Employment Regulations
Key Factors to Consider When Employing in Saudi Arabia:
There are several key areas to be aware of within Saudi Arabia’s employment regulatory framework, specifically for companies that plan to initiate a full local office and human resources department. These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the local laws and rules for both local employees as well as foreign nationals.
Contracts
Saudi Arabia requires that workers have employment contracts that meet local labor law standards. Companies must have a professional who can draft local employment contracts in Arabic and English.
Employee Entitlements
Paid Public Holidays
There is a variety of religious-related leave entitlements in Saudi Arabia, as reported on Pinoy-Ofw.
Hajj Holidays
Hajj is the annual Islamic pilgrimage among Muslim faithful held at the holy city of Mecca. If an employee joins they are allowed 10 days of paid vacation. However, they must have completed two years with the company first and can only take this leave once every five years.
Eid ul Fitr
Workers are allowed 4 days of paid vacations from 30th Ramadan for the Eid ul Fitr.
Eid ul Adha
Workers are allowed to have 4 days of paid vacations from 9th Zil Hajja for the Eid ul Adha.
Time Off Work
In the case of the death of a spouse or immediate biological family, workers are entitled 3 days paid leave. Female workers are entitled 15 days paid leave, according to Pinoy-Ofw.
Annual Leave Accrual Entitlement
Saudi Arabia guide Pinoy-Ofw states that Saudi Labor Law grants workers 21 days paid annual vacation. It will become 30 days once a worker completes five consecutive years of service. In general employees should use vacation leave during the year it is due.
Marriage Leave
Pinoy-Ofw reports employees are given 3 days of paid marriage leave. Marriage leave is separate to annual leave, e.g. if an employee takes two weeks of holiday leave to get married, 3 of those days will be deducted from Marriage Leave and the remaining from Annual Leave.
Paid Sick Leave Entitlement
Pinoy-Ofw reports that if an employee’s sickness has been proven (e.g. medical certificate), they are allowed up to four months sick leave from employer. Under these conditions the employer cannot terminate the employee during this time.
It is possible to connect sick leave with annual holiday benefit. The following lists down the quota which is implemented on yearly basis.
- First 30 days- Fully paid
- Next 60 days – 3/4 of total wages
- Next 30 days – Unpaid
Maternity Leave in Saudi Arabia
Pinoy-Ofw reports that female workers are entitled to 10 weeks of leave to deliver a child, starting from 4 weeks before the delivery date and 6 weeks after. This leave can also be connected with Annual Leave if the worker chooses to. During the period of Maternity Leave, the company cannot terminate the worker.
Maternity Leaves pay is determined as such:
- Less than 1 year – Unpaid
- 1 year – Half paid
- 3 years or more – Fully paid
Male workers are entitled to one day of paid paternity leave to attend the birth of their newborn.
Employment Termination in Saudi Arabia
The employer must have a valid reason for terminating the employee. According to labor laws listed by the Saudi Arabia embassy, examples of valid reasons include employees still under probation, gross misconduct, prolonged absence without valid reasons, violence, refusal to perform critical work duties, or failing to heed clear performance warnings. The dismissal could be regarded as having no valid reason if the employee was fired for reasonably refusing to accept a transfer.
If an employee takes legal action and the dismissal was found to be without valid reason, the court may order compensation or reinstatement of the employee.
According to Lexology, Saudi Arabia law does not yet provide for the concept of redundancies (although the article is undated, it is circa 2011).
Employment Termination
Severance / Redundancy Pay
According to SAP’s Saudi Arabia page, Saudi labor law stipulates End of Service (EOS) payments are to be calculated based on the average wages (plus housing allowance) and service years an employee has worked, unless the employee was terminated due to gross misconduct.
If terminated by employer the severance is equal to the wages for a half-month for each year for the first five years of service, and a whole month for each subsequent year.
However, if the employee quits, the award is modified based on the following:
- Less than 2 years – no award
- 2-5 years – one-third of the award
- 5-10 years – two-thirds of the award
The employee may be entitled to the full award if they leave for reasons outside of their control (force majeure), or if it is a female worker who ends her contract within six months from the date of her marriage or three months from the date of giving birth.
Termination of Employment
For employees employed at a monthly rate, the employer must give thirty-days notice, or fifteen-days notice for other workmen. Alternatively, the employer can give payment in lieu of notice. Payment is generally based on the average wages of the last three months.
Probation Period
Saudi law explicitly states that probation periods may not last longer than 30 days, as stated by the Saudi Arabia embassy.
