Saudi Arabia: Sweeping Changes To Employment Relations In The Kingdom: An Overview Of The Amendments To The KSA Labour Law

Last Updated: 7 September 2015
Article by Zahir Qayum

The Resolution approving the amendments to the Labour Law first announced by the Ministry of Labour ("MOL") on 5th April 2015 (Resolution No. 258)...

....was published in the official gazette on 24th April 2015 and heralds the most significant change in the regulation of employment relations in the Kingdom of Saudi Arabia ("KSA") since the advent of the Labour Law itself.

The amendments are wide ranging and taken together with the reforms to the judicial system that will see the establishment of new labour courts (to be opened in 2017) and the MOL's joint undertaking with the Ministry of Justice to consolidate the decisions of the labour commissions into 'judicial codes', these changes represent the beginnings of a paradigm shift in the management of employment relations in the Kingdom.

The Key Amendments

The amendments, conceived in part with the intention of bridging the gap between employment in the public and private sectors and in part to align the statutory regime with current work practices, are a mixed bag for employers and employees.

The key amendments are considered below.

1. Work organisation regulations

Articles 12, 13 and 14 of the Labour Law have been amended so that all employers are required to prepare and make available in a conspicuous place internal regulations that conform with the MOL's model work regulations. Previously, this was only required of employers with 10 or more employees. Employers will be permitted to include additional provisions and conditions to those in the model work regulations provided that they do not contradict the Labour Law.

2. Employee training

Article 46 is amended so that the obligation on employers with 50 or more employees to annually train Saudi nationals is increased from 6 per cent to 12 per cent of the workforce. Employers will be able to include in this figure Saudi employees who have completed studies funded by them.

Currently under Article 48, employers are entitled to require trainees to work for them for a period of time on completion of their training. The amendments go further and require workers to commit to repaying the costs of their training to the employer where they refuse or fail to work for the employer following the end of the training period.

3. Probationary period

Under Article 53, at present employees cannot be subject to a probation period greater than 90 days. This can be increased if they commence a new role for which they can be required to serve an additional probation period of up to 90 days in accordance with Article 54. The amendments permit the probationary period to be increased to potentially 180 days and also enable employers to require a returning employee to serve another probationary period where there has been a break in service of at least six months. These will be welcome changes for employers as it will enable them to assess a new employee's suitability over a more reasonable period of time and to re-assess a returning employee who may have been out of employment or the country or region for a long period.

4. Fixed term contracts

The period over which a fixed term contract is renewed and the number of times it is renewed before it will be deemed an indefinite term contract is increased. At present, if a contract is renewed for two consecutive terms or if the original contract term and the renewal period amount to three years then the contract is deemed to be for an indefinite term under Article 55(2). This is amended so that an indefinite term contract will come into being where the fixed term contract is renewed for three consecutive terms or the original term and the renewal period together amount to four years. This will give employers more flexibility when employing Saudi nationals but will not affect expatriate employees who will continue to be subject to employment for fixed terms in accordance with Article 37.

5. Change of work location

Article 58 is amended to allow an employer to temporarily transfer an employee to a different work location without the employee's prior written consent for no more than 30 days per year in an emergency. It is difficult to see how this might work in practice given that there is no definition for what would constitute an 'emergency'. However, it is arguable that it will include circumstances where there is an urgent need to fill a role due to the loss of an employee through illness or to deal with an unexpected demand in work.

6. Employee service certificate

Employees are entitled under Article 64, on request, to receive a certificate confirming their employment service (including start and end dates of employment, salary details and profession). Where these are provided, employers may make comments on the employee even if they are harmful to the employee's reputation or reduce his prospects of finding future employment but must include reasons for the same. The amendments prohibit the inclusion of any statement by the employer which may have this effect. Employers will be better placed to adopt a policy of providing anodyne references only for all employees.

7. Termination of employment: redundancy

The amendments introduce new grounds for termination under Article 74 and allow the employer to validly terminate the employment contract where the establishment is permanently closed or if there is a cessation of the business activity where the employee works. Although the concept of redundancy is recognised for the first time in the Labour Law, the amendments do not go so far as to include circumstances where there is a diminution in the requirements of a particular role or the numbers employed to perform that role.

8. Termination of employment: notice period

Article 75 is amended to increase the notice period for terminating indefinite term contracts from 30 to 60 days for employees paid on a monthly basis and from 15 to 30 days for all other employees. As the change only affects indefinite term contracts, it will not increase the notice period for expatriate employees who must be employed under a contract for a specified term or, by default, the period of the work permit. The purpose of the amendment therefore seems to be an attempt to make private sector employment more attractive to Saudi nationals.

Where the employer issues notice to terminate employment, both Saudi national and expatriate employees will have the right by way of an amendment to Article 78 to paid leave each week for one day or eight hours to search for alternative employment provided that the employer is notified. Article 78 is also amended to allow an employer to release the employee from the requirement to work the notice period by making a payment in lieu of notice.

9. Termination of employment: remedies

Where notice has not been observed by either party to an indefinite term contract, Article 76 is amended to allow the parties to waive the requirement on the defaulting party to pay compensation equal to the employee's wages for the notice period to the other party.

The parties can also expressly agree on the compensation that will be payable where either party terminates the contract for an invalid reason. This is an amendment to Article 77 which also stipulates that where compensation is not agreed in the contract then the sum will be the employee's wages equivalent to 15 days' for each year of service in the case of indefinite term contracts and the wages for the remainder of the contract period in the case of fixed term contracts. In either case, the default compensation sum must not be less than two months' wages. The right to claim reinstatement as a remedy is removed altogether by the amendments to Article 78.

These changes will bring much needed certainty to termination costs where these are agreed beforehand by the parties and expressly stated in employment contracts. Where it is not possible to agree on the compensation beforehand, employers will still be in a better position than they are now to assess termination on commercial grounds.

10. Termination of employment: summary termination for unauthorised absence

The amendments increase the number of days that the employee has to be absent from work without a valid reason before he can be dismissed summarily under Article 80(7). The employee will need to be absent for 30 aggregate days in a year or more than 15 consecutive days. Currently, the employee must be absent for more than 20 aggregate days in a year or more than 10 consecutive days. This change will make it more difficult for employers to manage workplace absences and can only be intended as a social measure to narrow the gap in employee rights in the public and private sector.

11. Payment of wages

Article 90 is amended to require employers to pay wages through approved banks in the Kingdom. This is to enable the government to monitor compliance with its Wage Protection System which is a cornerstone of its revised Nitaqat (Saudisation) policy.

12. Hours of work

Article 101 is amended to increase the total number of hours that an employee can be required to remain at the place of work from 11 to 12 hours per day. This may be subject to further amendment if the proposal to limit the weekly working hours to 40 hours per week over 5 days (which is to be considered again this year by the Shoura Council) is accepted by the Council of Ministers.

13. Increased leave entitlements

The amendments have increased paid leave entitlements in the following cases:-

  • Marriage leave – this is increased from 3 to 5 days;
  • Compassionate leave – this is increased from 3 to 5 days (in the case of a Muslim woman whose spouse dies her leave period is increased from 15 days to the full Iddah period of four months and 10 days and in the case of a non-Muslim woman her period of leave will remain unchanged at 15 days); and
  • Paternity leave – this is increased from 1 to 3 days.

14. Changes to maternity leave

Article 151 is amended to give women more flexibility in taking their maternity leave entitlement. Female employees have the discretion to distribute as they see fit their entitlement to four weeks paid leave immediately preceding the expected date of delivery and six weeks following it. They also have the right to extend their maternity leave by one month on an unpaid basis. These changes give women the right to ten weeks' paid annual leave with the option to take a further four weeks unpaid leave. Additionally, if a woman gives birth to a disabled or ill baby whose condition requires a full time carer then she will be entitled to an additional month of paid maternity leave at the end of the ten weeks' paid delivery leave and will be able to avail herself of one month's unpaid leave too. Therefore, she will have fourteen weeks' paid leave with an optional four weeks unpaid leave available to her.

15. Labour violations and workplace inspections

The MOL's work inspection capability is improved by the amendments which allow it to utilise qualified non-Ministry staff to perform inspections and authorise inspectors to impose an immediate fine and to produce minutes and reports of an inspection and not merely provide advice and guidance, as is currently the case.

There are also changes to the penalties that can be imposed for labour violations so that these now include financial penalties of up to SAR 100,000 and closure of the business for a period of no more than 30 days (or permanently in some cases). Additionally, businesses need to remedy the violation within a specific period and if they fail to do so or reach agreement with the MOL to settle the penalty then it will be deemed to be a new violation and presumably subject to further penalty.

Finally, there is an incentive of a reward of up to 25 per cent of the collected fine imposed by the MOL to those who assist in the detection of labour law violations.


On balance, the amendments should be welcomed by employers as they provide greater flexibility in managing employees; particularly when terminating employment. The introduction of a new ground for dismissal on the permanent closure of an establishment or cessation of a work activity will give employers some clarity and certainty when dealing with redundancies. The doubling of the probationary period will provide for a more reasonable time frame for employers to assess the suitability of an employee and to do so without liability where employment is terminated in that period.

Far more exciting is the possibility of agreeing a compensation sum where contracts are terminated for an invalid reason; which has the potential for reducing significantly, if not altogether, the risk of unlawful termination claims being brought by employees. It will be interesting to see how the MOL intends for this to work in practice and whether the judiciary will accept the contractual terms entered into by the parties; notwithstanding the obvious imbalance that will exist in the bargaining power of the parties at the outset. Less welcome are the changes to the notice period for terminating indefinite contracts and the increased powers that will be available to the MOL to carry out workplace inspections and to address labour violations.

The amendments will come into force six months from their publication in the official gazette and therefore are expected to be implemented on 24th October 2015.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions