Saudi Labor Law: a practical guide for employers

Read these first

• The Law applies to a wage contract under the employer’s management or supervision, subject to the Article 7 exemptions.
• A non-Saudi’s contract is written and fixed-term. Article 75 notice is the open-ended-contract path.
• Probation must be stated expressly. The total may not exceed 180 days. No award and no compensation if the contract ends during it.
• Ending the contract for an unlawful reason: Article 77 compensation if the contract is silent, and not less than two months’ wage.
• The M/44 amendments are in force from 19 February 2025. Implementing-regulation detail that was not checked is marked under review.

Who the Law covers, and who it excludes

The Law applies to every contract by which a person undertakes to work for an employer, under that employer’s management or supervision, for a wage. It also applies to workers in government, public bodies and public institutions, to workers in charitable institutions, to training and qualification contracts with persons who are not workers within the special provisions, and to part-time workers as to safety, health, work injuries and what the Minister decides. That is Article 5 of the Ministry’s consolidated text.

Article 7, as amended, excludes: the employer’s family members — spouse, ascendants and descendants — who work in an establishment that has no other employees; players and coaches of sports clubs and federations; domestic workers and those treated as such; agricultural workers, private herders and those treated as such; and non-Saudi workers who come to perform a specific task for a period not exceeding two months. The Minister, in coordination with the competent authorities, issues one or more regulations for those categories, other than sports players and coaches.

Any clause that conflicts with the Law is void. Any release or settlement of the worker’s rights under the Law while the contract is in force is void, unless it is more beneficial to the worker. That is Article 8. Arabic is required for data, records and contracts. If a foreign language is used beside it, the Arabic text prevails. That is Article 9.

Fixed-term and open-ended contracts

The employment contract must be written in two copies, one for each party, and documented under the statutory rules and the regulations. The contract stands even if it is not written; the worker alone may then prove it and the rights that arise from it by all means of proof, and either party may demand a written contract at any time. That is Article 51 as amended. The Ministry issues a unified model for each type of contract, and the contract must follow that model. That is Article 52.

A non-Saudi worker’s contract must be written and for a fixed term. If it does not state its duration, the term is one year from the date the worker actually starts. If work continues after that term, it is treated as renewed for a like term. That is Article 37 as amended by Royal Decree M/44.

A fixed-term contract ends when its term expires. If both parties continue to perform it, it is treated as renewed for an indefinite term, subject to Article 37 for non-Saudis. If it contains a clause that it renews for a like term or for a stated term, it renews for the agreed term. If it is renewed three consecutive times, or the original term plus the renewals reach four years, whichever is less, and the parties continue to perform it, it becomes an open-ended contract. That is Article 55.

Probation

If the worker is on probation, that must be stated expressly in the contract, and the period must be fixed clearly. The total may not, in any case, exceed one hundred and eighty days. The regulations set the connected rules, including leave that does not count toward the period. Either party may end the contract during that period. That is Article 53 as amended by Royal Decree M/44.

A worker may not be placed on probation more than once with the same employer. The parties may agree in writing to a further probation if it is in another occupation or another job, or if at least six months have passed since the relationship ended. If the contract ends during probation, neither party is entitled to compensation, and the worker is not entitled to an end-of-service award for that period. That is Article 54.

Working hours and leave

A worker may not be required to work more than eight actual hours in a day if the employer uses the daily standard, or more than forty-eight hours in a week if the employer uses the weekly standard. During Ramadan the actual hours for Muslim workers are reduced so that they do not exceed six hours a day, or thirty-six hours a week. That is Article 98.

The worker is entitled, for each year, to annual leave of at least twenty-one days, rising to at least thirty days after five continuous years with the employer. The leave is paid in advance. The worker must take it in the year it falls due. It may not be waived, and it may not be bought out in cash while the worker is in service. That is Article 109.

After the M/44 amendment: overtime is the hourly wage plus 50% of the basic wage, or — with the worker’s consent — paid compensatory leave instead. That is Article 107. The worker is entitled to five fully paid days on marriage or on the death of a spouse, an ascendant or a descendant; three days on the death of a brother or sister; and three days on the birth of a child, to be taken within seven days of the birth. That is Article 113 as amended. Maternity leave is twelve fully paid weeks, of which the six weeks after childbirth are mandatory. That is Article 151 as amended.

Notice period

If the contract is open-ended and the wage is paid monthly, either party may end it for a legitimate reason: if the worker ends it, written notice to the employer at least thirty days before the end date; if the employer ends it, written notice to the worker at least sixty days before the end date. If the wage is not paid monthly, the party who ends the contract — worker or employer — must give at least thirty days’ written notice. That is Article 75 as amended by Royal Decree M/44.

A party who ends an open-ended contract without observing the notice period pays the other party a sum equal to the worker’s wage for that period, unless they agree a higher sum. That is Article 76. If the notice comes from the employer, the worker may be absent during the period for one full day a week, or eight hours during the week, to look for other work, and is paid for that absence. That is Article 78.

Resignation is a different path. Article 2 defines it as the worker’s written, uncoerced declaration of a wish to end a fixed-term contract, without a condition, and the employer’s acceptance. Article 79 bis governs the request: it is treated as accepted if thirty days pass without a reply; the employer may postpone acceptance by up to sixty days with a written, reasoned explanation given before those thirty days expire; the worker may withdraw within seven days unless the request was accepted first; the request may not set a deferred resignation date; the contract remains in force during the period; and a worker whose contract ends by resignation is entitled to all rights under the Law.

Termination and Article 77 compensation

The contract ends if both parties agree to end it and the worker consents in writing; if the term expires and it is not renewed under the Law; if one party ends an open-ended contract under Article 75; on resignation; on reaching retirement age unless they agree to continue; on force majeure; on permanent closure of the establishment; on cessation of the activity the worker performs, unless otherwise agreed; on a final court decision or judgment ending the contract in a bankruptcy proceeding; or in any other case another statute provides. That is Article 74 as amended.

If the contract does not set a specific compensation for ending it for an unlawful reason, the harmed party is entitled to: fifteen days’ wage for each year of the worker’s service if the contract is open-ended; or the wage for the remaining term if the contract is fixed-term. That compensation may not be less than two months’ wage. That is Article 77.

The employer may not terminate without an award, notice or compensation except in the cases Article 80 lists, and only if the worker is given a chance to state reasons against the termination. The worker may leave without notice and keep all statutory rights in the cases Article 81 lists. Those lists are read from the text in force. This page does not replace them.

End-of-service gratuity

When the employment relationship ends, the employer must pay the worker an award for the period of service: half a month’s wage for each of the first five years, and one month’s wage for each following year. The last wage is the base. The worker is entitled to an award for a part-year in proportion to the time served. That is Article 84.

If the relationship ends because the worker resigns, the worker is entitled to one-third of the award after at least two continuous years and not more than five; two-thirds if service exceeds five continuous years and has not reached ten; and the full award if service has reached ten years or more. That is Article 85. The full award is due — as an exception to Article 85 — if the worker leaves because of force majeure beyond the worker’s control, and a female worker is entitled to it if she ends the contract within six months of her marriage contract or within three months of giving birth. That is Article 87.

When the worker’s service ends, the employer must pay the wage and settle the worker’s rights within one week at most from the end of the contractual relationship. If the worker is the one who ended the contract, the settlement must be completed within two weeks. That is Article 88. The formula and the tables sit on the end-of-service gratuity glossary page, not here.

Saudization and Nitaqat

Every establishment — in every activity, whatever its headcount — must work to attract and employ Saudis, keep them in work, and give them a fair chance to prove they can do the job through guidance, training and qualification. The share of Saudi workers the employer employs must not be less than 75% of the total workforce. The Minister may temporarily reduce that percentage if the technical competencies or academic qualifications are not available, or if the jobs cannot be filled by citizens. That is Article 26.

Nitaqat is the Ministry’s programme for applying nationalisation ratios by activity. This page does not publish a Nitaqat colour or an activity ratio; those are ministerial decisions and they change. They are read from the official channel in force when the contract is made. Private-sector employment contracts are documented on Qiwa, as the Ministry publishes. This guide does not replace the operational Saudisation manuals.

The 2025 amendments

The Labor Law amendments were issued by Royal Decree No. M/44 of 8/2/1446H (12 August 2024), following Cabinet Decision No. 117 of 2/2/1446H. The Ministry announced that they took effect on Wednesday 20 Sha’ban 1446H, corresponding to 19 February 2025. They amended 38 articles, deleted seven and added two.

What the consolidated text supports after that date includes: the definitions of resignation and assignment in Article 2; Article 37 on the term of a non-Saudi’s contract; Articles 51 and 52 on writing and the unified model; Article 53, under which probation may not exceed 180 days in total; Article 75 on the notice period; the new Article 79 bis on resignation procedure; paid compensatory leave for overtime with the worker’s consent in Article 107; the wider leave in Article 113; and maternity leave of twelve weeks in Article 151.

The implementing regulation issued with the in-force date, the updated violations and penalties schedules, and articles that were not checked for this page, are under review. No article number from the regulation is stated here.

What the text supports, and what is still under review

Pages that sit next to this guide

• Saudi employment contract
• Employment contract template
• Resignation letter template
• Notice period in GCC employment
• End-of-service gratuity in the GCC
• Employment contract
• Probation period
• Unlawful dismissal