Country Information

The Kingdom of Saudi Arabia is one of the largest in Western Asia. Arabic is the official language, with three regional dialects spoken throughout the country. Saudi Arabia boasts one of the largest economies in the middle east and has a population of 34.27 million.

Employment Contracts

Saudi Arabia relies on the Islamic calendar called Hijri in its dating system, not the Gregorian calendar. Therefore, any contracts and documents should be dated according to the Hijri calendar.

Employers who start a business or branch in the Kingdom are required to send to the labor office:

  • Name, nature, address, contact information, and center of the business
  • A copy of the commercial license to conduct business with the registration number, and permit to engage in business
  • The number of employees
  • Name of employer
  • Any other documents the labor ministry requests

Employment contracts should be written and in the Arabic language. If the employee is a foreigner, then a translated copy should be attached to the Arabic contract. There are three types of employment contracts in Saudi Arabia, definite term, temporary and indefinite term. The definite-term contract expires either by the expiration date or by work-completion. It can be renewed for the same period only three times. It automatically becomes an indefinite-term contract after the expiration of the third renewal or when the employee continues the work after its expiration without the employer renewing the contract. Temporary contracts are for specific hours per day or specific days per week and should not exceed 90 days. The indefinite contract does not have an expiration date and can be terminated by either party.

Employment contracts for non-Saudi nationals are deemed to be fixed term. If the employment contract does not specify its duration, it is deemed to be equal to that of employees’ residency visa and work permit. Employers are required to have at least 75% of their labor force made up of Saudi nationals.

Working Hours

The standard workweek is capped at 48 hours per week and eight hours per day. However, during the month of Ramadan, the working hours for Muslims are reduced to 36 hours per week and six hours per day. Employers are prohibited from having female employees work evening shifts.The employee is entitled to 24 hours of weekly rest on Friday. The rest period during a workday is at least half an hour per day, provided that the employee does not work more than five consecutive hours without a break. Furthermore, the employee is entitled to additional breaks to conduct prayers and have lunch, which is not considered part of the half-hour rest period.Overtime is capped at 11 hours per day. Overtime pay for hours exceeding the regular working hours and work during holidays is 150% of the basic rate.

Sick Leave

Employees are entitled to 30 days of paid sick leave per year. Sick leave pay starts on the first day of sickness and is based on a decreasing percentage of pay over time.

Maternity/Paternity Leave

Female employees receive 10 weeks of paid maternity leave after one year of service. The leave can start up to four weeks before the due date, with the remaining six weeks taken after delivery.If a female employee benefited from full pay for maternity leave during the year, then she is not entitled to be paid for annual leave during the same year. However, if she received half pay for maternity leave during the same year, then she is entitled to receive the other half pay during her annual leave during the same year.In the event of complications related to the pregnancy, the female employee is entitled to receive additional days of maternity leave, provided they do not exceed 180 days. After the female employee returns to work, she is entitled to receive an additional one hour break to nurse her child.Male employees receive one day of paid paternity leave.

Compensation

While Saudi Arabia provides for the establishment of a minimum wage system, no minimum wage has been implemented. Individual agreements between the parties fix wages. Daily laborers and work-completion employees must be paid weekly. Regular employees must be paid monthly. Annual and performance based bonuses are common.

Vacation Leave

Employees receive 21 days of paid annual leave during the first five years. After five years of service, the employee receives 30 days of paid annual leave. Muslim employees receive an additional paid religious leave of 10 to 15 days to conduct a pilgrimage to Mecca after two years of service, which must be arranged with the employer at the beginning of the year. Furthermore, employees receive paid educational leave that starts 15 days before examinations begin and lasts until the end of the examination period.

They are also entitled to paid personal days after providing verification to the employer in the following circumstances:

  • One day of paternity leave
  • Three days for getting married
  • Three days for the death of a family member
  • A female employee whose husband dies is entitled to receive at least 15 days of fully paid leave

The employer is required to determine the start date of the annual leave with the employee and the annual leave must be paid in advance to the employee. Annual leave may be carried over to the following year with the written consent of the employee only once and should not be postponed any further than the following year. Employees are also entitled to receive unpaid leave, which must be agreed upon by both parties. If the unpaid absence exceeds 20 days, the contract is considered to be on hold.

Public Holidays

There are two major public holidays, which are projected to fall on:

  • Eid al-Fitr (May 13-16, 2021; May 3-6, 2022)
  • Eid al-Adha (July 19-22, 2021; July 10-12, 2022)
Health Insurance Benefits

The state provides Saudi citizens with healthcare, while companies offer ex-pat employees supplementary private healthcare insurance.

Employment / Termination / Severance

Either party may terminate an employment contract in writing. The party that initiates termination is required to provide a 30-day termination notice for monthly paid employees and at least a 15-day termination notice for all other employees paid on daily or weekly intervals. The termination notice period during probation is at least seven days before the exit date. The party that does not adhere to the termination notice period is required to compensate the other party the amount equal to the salary covering the notice period. In certain instances, the employer may initiate termination without severance pay or termination notice if the employee.

Examples include:

  • Physically assaults the employer or supervisors
  • Continues to breach any of the contract’s provisions after being warned in writing
  • Engages in unethical behavior or insubordination

However, the employer is required to follow specific steps before issuing a termination notice for infringements, which are:

  • Written warning
  • Fine
  • Denial of bonus or postponing a promotion provided this does not exceed one year
  • Suspension without pay provided it does not exceed five months
  • Termination in accordance with labor laws

The employee may not be penalized for an infringement that was 30 days old since the day it happened. In other instances, the employee may terminate a contract without losing severance or giving notice if the employer.

Examples include:

  • Breaches any of the contract’s provisions
  • Defrauds or misleads the employee regarding the work conditions during the negotiations of the contract
  • Gives the employee different work than was agreed upon

After termination of a contract, the employer is required to provide the employee with an end-of-service certificate that shows the start and end dates of employment, job description and salary. The employer is required to pay severance to the employee after the termination of employment. However, termination during the probation period by either party, the employee forfeits severance and compensation. Female employees are entitled to terminate employment without losing severance pay if the termination happens within six months after getting married or within three months after giving birth. The employer must pay severance within one week after the termination of employment. However, if the employee terminates the contract, the payment of severance should be paid within two weeks after termination. If the contract does not have any provisions about severance pay, then severance pay will automatically be calculated as two-month pay for every year of service.

Local Laws & Regulations

We understand that local laws and regulations change and sourcing an accurate reference guide is not easy. Our data is researched and verified by our team of local international Employment Attorneys, HR and Benefit Professionals and Tax Accountants through our Atlas team and consultants, to ensure information up-to-date and accurate.

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