UK: KSA Labour Law Developments To Usher In A New Era Of Labour Relations

Last Updated: 13 October 2015
Article by Sara Khoja and Rebecca Ford

In April 2015, amendments to the Saudi Labour Law (Royal Decree M/51, dated 23/08/1426, as amended, the 'Labour Law') were published (Resolution 258, dated 3/6/1436). These are expected to be implemented six months after publication, which will be 18 October 2015. Since publication, the amendments have been well-received and reflect the importance placed by the Kingdom of Saudi Arabia (KSA) on access to training and jobs by its nationals, and on ensuring that the statutory regime continues to reflect current work practices.

Interestingly, the amendments are likely to satisfy both employees and employers, as they provide more certainty over terms of employment, require more access to training for Saudi nationals and give more support to departing employees looking for alternative employment; and also provide greater flexibility to employers in managing the employment, by (amongst other things), increasing the probation periods, adjusting the fixed term periods, and increasing working hours.

The amendments will require employers to review and update their contracts of employment and company policies, not only to reflect the changes such as increased leave periods, but also to address some of the important developments regarding termination of the employment contract.

The amendments can broadly be grouped together as those which:

  • provide certainty over employment terms;
  • facilitate Saudi nationals in the workplace;
  • reflect current work practices;
  • enable employers to terminate the employment of individuals in certain circumstances and provide support to departing employees; and
  • increase sanctions for breaches (and also increase the chances of discovery of those breaches).

This article will summarise the key amendments in each of these areas.

Certainty of employment terms

The Saudi Labour Law currently requires employers with more than ten employees to develop workplace regulations, to be submitted for approval to the Ministry of Labour.  The amendments to the law will now require all employers (regardless of number of staff) to provide workplace regulations.  Although the workplace regulations must conform to the model code or codes issued by the Ministry, the employer is entitled to incorporate additional terms, provided that they do not contradict the provisions of the Labour Law.  Reference to the approval process previously contained in the Labour Law has been removed.

The amendments to the law also state that the Ministry will develop a uniform employment contract, which shall include the name, address, nationality of the employee, as well as salary, bonus, allowances, dates of employment, and whether the contract is for a fixed term.  Currently, there is no standard form contract issued by the Ministry.  The amendments do, however, allow an employer to add additional terms and conditions, provided that these do not contradict the Labour Law.

Facilitation of Saudi nationals in the workplace

A number of amendments have been introduced which specifically affect the employment of Saudi nationals, in particular:

  • Employers with 50 or more employees must provide training on an annual basis to Saudi employees making up not less than 12 per cent of the total workforce (previously the requirement was for 6 per cent of the workforce), although this can also include those employees who are completing their education, where the employer is paying their education costs.
  • Fixed term periods may now continue for three consecutive terms (whereas previously this was only for two fixed terms), or for a total period of four years (previously this was for three years), whichever is the shorter, before they convert to unlimited term contracts.  A fixed term contract will automatically expire at the end of its term (unless the parties continue to perform under it).

Current work practices

Certain amendments update the Labour Law to reflect both employer and employee requirements in the workplace:

  • Employers may require an employee to carry out their duties in a place other than their workplace for a period not exceeding 30 days per annum, without having to obtain the employee's prior consent.  However, the employer must pay for the employee's transport and accommodation throughout the period, and there must be some form of emergency necessitating the assignment.
  • Employers must pay salary into an employee's bank account through approved banks.  This reflects the fact that a wage protection system is currently being rolled out in KSA (currently those companies with 170 employees or more are required to comply with the system).
  • Maximum working hours have been increased from 11 to 12 hours per day (of which at least one hour must be for rest, food, and prayer).
  • Paid leave periods for employees have been increased, in particular, paternity, marriage, and compassionate leave have all been increased to five calendar days, and compassionate leave for a female Muslim employee whose spouse has died has increased from 15 days to the Iddah leave of four months and ten days.  A female employee may now take an additional one month's unpaid maternity leave (in addition to the current ten weeks' paid leave paid in accordance with the Labour Law provisions) and, if the baby is ill or disabled and whose health requires permanent attention, a female employee may have one additional month's paid leave, in addition to the maternity leave available to other female employees.

Termination of employment

A number of the amendments to the Labour Law address issues which arise during employment, in particular:

  • The existing probation period provided for under the Labour Law of 90 days may be extended by a further 90 days, during which the employment may be terminated at any time (or in accordance with the contract);
  • The notice period to be given to terminate an unlimited term contract (applicable to Saudi nationals only) has been increased from 30 to 60 calendar days;
  • An employer may not dismiss an employee for cause for unauthorised leave until the employee is absent for at least 30 calendar days' a year, or 15 consecutive days (this was previously 20 and 10 days, respectively);
  • The concept of redundancy will now be included in the law, so that a valid reason for termination arises where the establishment of the employer is being closed or there is a cessation of business within the unit or operation where the employee works;
  • The Labour Law currently provides that an employer must issue a service certificate to an employee on termination, on request, confirming the dates of employment, role, and last salary received.  The amendments to the law now expressly provide that the employer shall not include in the certificate any remarks which are prejudicial to the employee's reputation, or are likely to limit the employee's ability to obtain employment;
  • The employee is entitled to paid time off work to look for alternative employment when notice is served by the employer, which is limited to one full day or eight hours, per week, during the course of the notice period;
  • A significant amendment to the law relates to the compensation due on termination for an invalid reason.  The amendments to the law now allow the parties to expressly state in the employment contract the level of compensation which may be payable where either party terminates the contract without reason, provided that it must not be less than two months' wages.  In the absence of prior agreement, the amendments to the Labour Law state that the compensation shall be 15 calendar days' pay per year of service in the case of an unlimited term contract, and pay for the remainder of the term in the case of a limited term contract.

Sanctions for breach

The amendments to the Labour Law have increased the penalties for breaches of the Labour Law and also provide greater powers to Ministry of Labour Officials (or those appointed by them).  In addition, inspectors are now obliged to produce reports and minutes of any inspection (rather than offer initial guidance and corrective recommendations, which is currently contained in the Labour Law).

The amendments also introduce a form of whistleblowing, to encourage the reporting of violations of the rules by individuals, by way of a financial incentive.    An individual assisting in the detection of violations may be rewarded up to 25% of the value of a fine imposed on an employer by the Ministry.

What's next?

The implementation of the amendments to the Labour Law in October is likely to lead to a number of changes in workplace practices and employers should be taking steps now to update their contracts and company policies.

Looking further into the future, the amendments to the Labour Law do contain some noticeable absences; for example, announcements in early 2014 indicated that the Shoura Council had approved a move to a 5-day working week, although this is currently still under discussion.  In addition, revisions to the Nitaqat system are expected, which are likely to increase Saudisation requirements in certain sectors, and make adjustments to the calculation methods and incentives.

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.

Sara Khoja
In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.