Saudi Arabia Labor Law amendments reflect commitment to fair treatment in employment

The significant amendments (71 pages/1 MB) came into effect in early February and set out to enhance employee rights and improving workplace conditions.

Length of fixed-term contracts

The changes include those to employment contracts. Employment contracts for non-KSA employees will now default to one year if no duration is specified, with automatic renewal for similar periods if the work continues beyond the initial term.

This amendment ensures that non-KSA employees have a clear understanding of their contract duration, reducing ambiguity.

Probation periods

The recent amendments to the KSA labour law have extended the maximum duration of probationary periods to 180 days, providing employers with greater flexibility in evaluating new hires.

Previously, probationary periods were fixed at 90 days, with the possibility of extending for an additional 90 days upon mutual agreement. The new amendment allows employers to set probationary periods up to 180 days from the start of the employment contract. Furthermore, the amendment includes additional holidays, namely National Day and Independence Day, which will not be counted towards the overall probationary period.

Anti-discrimination provisions

Expanded anti-discrimination measures mandate equal opportunities and fair treatment, prohibiting discrimination based on race, colour, gender, age, disability, social status, or other factors.

This amendment strengthens the legal framework against workplace discrimination, aligning with international human rights standards. It imposes a legal obligation on employers to implement and enforce anti-discrimination policies, which can lead to increased scrutiny and potential legal challenges if violations occur.

Employee allowances

Employers must provide either appropriate accommodation or a suitable cash allowance, and either suitable transportation or a cash allowance, though no statutory minimums are specified.

Legally, this amendment imposes a duty on employers to ensure that employees' basic needs are met, which can be seen as an extension of the employer's duty of care. The lack of statutory minimums, however, may lead to variability in implementation, potentially resulting in legal disputes over what constitutes "appropriate" or "suitable" allowances.

Termination

Notice periods for termination of indefinite-term contracts have been clarified, with employees required to give 30 days' notice and employers 60 days' notice for monthly wage contracts.

This amendment provides legal clarity and ensures that both parties have adequate time to prepare for the termination of employment.

Resignation

Resignations are now a valid reason for terminating fixed-term contracts, with specific provisions for acceptance, delay, and withdrawal of resignation. This amendment introduces legal clarity regarding the resignation process, ensuring that both parties understand their rights and obligations.

Resignation is defined as a written declaration by the employee to terminate a fixed-term employment contract without coercion, reservations, or conditions, and the employer's acceptance thereof. This formal recognition resolves previous uncertainties about resignation under fixed-term contracts. The amendments introduce a structured resignation process and establish a clear timeline for handling resignations. Employees must submit their resignation without specifying a deferred date, wait thirty days for a response, and can withdraw their resignation within seven days unless accepted by the employer. Resignations must be submitted through the Qiwa portal.

Employers have three options: accepting, delaying acceptance, or rejecting resignation. They must respond within 30 days, or the resignation is automatically accepted. Employers can delay acceptance for up to 60 days if necessary for work interests, with a written explanation provided to the employee. The contract is terminated either on the date the employer accepts resignation, after 30 days if the employer has not responded, or after the delayed acceptance period. Recording decisions on the Qiwa portal is crucial for employers.

Overtime compensation

Employers can now offer days off in lieu of overtime worked on holidays, providing more flexibility in managing work hours. Legally, this amendment offers an alternative to monetary compensation for overtime, which must be clearly documented and agreed upon by both parties to avoid disputes. It also aligns with principles of flexibility and mutual agreement in employment contracts.

Leave entitlements

Bereavement leave has been introduced and maternity and paternity leave extended.

The law now includes three days of paid leave for the death of a sibling, in addition to the existing five days for the death of a spouse, parent, or child.

Fully paid maternity leave has been extended from ten to twelve weeks, with mandatory six weeks post-childbirth. This amendment enhances legal protections for working mothers, aligning with international standards on maternity leave. Paternity leave provides three days leave within seven days of childbirth.

Training policy

Employers are required to develop and implement training policies for KSA nationals to enhance their skills. Legally, this amendment imposes an obligation on employers to invest in the development of KSA nationals, supporting the Kingdom's broader goals of workforce development and economic diversification.

These amendments collectively represent a progressive shift in KSA labour regulations, balancing employer flexibility with enhanced employee rights. They are likely to foster a more equitable and supportive work environment, contributing to the Kingdom's broader goals of economic diversification and social development.

Given the changes now in force from February, employers must act swiftly to comply with the amendments. Important actions include adhering to stricter Saudization quotas in certain professions, updating employment contracts, and implementing policies for extended leave benefits and overtime compensation, which may involve offering vacation days as compensation with employee consent. The amendments also mean employers need to emphasise employee training, probation period adjustments, and providing housing, transportation, or allowances for these. Employers must align all policies in a bilingual manner with new regulations to avoid penalties and foster a compliant, positive work environment, ensuring compliance with these changes as they take effect.

Co-written by Sarah Khasawneh of Pinsent Masons.