Key Amendments to the Kingdom of Saudi Arabia Labour Law Announced

The Council of Ministers in the Kingdom of Saudi Arabia (KSA) recently approved a number of amendments to the KSA Labour Law, which will come into effect on 25 February 2025. The amendments to the Labour Law reference revisions to the Implementing Regulations, which also have yet to be published. This LawFlash considers how the key amendments will impact employers and employees once they come into force.

EMPLOYER DUTY NOT TO DISCRIMINATE

The existing Labour Law contains a general provision that all nationals have equal rights to work without discrimination on the basis of gender, disability, age, or other form of discrimination, whether during the performance of the job, or the hiring process. The amendments to the Labour Law will add a duty on employers to refrain from doing anything that would undermine equal opportunities or treatment in employment, whether through exclusion, differentiation or preference between job applicants or employees on the basis of race, colour, gender, age, disability, marital status, or any other form of discrimination.

HOUSING AND TRANSPORT ALLOWANCE

The amendments include an obligation on the employer to provide either accommodation and transport, or housing and transport allowances. These are not addressed in the current Labour Law.

PROBATIONARY PERIOD

The provisions regarding probationary periods have been simplified. In the current version of the Labour Law, an employer is entitled to impose an initial probationary period of 90 days, which may be extended by agreement between the parties for a further 90 days.

The amendments enable the parties to agree to a 180-day probationary period at the outset, which is likely to reduce the administrative burden on employers who currently need to seek agreement for an extension to the probationary period after 90 days.

The amendments also clarify that each party has the right to terminate the contract during the probationary period, whereas under the current Labour Law, it is possible to restrict the right to terminate during probation to one party only.

The Implementing Regulations will clarify which holidays will be excluded from the probationary period. Currently, these are Eid al-Fitr, Eid al-Adha, and periods of sick leave.

OVERTIME

Currently, the Labour Law is restrictive regarding the compensation for overtime hours worked—all overtime needs to be compensated by paying an uplift of 50% of the basic wage. The amendments will provide more flexibility to employers and enable them to offer either an uplift in pay, or time off in lieu of any overtime worked, subject to the employee’s consent. Further details will be set out in the Implementing Regulations.

PERIOD OF LIMITED TERM CONTRACTS

All non-Saudi national employees must be employed by way of a limited term contract. Where the contract fails to specify the term, the current Labour Law states that the limited term shall be determined by reference to the expiry of the work permit. However, the amendments state that where the contract is silent as to the period of the limited term, it shall be considered a period of one year starting from the employee’s commencement date and can be renewed for similar periods.

LEAVES

Maternity Leave

Under the amendments, entitlement to maternity leave will be increased from 10 to 12 weeks on full pay. Six weeks of maternity leave must be taken following the birth of the child. The remaining six weeks can be distributed as the employee sees fit, starting from four weeks prior to the expected date of delivery.

Parental Leave

Male employees will be entitled to paid parental leave of three days to be taken within seven days of the birth of the child.

Bereavement Leave

The amendments will introduce an entitlement to paid bereavement leave of three days in the event of the death of a sibling.

RESIGNATION BY EMPLOYEE

A key development in the amendments to the Labour Law is the introduction of an express concept of employee resignation. Resignation is defined as “the employee’s written expression of their desire, without coercion, to terminate a fixed-term employment contract without any conditions or stipulations, and the acceptance of this resignation by the employer.”

This means that an employee can resign prior to the expiry of a limited term, subject to the following provisions:

• A resignation will be considered as accepted if a period of at least 30 days has passed without any response from the employer.
• An employer is entitled to delay a resignation request for a maximum of 60 days if required by the employer for business purposes. In such case, the employer will be required to provide a written explanation to the employee for the delay.
• Employees will be entitled to withdraw their resignation within a period of seven days from the date that they have submitted their resignation, unless the employer has approved the resignation before the employee’s withdrawal.
• Resignations may not specify a later effective date.
• A resignation shall be considered effective on the earlier of (1) the acceptance of the resignation by the employer, (2) the expiration of the period of 30 days without any response from the employer, or (3) after the expiry of the delayed acceptance by the employer for any business reasons.

NOTICE PERIOD UNLIMITED TERM CONTRACT

A further key amendment to the Labour Law is the reduction in the notice period for termination of an unlimited term contract from 60 to 30 days where the employment is terminated by the employee. However, termination of an unlimited term employment contract by an employer remains at 60 days’ notice.

OTHER AMENDMENTS

The amendments to the Labour Law introduce the concept of outsourcing, where an employer may provide an employee to a third party, via an establishment licensed to provide this outsource service. The amendments also impose wider obligations on employers to train Saudi national employees and provide greater powers to the Ministry of Human Resources and Social Development to impose certain penalties for breach of the obligations under the law.

OUTLOOK

The amendments to the KSA Labour Law will require employers in Saudi Arabia to revisit and amend their internal employment contracts and any applicable policies.