The vast majority of people discover that working and living in Saudi Arabia is a transformative experience. Saudi Arabia has been implementing significant labor changes in the last few years. This, with the goal of enhancing the employment contract in Saudi Arabia, consequently, bringing employee and employer empowerment.
In this article, we will be talking about the employment contract in Saudi Arabia in detail. Knowing about the employment contract KSA is important for future employees and employers alike. Therefore, they will be able to comply with each rule that the contract specifies. Let us observe!
Saudi employment contract requirements
The Labor Law specifies unequivocally that the employment contract in Saudi Arabia needs to be in paper. From a procedural standpoint, all non-GCC national employees must have employment contracts in order to apply for visas. Also, the contract of employment should be drawn up in duplicate, with one copy belonging to each side.
The contract must follow a model set forth by the Ministry of Human Resources and Social Affairs and must contain the following details::
- The name of the employer.
- Registered address.
- The employer’s contact information.
- The employee’s name, nationality, and address.
- Employee’s identification information (such as the national identity card number for citizens or the foreign passport number for non-citizens).
- An overview of the employee’s responsibilities.
- The employee’s pay and any benefits.
- The location of where the work would be done.
- Date of hire and the start of the contract.
- Duration of the contract.
If applicable, the Saudi Arabia employment contract must contain:
- Annual leave as well as general leave policies (such as maternity and compassionate leave).
- Guidelines for benefits and resignation.
- Events leading to termination (such as summary and deliberate dismissal).
- Governing law and forum.
- Among other things, standards governing how employees should behave.
All labor laws in Saudi Arabia are integrated into the employment contract between an employer and its employees. Therefore, this law protects employees’ rights across the country. This protection in this case extends to foreign workers for companies or other organizations.
Nevertheless, this law does not provide job security for the following positions:
- Those who provide domestic services, such as gardeners, maids, and drivers.
- Employees of companies with fewer than 10 employees relating to agriculture.
- Members of the crew of ships transporting no more than 500 tons of cargo.
- Those with a temporary work permit.
In essence, a probationary term is a probationary period of work during which a person is hired pending successful completion of their probation. They range in length, but usually run between 1 and 6 months, and are primarily utilized with new hires. Probationary durations may differ for temporary employees and people with zero-hours contracts.
They may also be utilized by some employers with current workers. They come in handy, for instance, when you want to test out a recently promoted employee or when there are performance issues that you want to keep an eye on. While the employee is learning the job, assuming the new role, or trying to enhance their performance, the employer may withhold or modify part of the terms of employment.
Employees on probation are shielded from termination for “protected reasons” such age, race, handicap, religion, gender, etc. If the employer violates any contractual dismissal procedures, they would also have protection from any wrongful termination.
In the KSA, for any new employee, a probationary period of up to 3 months may be setup. With the employee’s written approval, the probationary term may extend, but it cannot go above 180 days. The employee has no right to protest the termination or to demand that the employer reinstate them, and they are also not eligible to an end-of-service gratuity (EOSG) during this probation period, provided this choice is restricted to only one of the parties.
The contract must specify the length of the probationary period. Unless both sides agree otherwise, an employee might only have to complete one probationary period for a given job position. Assuming that the second probation period is for a new position or that at least six months have passed since the conclusion of the prior employment connection.
Renewal of employment contract
Fixed-term contracts in Saudi Arabia expire on the date stipulated in the contract. In this case, the corporation is liable for the employee’s repatriation fees. However, the law requires the agreement to continue for an indefinite period of time if both parties continue to follow the provisions of the initial agreement.
The contract’s duration will therefore match the work permit’s validity in the event that the abovementioned occurs. Nevertheless, a contract may contain a clause that specifies that it will be extended for the same period of time or for a different one.
On the other hand, a short-term contract turns into one unlimited if the employer gives it two successive extensions. The identical scenario will take place if the total length of the first contract and any subsequent renewals is three years. If the employer continues to adhere to the terms of the agreement and the lesser of the two criteria, this occurs.
Additionally, if the worker needs go home before the work agreement expires, he must give the employer advance notice. According to the type of contract, different notice periods apply in this circumstance:
- For employment contract in Saudi Arabia having a limited term, the time frame is 30 days.
- For employment contract in Saudi Arabia with an indefinite length, it is 60 days.
In both cases, the employer and the worker shall total such days prior to the termination date of the labour contract Saudi Arabia.
Penalty for breaking employment contract in Saudi Arabia
Saudi Arabian labor law specifies the reasons that an employment contract may end. The parties in question may also have chosen these grounds voluntarily or for other reasons, depending on the circumstances. The following are these circumstances:
- Throughout the test period, by mutual consent.
- The employee did not succeed the physical examination.
- By understanding.
- When a worker reaches the age of retirement.
- The end of contract.
On the other side, the business has the authority to fire a worker without notice if they endanger the employer or any other employees. Additionally, the employer has the right to terminate the contract if the employee does not fulfill his obligations. Discriminatory hiring procedures and illegal absences during statutory hours are a couple of other contributing factors.
The employee has the option to quickly terminate his contract in the following circumstances:
- The agreement’s conditions are broken by the employer.
- Violates contractual obligations by fraud.
- Assigns the worker to duties that the contract does not cover.
- Insults or causes harm to the worker or their family.
- Even though it is aware of safety problems, the corporation does nothing to address them.
- Indicate that the termination of the contract was the employee’s fault.
These and other justifications appear in great detail in the Saudi Arabian labor legislation. In addition, if the agreement cannot end for whatever reason, the affect party will get compensation.
If the contract does not specify compensation, the party whose rights fail by termination will be eligible for the following compensation:
- For contracts with an indeterminate duration, an amount equal to a fifteen-day salary for each year the employee works.
- The salary for the remaining time left on fixed-term contracts.
- The remuneration in this law cannot be less than the worker’s salary for two months.
Employment rights in contract
According to the Saudi Arabia employment contract, employees have the following rights:
Working hours cannot exceed 48 hours a week or 8 hours a day, as per Saudi labor laws. However, during Ramadan, Muslim workers only put in 6 hours per day and 36 hours a week. Furthermore, Friday is the set aside day for rest, though any worker may ask for a change.
Likewise, the working day must include the mandatory 30-minute break. A worker cannot be asked to work more than five hours continuously by the employer. Moreover, the daily workweek has a limit at 12 hours, with overtime pay equal to 150% of the standard rate.
Labor legislation Saudi Arabia requires employers to provide incentives to their staff under a variety of conditions. Here are a few specifics about these benefits:
- Accommodations: In accordance with the conditions of the employment contract, the employer has to provide housing or a rent payment in this case.
- Food: Similar to this, the Saudi Ministry of Labor rule mandates that the employer provides food or money aid to the employee.
- Governmental fees: The following expenses are the responsibility of the employee: medical exams, Iqama renewal, late payment fees, and entry and departure visas.
- Health insurance: In compliance with Saudi Arabian labor law regulations, employers have to provide employees with health insurance. This covers the worker’s pre-Iqama medical examination, which is a need for obtaining the permit.
In addition, employees in Saudi Arabia have the right to:
- Annual leave: a 21-day yearly break for workers who have been at work a full year. However, employees with 5 years of comparable work experience are eligible for 30 days.
- Maternity leave: The employees will receive 10 weeks of maternal leave, divided into 4 weeks ahead of childbirth and six weeks thereafter. In this instance, the payout will consist of half the salary for the initial year of service and the entire salary for the next three-year period.
- Paternity leave: Paternity leave is available for three days following the birth of a worker’s child.
- Bereavement leave: If a spouse or child passes away, the employee has the right to a 5-day leave. However, female employees who suffer the passing of their husband are going to obtain a leave of 15–130 days depending on their level of religious observance.
- Sick leave: The employee receives compensation for the first month of their sick leave, and for the subsequent 60 days, they could receive ¾ of their salary. However, for the following 30 days, you will not receive any kind of money.
- Holidays with payment: The employee has the right to a full pay period of 10 to 15 days to perform the Hajj after two years of employment. Three paid holidays are also included in the Saudi labor code: Saudi National Day, Eid al-Fitr, and Eid al-Adha. If the employee has to be present on any of those days, they must receive overtime pay.
End of service
After two years of employment, the employee might be qualified for benefits for termination of service following the contract’s expiration. In this case, you will receive 15 days of salary for every year of employment that is less than five years. However, you will receive one month’s salary for each year that you exceed the top 5 finishers.
However, there are some limitations the Saudi labor law imposes on the distribution of end-of-service benefits. Along with the previous typical situations, it also establishes:
- The employee will get a reimbursement of 30% of their salary for service between 2 and 5 years in the event of resignation. You will receive 2/3 of the prize if you have five to ten years of service, and the full amount if you have over ten years of service.
- They will also be given the same benefit if the employees’ contracts expire within 6 months of their marriage. Additionally, if you have a baby, you will receive it for three months.
In a similar vein, according to Saudi labor legislation, the employee must get payment within 7 days of final exit. If the employee terminates the agreement, the business must reimburse the employee within two weeks.
If you want to learn more about employment in Saudi Arabia, go to our insights section. Also, if you want our support to help you manage your HR duties in the KSA, we are here for you. Give us a call at +971 43 316 688 and our agents will start with the process. Also, you can contact us at email@example.com.