To ensure that all participants in the labor market are secure, Saudi labor law is continually receiving updates. This law considers every aspect of the contractual arrangement that must prevail between employers and employees. Consequently, it is crucial that both sides are conscious of their responsibilities and rights under this regulation.
In this article, you may learn more about key aspects of Saudi Arabia labor law, like the types of workers it protects. You will also discover what the law says regarding, among other things, permits, perks, work schedules, and trial periods. Let us check:
- Who covers the labour laws in Saudi Arabia?
- What does the Saudi labor law says about employment contracts?
- What are the employee benefits in the labour law in Saudi Arabia?
- What does the Saudi labor law estates about the termination of the contract?
- How can Connect Resources help you?
1. Who covers the labour laws in Saudi Arabia?
In Saudi Arabia, the employment contract among a company and its workers is bound by all labor regulations. As a result, this law safeguards the rights of workers throughout the nation. In this instance, this protection applies to foreign employees who work for businesses or other establishments.
The following jobs, however, are not secure under this law:
- Domestic service workers, including drivers, maids, and gardeners.
- Employees in agricultural-related businesses with much less than 10 employees.
- Crew members of ships carrying only about 500 tons of cargo.
- Workers on a temporary work visa.
Other clauses, in addition to those already here, refer to employees who are not secure under the labour law Saudi Arabia.
2. What does the Saudi labor law says about employment contracts?
According to Saudi labor law, both the employee and the employer must have a signed employment contract. The business must also state the contract’s duration, which is typically two years, in the agreement. The contract must be in Arabic, although it may also be in another language; however, Arabic will take precedence in cases of disagreement.
According to the labor law Saudi, the employment agreement must also explicitly mention the following components:
- The employer and employee’s names and addresses.
- The job title.
- Agreement term.
- The agreed-upon wage.
- Offering free meals or meal allowances.
- Work schedule.
- Assignments.
- Holidays.
- Medical coverage.
- Benefits at the end of service.
- Dispute resolution mode.
Additionally, other components that must be mentioned in the contract of employment are specified by the labor law in Saudi Arabia. To ensure that you are aware of each one, we will describe the ones that were in place as well as a few others in the parts that follow.
2.1 Trial period
The trial period for prospective employees is one of the components that can be conveyed in the employment contract. According to Saudi Arabian labor regulation, this time frame’s limit is 90 days (3 months). However, this time frame may be extended by both parties with a maximum extension of 180 days.
Additionally, according to Saudi Arabia labour law, either party (employer or employee) may end the contract during this time. In this scenario, the worker will be let go without any sort of payment or reward. The worker is also responsible for paying for his own return flight to his own nation.
2.2 Employment contract renewal in accordance with Saudi labor law
According to labor law of Saudi Arabia, fixed-term contracts expire on the date specified therein. In this situation, the company is responsible for paying the employee’s repatriation costs. However, the law calls the agreement to keep going for another with no set duration if both sides continue to carry out the terms of the original agreement.
As a result, in the event that the aforementioned happens, the contract’s duration will coincide with the work permit’s validity. However, a contract may have a provision that governs whether it will be renewed for the same or a different duration.
On the other hand, if the employer extends the short-term contract for two successive periods, it becomes one with an indefinite duration. The same thing will occur if the sum of the initial contract’s term and the renewal term is three years. This happens if the employer keeps carrying out the terms of the contract and whichever of the 2 conditions is lower.
Also, the employee must notify the employer in advance if he has to return home before the labor agreement expires. The notice period in this situation varies depending on the type of contract:
- The time limit is 30 days for contracts with a fixed term and 60 days for contracts with an indeterminate length.
Both the employee and the worker must tally up these days prior to the contract’s termination date in both situations.
3. What are the employee benefits in the labour law in Saudi Arabia?
Labor law Saudi Arabia obligates the country’s employers to provide benefits to their employees in a number of situations. In this instance, the services include, among other things, housing, food, and health insurance. Here are some specifics regarding these advantages:
- Accommodation: In this situation, the employer needs to offer lodging or a rent contribution in accordance with the terms of the employment contract.
- Feeding: Similar to this, according to Saudi ministry of labor law, the employer needs to give the employee food or financial assistance.
- The cost of fees: Employees are responsible for paying the following costs: diagnostic tests, Iqama, late payment penalties, entry and exit visas.
- Health insurance: In accordance with Saudi Arabian labor law rules, employers must also offer health insurance to their employees. This includes the worker’s pre-Iqama medical checkup, which is a mandatory prerequisite to receiving the permit.
3.1 Working hours according to the Saudi labour law
According to Saudi labor regulations, working hours must not exceed 48 hours each week or 8 hours per day. However, Muslim employees only work 6 hours a day and 36 hours per week during Ramadan. Additionally, Friday is the designated rest day, though any employee may request a modification.
Likewise, a required 30-minute break must be incorporated into the working day. The employer also has no right to make an employee work longer than five hours nonstop. Working hours are also limited to 12 hours per day, and overtime is compensated at 150% of the regular wage.
3.2 What does the KSA labor law says about licenses and permits for employees?
Saudi Arabian workers are entitled to the permits mandated by Saudi labor legislation. The employer must also provide information about each of these permits in the labor contract for the foreign employee. The following are the legal authorizations that a worker in the nation may use:
- A 21-day annual leave for employees who have completed one year of service. Employees with five years of experience working in the same organization, however, are eligible for 30 days.
- The first 30 days of the employee’s sick leave are covered, and for the following 60 days, they might get 3/4 of their pay. However, you won’t have received any form of payment over the previous 30 days.
- Ten weeks of maternity benefit will be given to the employees, split into four weeks prior to childbirth and 6 weeks following it. The payment in this case will be half the wage for the first year of employment and the full compensation for the next three years.
- Three days are allotted for paternity leave after a worker’s child is born.
- The employee is entitled to a 5-day leave in the event of the passing of a spouse or child. However, depending on their faith, female employees who experience the death of their husband will be granted a leave of 15–130 days.
- After two years of service, the employee is entitled to a full pay of 10 to 15 days to do the Hajj. The Saudi labor code also provides for three paid holidays: The Saudi National Day and Eid al-Fitr and Eid al-Adha. The employee must earn overtime pay if he has to work on any of those days.
4. What does the Saudi labor law estates about the termination of the contract?
Saudi Arabian labor law outlines the grounds for terminating an employment contract. Additionally, the interested parties may have mutually agreed upon these grounds or they may be for other factors. These conditions are as follows:
- By mutual consent throughout the test time.
- The employee failed the physical.
- By understanding.
- The contract’s term expiring.
- In the case of long-term agreements.
- When the employee reaches retirement age.
For harming the employer or any employees, on the other hand, the corporation has the right to fire the employee immediately. In addition, if the employee fails to uphold his end of the bargain, the employer may end the agreement. Other causes include unfair labor practices and unlawful absences during legally prescribed times, among others.
The following situations provide the employee the right to end his contract immediately:
- The employer breaches the terms of the agreement.
- Breaks contract commitments with fraud.
- Gives the employee tasks that are not specified in the contract.
- Hurts or insults the employee or their kin.
- The company does not take steps to remove safety concerns that it is aware of.
- Indicate that the employee is to blame for the contract’s termination.
The Saudi Arabian labor legislation is very specific in stating these and other reasons. Additionally, the impacted party will be compensated if the contract cannot be terminated for any reason. The other party shall pay this in full.
4.1 End of service benefits
The employee may be eligible for benefits for service termination following the contract’s termination, but only after two years of employment. For each year of employment under five years, you will earn 15 days of pay in this scenario. For every year that you surpass the top 5 though, you will be paid one month’s income.
On the other hand, the delivery of end-of-service rewards is subject to some restrictions set forth by Saudi labor legislation. In addition to the previously listed typical circumstances, it additionally establishes:
- In the event of resignation, the employee will get a payout of 30% of the benefit for employment between two and five years. If you have between 5 and 10 years of service, you will earn 2/3 of the award, and if you have more than 10 years, you will get the entire amount.
- If the employees’ contracts expire within six months of their marriage, they will also be granted the same entitlement. Additionally, you will get it three months upon having a baby.
Similarly, the employee must receive remuneration within 7 days according to Saudi labor law for final exit. However, the employer is required to make the reimbursement within two weeks if the employee ends the contract.
5. How can Connect Resources help you?
The rules and guidelines that define the labor rights between a corporation and an employee are established by Saudi labor law. It lays out the obligations of the employer and the employee as well as their respective rights. Therefore, in order to minimize legal annoyances, all parties must be aware of each of these factors.
Our company can provide the assistance you require if you require more than simply Saudi labor law support. We have long helped companies in the United Arab Emirates expand and accomplish their objectives. As a result, we offer a range of services that may help a business grow and succeed. Therefore, you may depend on us to give you the essential HR services if you want to develop:
- Employer of Record.
- Contract staffing.
- Professional Employer Organization.
- IT outsourcing.
- Recruitment services.
Do you want support with adhering to the Saudi labor law? Contact us! You can send us an email at contact@connectresources.ae or call us at +971 43 316 688. Also, if you want to learn more about what we do, you can see our testimonials or case studies.
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