Employment Law in Saudi Arabia

The principal item of legislation governing employment relationships in the Kingdom of Saudi Arabia is the Labour Law (promulgated by Royal Decree Number M/51 of 23 Sha’ban 1426 [27 September 2005]), accompanied by a set of implementing regulations, plus resolutions on specific issues issued by the Ministry of Human Resource and Social Development. The Labour Law does not apply to:

• an employer’s family members who constitute a firm’s only employees

• domestic servants

• groups such as certain maritime and agricultural workers

• foreign nationals entering Saudi Arabia to perform a specific task for two months or less.

The Labour Law is interpreted by Labour Courts. It should be noted that in the Saudi Arabian judicial system, case law does not set binding precedents (and is not publicly reported) and courts judge cases solely on their facts. Therefore, it is often difficult to state with any confidence how matters left undefined by the legislation — such as what constitutes a permissible “valid” reason for Dismissal with notice — will be interpreted by a Labour Court in a particular case.

Employment contracts and company’s internal work regulations are other important sources of regulation (in both cases, these must follow an official model drawn up by the Ministry of Human Resource and Social Development). There are no collective agreements.

A key feature of employment in Saudi Arabia is that around 80% of the private sector workforce is currently made up of foreign nationals. In order to increase the proportion of Saudi nationals in the workforce, the Government pursues a policy of “Saudisation” and penalises employers that do not meet targets for the employment of local staff (see Saudi Nationals/Saudisation). There is positive discrimination in employment in favour of Saudi nationals, who also receive preferential legal treatment in various areas. For example, only Saudi nationals:

• may be employed on indefinite-term employment contracts (see Types of Contract and Employee)

• are entitled to a de facto statutory minimum wage (see Minimum Wages)

• may perform “flexible work” (see Part-time Work)

• have statutory protection from discrimination on grounds such as sex and age (see Prohibition of Discrimination)

• may elect labour committees (see Trade Unions)

• have specific protection from collective redundancies (see Collective Redundancies)

• must be given vocational training by their employer (see Vocational Training).

For the purposes of most of the issues covered in this topic, the rights and priorities accorded to Saudi nationals also apply to the citizens of four other member countries of the Gulf Cooperation Council (GCC) — Bahrain, Kuwait, Oman and the United Arab Emirates.

This topic refers only to the private sector.

• Employers must notify the public employment service about all vacancies within 15 days of the position falling vacant, and the employment service is entitled to nominate Saudi citizens registered as jobseekers for such vacancies. Recruitment and Selection

• Probationary periods, during which either party may terminate the employment contract without notice, may last no more than 90 days, though may be extended for up to another 90 days by agreement. Recruitment and Selection

• Private sector companies with at least six employees must employ a certain quota of Saudi nationals, while a number of designated jobs may be filled only by Saudi nationals. Recruitment and Selection

• Foreign nationals may be employed only if they possess professional and academic qualifications that are needed in Saudi Arabia and that an insufficient number of Saudi citizens possess, or belong to, a category of workers that Saudi Arabia needs. Recruitment and Selection

• An employment contract is defined as a contract concluded between an employer and an employee, whereby the latter undertakes to work under the management or supervision of the former for a wage. Employment Contracts

• Employment contracts must contain at least the core terms set out in an official model contract, and must be authenticated by the General Organisation for Social Insurance. Employment Contracts

• The employment contracts of Saudi nationals may have an indefinite or fixed term (various statutory rules apply to the renewal of the latter) but those of foreign nationals must have a fixed term. Employment Contracts

• Employers must generally pay employees monthly or weekly by bank deposit in Saudi riyals, generally using a government-run online Wage Protection System and must observe rules on deductions from pay. There is no general statutory minimum wage but a de facto minimum applies to Saudi nationals. Pay and Benefits

• Employees’ normal working time must not generally exceed eight hours per day and 48 hours per week — though with exceptions, as in the case of Muslim employees during Ramadan — and overtime above these limits entitles a worker to a pay supplement of 50%. Working Time, Rest and Holidays

• Employees must not generally work for more than five consecutive hours without a break (unpaid) of at least 30 minutes and are entitled to a weekly rest day, normally on Friday. Working Time, Rest and Holidays

• All employees are entitled to at least 21 days of paid annual leave, while those with at least five years’ service with their employer are entitled to at least 30 days. Working Time, Rest and Holidays

• Pregnant employees are entitled to 10 weeks of maternity leave on full pay from their employer; they must not work in the six weeks following the birth and may take no more than four weeks of maternity leave before the expected date of birth. Employers are prohibited from dismissing employees, or giving them notice, while they are pregnant or taking maternity leave. Parenthood and Work-life Balance

• Employees are entitled to varying amounts of paid leave for events such as their marriage or the death of a close relative or spouse. Parenthood and Work-life Balance

• Employees are entitled to (partially paid) sick leave totalling four months (continuous or otherwise) in any 12-month period. Parenthood and Work-life Balance

• Employers must generally discriminate in employment in favour of Saudi nationals, but must not discriminate among Saudi nationals on grounds such as sex, disability or age. Equality and Discrimination

• Various special rules and restrictions apply to the employment of women. Women must be paid the same as men for performing work of equal value. Equality and Discrimination

• Discrimination in relation to employment on grounds of disability is forbidden and employers with 25 or more employees must, where the nature of the work allows, ensure that at least 4% of their workforce is made up of people with recognised disabilities. Equality and Discrimination

• Employers are required to put in place the necessary measures to prevent and combat harassment and abusive behaviour in the working environment. Equality and Discrimination

• Employees have no right to form or join independent trade unions, while strikes are illegal and collective bargaining is non-existent. Industrial Relations and Collective Rights

• Employers must take the necessary precautions to protect employees against hazards, occupational diseases and machinery, and to ensure work safety and protection. They also have a range of specific obligations in this area, as do employees. Occupational Health and Safety

• An employer may terminate an indefinite-term employment contract with notice for a valid reason, such as redundancy or incompetence. Termination of Employment

• An employer may summarily dismiss an employee without notice in certain circumstances, generally related to gross misconduct by the employee. Termination of Employment

• Employers with 50 or more employees cannot implement collective redundancies of employees who are Saudi nationals without official approval. Termination of Employment

• Employment contracts may end in a variety of ways, other than dismissal or resignation, including where the employer’s business ceases completely or the establishment or activity in which the employee works is closed down. Termination of Employment

• When terminating an indefinite-term employment contract, the employer or employee must generally give the other party written notice of at least 60 days if the employee is paid monthly or 30 days if the employee is paid with any other frequency. Termination of Employment

• Employees are in many circumstances entitled to a statutory end-of-service payment on termination of employment. Termination of Employment

• Employers have a general obligation to train employees who are Saudi nationals, while those with 50 or more employees must provide training to at least 12% of their Saudi employees each year. Other Key Issues

• Employers of 10 or more employees must have in place a set of internal work regulations, dealing with matters such as disciplinary offences and penalties, working hours, rest periods and leave. Other Key Issues

• Disciplinary sanctions and procedures are regulated by statute. Other Key Issues