Overview of Saudi Arabia Labor Law and Employment Policies

Employment Law Overview

• Key Legislation:
  • Labor Law (2012)
  • Social Insurance Law (2016)
  • Occupational Hazards Insurance Law (2012)
• Legal Characteristics:
  • Aims to protect employee rights and promote a fair employment environment.
  • Sets minimum standards for working hours, leave, wages, and severance pay.

Employment Contract Requirements

• Contract Types:
  • Fixed-term contracts (up to 3 years)
  • Indefinite-term contracts
• Contractual Provisions:
  • Must be written in Arabic.
  • Must include terms on job description, remuneration, working hours, leave, and severance pay.
• Language and Currency:
  • Contracts must be in Arabic.
  • Salaries must be denominated in Saudi Riyals (SAR).

Working Hours Regulations

• Standard Working Hours: 48 hours per week, 8 hours per day.
• Rest Days and Breaks: 24-hour rest on Fridays, minimum 30-minute break per day.

Leave Policies

• Annual Leave:
  • Less than 5 years of service: 21 days
  • Over 5 years of service: 30 days
• Public Holidays: 9
• Special Leaves:
  • Sick leave: 120 days per year, first 90 days paid.
  • Maternity leave: 10 weeks paid.
  • Paternity leave: 1 day paid.

Employee Termination and Contract Termination

• Notice Period:
  • Indefinite-term contracts: 60 days' notice
  • Fixed-term contracts: 30 days' notice
• Severance Pay:
  • 2 months' salary for each year of service.
• Protection Against Unfair Dismissal:
  • Employees are entitled to compensation for unfair dismissal.

Tax Laws

• Personal Income Tax: Saudi Arabia does not have personal income tax.
• Social Insurance Contributions:
  • Employer: 12%
  • Employee: 0%

Health Insurance

• Insurance Policy: Employers must provide supplementary health insurance for expatriate employees.
• Coverage: Medical care and hospital treatment.

Compensation and Benefits

• Minimum Wage: No mandatory minimum wage.
• Salary Structure:
  • Basic salary
  • Allowances (housing, transportation, etc.)
  • Bonuses

Work Permits and Visas

• Permit Requirements: Expatriate employees require a work permit and a residence visa.
• Application Process:
  • Employer applies for work permit from the Ministry of Labor.
  • Employee applies for residence visa from Saudi embassy or consulate abroad.

Confidentiality and Non-Compete Clauses

• Enforceability: Confidentiality and non-compete clauses are enforceable in Saudi Arabia.
• Common Provisions:
  • Confidentiality: Employees may not disclose the employer's confidential information.
  • Non-compete: Employees may not work for a competitor for a specified period.

Training and Development

• Legal Requirements: No mandatory training requirements.
• Government Support: Government provides training and development programs.

Workplace Diversity and Inclusion

• Legal Requirements: Discrimination based on factors such as race, religion, or gender is prohibited.
• Enforcement: Ministry of Labor is responsible for enforcing anti-discrimination laws.

Remote Work Policies

• Legal Framework: Remote work is regulated in Saudi Arabia.
• Tax and Insurance Implications: Tax and social insurance implications of remote work depend on specific circumstances.

Authoritative Website Addresses

• Ministry of Labor, Saudi Arabia