Saudi Arabia has a well-regulated labour market, with clear guidelines on employment terms, working conditions, and remote work policies. Employers must adhere to these regulations to ensure compliance and maintain fair workplace practices.
A key aspect of employment in Saudi Arabia is the employment contract, which must be in writing and follow the guidelines set by the Ministry of Human Resources and Social Development. There are different types of employment contracts in Saudi Arabia, including fixed-term and indefinite-term agreements. Fixed-term contracts, particularly for expatriates, cannot exceed four years, and repeated renewals may result in conversion to an indefinite-term contract. Employers must also consider the penalty for breaking an employment contract in Saudi Arabia, which often involves compensating the other party for the remaining contract period. Additionally, employees can review their agreements online, making it easier to track and verify employment terms.
Work hours in the Kingdom are also strictly regulated. The standard employment contract in Saudi Arabia typically includes a 48-hour workweek, reduced to 36 hours during Ramadan for Muslim employees. Overtime is compensated at a premium rate, and rest periods are mandatory to ensure worker well-being.
Remote work has gained traction, especially after significant investments in digital infrastructure. However, breach of employment contract in Saudi Arabia remains a concern, particularly when remote work arrangements are not clearly outlined. The country does not currently have a dedicated remote work visa, but foreign professionals can work remotely under the Saudi Premium Residency program.
Employers looking to hire or retain talent in Saudi Arabia must navigate these evolving employment regulations while ensuring their contracts and workplace policies align with legal requirements.
In Saudi Arabia, employment agreements must be formalised in writing, as mandated by the Labour Law. For non-GCC nationals, a signed contract is essential for visa processing. Each party must retain a copy of the contract, which should follow a standard template issued by the Ministry of Human Resources and Social Development (HRSD).
At a minimum, the contract should include key details such as the employer’s registered address, the employee’s full name, nationality, and identification details (national ID or passport number). It must also specify the salary structure, allowances, job responsibilities, workplace location, contract duration (if applicable), leave entitlements, and termination conditions. Additional clauses can be included as long as they do not conflict with the Labour Law.
Employers may set a probation period of up to 90 days for new hires, which can be extended to a maximum of 180 days with the employee’s written consent. During this period, either party can terminate the contract without cause, unless otherwise restricted by contract. Employees who are dismissed during probation are not entitled to end-of-service gratuity (EOSG) or reinstatement rights.
A probationary period must be clearly stated in the employment contract. If an employee is rehired for the same role, a second probationary period is generally not permitted unless the employee has been out of the organisation for at least six months or is taking on a different position within the company.
Under Saudi Labour Law, all employers must establish and display workplace regulations in Arabic. These policies should align with HRSD’s standard guidelines and cover areas such as health and safety measures, disciplinary actions, and grievance procedures. Employers may introduce additional policies, but they must comply with Labour Law provisions and undergo approval by the HRSD.
For companies drafting an HR policy and procedure manual in Saudi Arabia, it is crucial to ensure compliance with Ministry regulations. Custom policies, especially those related to employee conduct, must not contradict existing labour protections and should be submitted for approval through a licensed legal professional.
Employers are not required to lodge employment contracts or internal workplace policies with any third party aside from the HRSD. However, any modifications to standard employment regulations that go beyond the Ministry’s prescribed framework must be formally approved. The review process can take up to 60 days and must be conducted through a licensed legal practitioner.
For businesses hiring at various levels, including those looking to fill entry-level policy jobs in Saudi Arabia, staying compliant with local regulations is essential. Ensuring that employment terms and company policies meet legal standards helps mitigate risks and supports a stable work environment.
In Saudi Arabia, all employment agreements must be formalised in writing, as stipulated by the Labour Law. This requirement is particularly crucial for non-GCC nationals, as a valid employment contract is necessary for visa processing. Each party must retain a copy of the signed contract, which must adhere to the HRSD’s prescribed template.
A legally compliant contract must contain key details, including the employer’s name and registered address, as well as the employee’s full name, nationality, and identification details (such as a national ID or passport number for foreign workers). The contract should outline salary structure, allowances, job description, work location, start date, contract duration (if applicable), leave entitlements, termination conditions, and other workplace policies. While additional terms may be included, they must align with the Labour Law to ensure compliance.
There are two primary types of employment contract terms in Saudi Arabia: fixed-term and indefinite-term contracts. Fixed-term contracts specify a set duration, with clear conditions for renewal. If a fixed-term contract continues beyond its agreed expiry date without formal renewal, it automatically converts into an indefinite-term contract in Saudi Arabia. These contracts remain valid until either party initiates termination under legally defined conditions.
Standard employment contracts must also cover essential provisions such as annual leave entitlements, sick leave policies, maternity leave for female employees, and end-of-service gratuity (EOSG). Employers are responsible for covering work permit and visa costs for expatriate employees. Furthermore, termination rights must be clearly defined, detailing valid grounds for dismissal and notice periods.
For employers, ensuring compliance with Saudi Labour Law when drafting employment contracts is essential to mitigating legal risks and fostering a structured work environment. Custom clauses can be included to reflect company policies, but these must not contradict statutory requirements. Employers should review contract terms periodically to align with evolving labour regulations and industry best practices.
In Saudi Arabia, most employment contracts are structured as fixed-term agreements, meaning they automatically terminate upon reaching their specified end date. However, employers and employees can agree to a request for extension of contract, provided the renewal terms are clearly defined.
Fixed-term contracts can have a maximum duration of two years, with an option to renew. If a contract includes a renewal clause, it may be extended for a similar period or a specific term agreed upon by both parties. Importantly, if a contract is renewed three consecutive times or if the total duration of the original contract and its extensions reaches four years (whichever comes first), it automatically converts into an indefinite-term contract.
For non-Saudi employees, if an employment contract does not specify a duration, it is considered valid for one year and will renew automatically unless terminated. Employers who do not wish to renew a contract must provide notice in accordance with the contract terms. If no notice period is stated, the default requirement is 60 days’ notice before contract expiry.
Employers should document renewals formally, often through an employment contract extension letter, to avoid disputes and ensure compliance with labour regulations. Clear renewal terms help both parties align on expectations and avoid unintended contract terminations.
When working with independent contractors, contract extensions operate differently. These agreements are typically based on mutual consent, and renewal terms should be outlined in the initial contract to avoid ambiguity. If an extension is needed, both parties must agree in writing, specifying any adjustments to terms, such as payment structures or project scope. Unlike standard employment contracts, independent contractor agreements do not automatically convert into indefinite-term arrangements.
To ensure compliance with Saudi Arabia’s labour laws, employers should regularly review contract extension policies and maintain proper documentation. Whether extending an employment contract or renewing an independent contractor agreement, having clear contractual terms can help businesses maintain workforce stability while meeting legal obligations.
In Saudi Arabia, a fixed-term contract is a legally binding agreement that specifies a predetermined duration for employment. These contracts are commonly used for project-based or temporary roles and automatically expire on the agreed end date unless renewed. Fixed-term contract expiration does not require formal notice unless stated in the contract.
Employers hiring non-Saudi employees must issue fixed-term contracts, as indefinite-term contracts are not permitted for expatriate workers. If a contract does not specify a duration, it is automatically considered valid for one year from the employee’s start date.
Fixed-term employees may be subject to a probationary period of up to 90 days, which can be extended to a maximum of 180 days with the employee’s written consent. During probation, either party may terminate the contract without compensation unless otherwise agreed.
Notice periods are typically not required for fixed-term contract expiration unless contractually specified. However, if an employee or employer wishes to terminate the contract early, the terms outlined in the contract must be followed.
A fixed-term contract in Saudi Arabia naturally ends when the agreed duration expires. However, if an employer and employee continue working beyond this period without explicitly renewing the contract, it may be considered renewed under the same terms. If a fixed-term contract is renewed three consecutive times, or if the total employment duration exceeds four years, it automatically converts into an indefinite-term contract.
If an employer or employee terminates a fixed-term contract before expiration, the party initiating termination must compensate the other. The required compensation is typically equal to the remaining salary for the duration of the contract unless otherwise agreed.
Employees on a fixed-term contract are entitled to end-of-service benefits if they have completed at least two years of continuous service. The standard severance pay calculation is half a month’s wage for each of the first five years and a full month’s wage for each additional year. If a contract is terminated early, severance entitlements depend on the specific terms outlined in the employment agreement.
Employers must carefully structure fixed-term contracts to ensure compliance with Saudi labour laws while allowing flexibility for business needs. Proper documentation and clear contractual terms help prevent disputes and ensure a smooth employment relationship.
Employers in Saudi Arabia must adhere to regulations governing working hours, rest breaks, and overtime. These rules help ensure a balanced work-life structure while accommodating cultural and religious considerations, such as Ramadan.
The official working hours in Saudi Arabia are typically 48 hours per week, spread across five or six days. The normal working hours in the country should not exceed eight hours per day when following a five-day workweek. However, during Ramadan, the daily work limit is reduced to six hours per day or 36 hours per week for Muslim employees.
Employers must also schedule working hours so that no employee works more than five consecutive hours without at least a 30-minute break for rest, prayer, or meals. These breaks are not considered part of the standard working hours and cannot be counted toward total work time.
The weekly working hours in Saudi Arabia typically run from Sunday to Thursday, with Friday and Saturday as the weekend for most businesses. Some organisations, particularly in retail or customer service sectors, may operate on different schedules, but total work hours must comply with Saudi Arabia working hours per week regulations.
Employees cannot be required to remain at the workplace beyond their normal working hours unless explicitly stated in their contract or agreed upon under specific conditions.
Any work exceeding the new working hours in Saudi Arabia (i.e., eight hours per day or 48 hours per week) is considered overtime. Employers must compensate employees for overtime hours at a rate of at least 150% of their regular hourly wage.
The maximum allowable daily work, including overtime, is 11 hours per day. Employees in senior management and policy-making positions may be exempt from standard overtime regulations.
Employers should ensure that timesheets are maintained to track overtime hours, as these records are often required for compliance and payroll processing.
By maintaining compliance with Saudi Arabia’s working hour regulations, employers can foster a legally compliant and efficient work environment while respecting cultural and religious practices.
Remote work in Saudi Arabia is becoming increasingly viable due to the country’s advancements in digital infrastructure. However, regulations governing remote work arrangements remain somewhat undefined. Employers considering remote work policies should be aware of the existing framework and evolving visa options that support foreign professionals.
Saudi Arabia has made significant investments in its digital economy, notably through the establishment of the National Digital Transformation Unit in 2017. Since then, approximately $15 billion has been allocated to ICT infrastructure, ensuring comprehensive internet coverage across the country. As a result, over 93% of Saudi residents between the ages of 10 and 73 are internet users. The nation was also among the first globally to introduce commercial 5G services, ranking 13th in the World Economic Forum’s Digital Capacity Index.
While Saudi Arabia does not currently offer a specific remote work visa, foreign professionals can work remotely under certain conditions. The Saudi Premium Residency, also referred to as the “Saudi Green Card,” provides residency rights to investors, entrepreneurs, and highly skilled professionals. This programme allows expatriates to live, work, and own businesses in the Kingdom without needing a local sponsor or employer.
Although there is no formal digital nomad visa, some foreigners may work remotely from Saudi Arabia using a tourist visa. However, this arrangement requires caution, as engaging with Saudi-based employers or clients could violate visa regulations. Employers should carefully evaluate their remote work policies to ensure compliance with Saudi labour laws.
As remote work continues to evolve in Saudi Arabia, businesses should monitor regulatory developments and explore appropriate visa options to support their remote employees effectively.
Every country has its own employment regulations, and Saudi Arabia is no exception. Non-compliance can result in serious legal and financial consequences for your business.
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