant contract templates.
• Recommendation: Familiarize with and adopt the Ministry’s model forms as needed.

Article 75

• Amendment: Notice period for indefinite contracts terminated by employees reduced from 60 to 30 days.
• Effect on employers: Shortened notice period requires policy adjustments.
• Recommendation: Update termination policies to reflect the change.

Article 79

• Amendment: New regulations introduced for employee resignation.
• Effect on employers: Compliance with updated resignation procedures.
• Recommendation: Review and revise resignation policies.

Article 107

• Amendment: Employers may offer compensatory paid leave instead of overtime wages with worker consent, as detailed in the Regulations.
• Effect on employers: Increased flexibility in managing overtime compensation.
• Recommendation: Develop policies for granting compensatory leave.

Article 113

• Amendment: Three-day leave with full pay introduced for the death of a worker’s sibling.
• Effect on employers: Expanded bereavement leave entitlements.
• Recommendation: Update leave policies to include this provision.

Article 151

• Amendment: Maternity leave extended from 10 weeks to 12 weeks.
• Effect on employers: Longer paid maternity leave.
• Recommendation: Adjust leave policies to reflect the extension.

Preparing for compliance

Employers operating in Saudi Arabia must take proactive measures to align with the amended KSA Labor Law. While the full scope will become clearer with the release of the Implementing Regulations, businesses are advised to review and update contracts, policies, and training programs immediately to ensure compliance and avoid potential penalties. By prioritizing these changes, employers can better support their workforce and meet regulatory requirements.

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