Saudi labour law essentials: Saudi labour law,
reduced to what HR uses weekly.

Which law governs private-sector employment in Saudi Arabia?

Private-sector employment in Saudi Arabia is governed by the Labor Law issued under Royal Decree M/51, administered by the Ministry of Human Resources and Social Development. It has been amended several times, and a substantial set of amendments came into force in 2025 covering probation, notice, contract terms and several leave entitlements.

The 2025 amendments matter in practice because a great deal of the guidance circulating online predates those amendments. If a template, a calculator or a policy document in your business has not been reviewed since 2024, assume it needs checking rather than assuming it is still right.

Some categories of worker sit outside or partly outside the main law, including domestic workers, who are covered by their own regulations. Certain special economic zones and government-linked entities operate under their own employment arrangements as well.

How do Saudi employment contracts work?

Employment contracts should be in writing, in Arabic, in two copies, with the employer holding one and the employee the other. The contract is also registered on the ministry's Qiwa platform, and the registered version is the one the authorities will look at if there is a dispute about terms.

The most important structural difference from the UAE is the default term for expatriate employees. Article 37 requires a contract with a non-Saudi employee to be written and fixed-term. Where it states no term, the amended article treats it as one year from the day work actually began, renewed for the same period if the work carries on. The older text used the work permit's period, so templates written before the amendments may still say that. The permit still has to be renewed, which is why its expiry date belongs on the employee record and not in someone's calendar.

Contracts with Saudi nationals may be indefinite. Under Article 55, a fixed-term contract that both sides simply carry on with becomes indefinite. Where the contract has a renewal clause, the same happens after two consecutive renewals, or once the original term and renewals reach three years, whichever is less. The ministry's amendment guideline does not list Article 55, so we read this as unchanged.

Probation

Probation must be stated expressly in the contract, with its length, and the total cannot pass one hundred and eighty days. Either side may end the contract during it. The amended Article 53 leaves the leave that does not count towards probation to the regulations. The earlier text left out Eid holidays and sick leave, which pushes the real end date later than a calendar count suggests, so check the current regulation before fixing a date.

Notice and resignation

The amendments split the notice period on an indefinite contract. Where salary is paid monthly, an employee gives at least thirty days and an employer at least sixty. Where it is not paid monthly, either side gives at least thirty.

The ministry's guideline defines resignation as ending a fixed-term contract, and the notice rules above cover contracts with no fixed term. Resignation has its own timetable under Article 79 (bis). A request counts as accepted if the employer has not answered within thirty days. The employer can postpone acceptance by up to sixty days if work requires it, by giving written reasons inside those thirty days. The employee can withdraw within seven days unless the employer has already accepted, and the request cannot name a later resignation date.

What are the working hours in Saudi Arabia?

Standard working time is eight hours a day or forty-eight hours a week. Article 99 lets the minister raise the daily figure to nine for some categories and lower it to seven for hazardous work.

Employees should not work more than five consecutive hours without a break of at least thirty minutes, and should not be at the workplace for more than eleven hours a day, breaks included.

During Ramadan, working hours reduce to six a day or thirty-six a week. The statutory reduction is framed for Muslim employees, though a great many employers apply the shorter day across the whole workforce as a matter of policy. Both approaches are common, and the choice should be written down rather than left to each manager.

Overtime

Article 107 pays overtime at the hourly wage plus fifty per cent of the basic wage, and all hours worked on holidays and official vacations count as overtime. With the employee's consent, the amended article lets an employer give paid compensatory days off instead. Article 2 defines the basic wage to include periodic allowances, so check your own template before assuming the UAE convention applies.

Weekly rest

Employees are entitled to a weekly rest day, ordinarily Friday, of at least twenty-four consecutive hours. It is paid, and it cannot be replaced with cash. An employer may move it to another day for some workers after notifying the labour office. Rest days are not accumulated across weeks by default, though Article 105 allows it in remote areas and continuous work.

How much annual leave do employees get in Saudi Arabia?

Annual leave is twenty-one days a year, and it steps up to thirty days once the employee has completed five consecutive years of service with the same employer. That step is the single most commonly missed entitlement in Saudi payroll, because it depends on a service anniversary rather than on a policy grade.

Leave is taken in the year it is earned, and it cannot be given up or swapped for cash during service. The employer sets the dates and has to give at least thirty days' notice of them. An employee can defer leave to the next year with the employer's approval, and an employer can defer it by up to ninety days past the year it is due; longer needs the employee's written consent. The untaken balance is paid when employment ends, including the part of a year worked.

Sick leave is tiered within a single year, and Article 117 starts that year on the date of the first sick leave, not on 1 January. Payroll needs to know which tier a given absence falls into, whether the days are continuous or scattered, so they have to be counted from that date.

How is end-of-service benefit calculated in Saudi Arabia?

End-of-service benefit accrues at half a month's wage for each of the first five years of service and a full month's wage for each year after that, with part years counted proportionally.

Unlike the UAE, the calculation is based on the last wage including allowances rather than basic salary alone, which makes the Saudi figure materially larger for the same headline package.

Where the employer ends the employment, the full accrued award is payable. Where the employee resigns, the award is reduced by length of service under Article 85. Wages and entitlements are due within a week of the contract ending, or within two weeks where the worker ended it (Article 88). The two sides may agree to leave commissions, percentages and similar variable items out of the wage used for the award.

How do GOSI and Saudization affect payroll?

Social insurance

Employees are registered with the General Organization for Social Insurance shortly after they join, and registration is the employer's responsibility. Saudi nationals are covered by the full scheme, including pension and unemployment insurance. Non-Saudi employees are covered for occupational hazards only. The Social Insurance Law sets that branch at 2 per cent of the contributory wage, paid by the employer, which is why the employer cost differs sharply between the two groups.

The contributory wage is normally basic salary plus housing allowance, and it is declared to GOSI rather than inferred. The law sets a ceiling of SR 45,000 a month and has contributions paid within the first fifteen days of the following month, with a delay fine of 2 per cent of the unpaid amount for each month or part of one. Pension rates have been under a phased reform affecting newer subscribers, so treat any rate quoted in an article, including this one, as something to verify against the current GOSI schedule.

• Register joiners promptly; late registration creates back-dated liability
• Declare the contributory wage consistently with the payroll record
• Update GOSI when salary structure changes, not only at annual review
• Deregister leavers, or you keep paying for people who left
• Reconcile the GOSI invoice against payroll every month, not annually

Nitaqat, as an operating constraint

Saudization is not a background policy. Under Nitaqat, an entity falls into one of five ranges, Red, Low Green, Medium Green, High Green or Platinum, based on the share of Saudi nationals it employs. The ministry's 2021 guideline works the requirement out from the number of employees and the economic activity, in place of the old fixed size bands. The range determines what ministry services the establishment can use, and Article 35 lets the ministry refuse to renew a work permit where the nationalisation standards are not met. In February 2026 the ministry announced a new three-year phase of the programme, so confirm your activity's current figures.

The practical consequence is that hiring plans and visa plans are the same plan. A business that recruits ten expatriate staff without tracking its band can find itself unable to issue the permits it needs. Separately, specific professions carry their own Saudization percentages that have been raised in stages, so a role that was open last year may not be this year.

How does wage protection work through Mudad?

Salaries are paid through approved banking channels and reported through the Mudad platform, which compares what employers declare against contract data held by the ministry. Establishments are assessed on their compliance, and persistent failures restrict the same ministry services that Nitaqat governs.

Because Mudad checks declared salary against registered contract terms, mismatches between the payroll system, the contract on Qiwa and the GOSI declaration surface quickly. The fix is boring and effective: one source of truth for salary structure, and any change made in one place flows to all three.

What to keep, and where

Saudi disputes, like most employment disputes, turn on evidence rather than interpretation. Contracts, wage declarations, attendance, leave approvals and settlement calculations should be retrievable for any employee in minutes, in the form they were approved in.

• Registered contracts and every variation to them
• Work permit and iqama details, kept current through renewals
• Attendance records including Ramadan schedules and corrections
• Leave balances, approvals and the five-year annual leave step
• Payroll history, GOSI declarations and Mudad submissions
• End-of-service calculations and final settlements