Key Amendments to the Saudi Labor Law

On August 6, 2024, the Saudi Arabian government introduced amendments to the Labor Law issued by Royal Decree No. (M/51) dated 23/8/1426 AH, as amended. These changes aim to improve working conditions, clarify employer obligations, and enhance worker rights. The revisions include amendments to thirty-eight articles, deletion of seven articles, and addition of two new ones.

Key Changes made to the Labor Law:

1. Foreigner’s Contract: If the duration for an employment contract for a foreign worker is not specified, the contract defaults to one year and automatically renews. This replaces the previous provision that aligned the contract duration with the work permit duration.
2. Training Obligations: Employers are required to implement training and qualification programs to enhance workforce skills and proficiency.
3. Probation Period: The maximum probation period for employment contracts is now limited to 180 days.
4. Resignation: A resignation is considered accepted if not responded to within 30 days, with a possible 60-day delay if a written explanation is provided. The contract ends upon acceptance, after 30 days, or after the delay period, and can be retracted within 7 days.
5. Termination: New grounds for terminating an agreement include employee resignation and a final court decision or ruling ending the employee’s contract due to bankruptcy proceedings.
6. Notice Periods for Indefinite Contracts: Notice periods are now 30 days if the employee initiates termination and 60 days if initiated by the employer, provided the salary is paid monthly.
7. Compliance and Penalties: Only licensed entities can employ Saudis, recruit workers, or outsource labor. Violations may result in fines ranging from 200,000 to 500,000 Saudi riyals.
8. Leave Entitlements: Paid leave is now available for the death of a sibling. Additionally, employees can choose paid leave instead of overtime compensation.
9. Maternity Leave: Maternity leave has been increased to 12 weeks (previously 10 weeks), offering additional support for working mothers.

Goals and Implications:

These amendments are closely aligned with Vision 2030 and are meticulously crafted to enhance job security, protect the rights of all parties involved in employment agreements, and ensure a fair labor market. They are specifically designed to broaden job opportunities for Saudi nationals, reflecting the Kingdom’s strategic objectives for labor market development. 

The changes were developed through an exhaustive review process that involved comparisons with international labor standards and comprehensive feedback from a range of participants, including businesses, government agencies, and labor experts. This approach ensures that the amendments address both global best practices and local needs effectively.

Implementation:

These amendments will take effect 180 days following their publication in the Official Gazette. It is crucial for both employers and employees to thoroughly review these changes to ensure full compliance and adapt to the updated regulations effectively.

For more information regarding labor law and regulations in Saudi, please feel free to contact Michel Ghanem (partner) mghanem@meysan.com and Rosy Rizk (associate) rrizk@meysan.com