Saudi Arabia Labor Law Guide for Hiring Employees and Contractors
This labor law guide for Saudi Arabia has important information for businesses looking to hire employees or contractors in the country. Saudi Arabia is a country in the middle east.
As of the full year 2023, Saudi Arabia’s economy maintains a robust and diversified profile. The Kingdom has witnessed significant growth driven by various sectors, with notable contributions from oil and gas, petrochemicals, mining, construction, finance, and tourism.
The Vision 2030 initiative has been pivotal in steering the country towards economic diversification and reducing its dependency on oil revenues. The country continues to attract foreign investments, bolstering its position in the global economic landscape.
The currency used in Saudi Arabia is the Saudi Riyal (SAR).
Minimum Wage
4,000 SAR per month
Overtime Wage
150% of regular hourly wage
Meal Breaks
One hour
Rest Breaks
Two breaks of 15 minutes each
Working hours
8 hours/day, 48 hours/week
Salary Payment Cycle
Monthly
Payroll Taxes
GOSI (General Organization for Social Insurance)
Paid Vacation
21 days (increases to 30 days after 5 years of service)
Overtime Hours
Exceeding 48 hours in a week
Night Shift Hours
Standard pay rates apply
Holidays
9 days
No Work Days
Friday and Saturday
Employers must sign written contracts with employees, detailing employment terms, job description, salary, work hours, leave entitlements, and termination terms.
The law treats employees and contractors separately, wherein contractors may not enjoy the same employment benefits and protections as traditional employees.
- Foreign workers, where the minimum wage law does not apply, with salaries determined by contracts
- Certain apprenticeship or training programs
Overtime hours are any hours worked in excess of the standard working hours. The overtime pay rate is 150% of the regular hourly wage.
Night shifts do not receive additional pay, meaning the standard pay rates apply.
The minimum age for employment is 15 years, and strict laws prohibit child labor.
- For Saudi nationals: 22% (9% employer, 9% employee, 2% shared for unemployment insurance, 2% shared for occupational hazards).
- For non-Saudis: 2% (1% employer, 1% employee for occupational hazards).
- Paid Vacation: 21 days of paid leave per year, increasing to 30 days after five years of service.
- Maternity Leave: 10 weeks, with 4 weeks before and 6 weeks after delivery.
- Paternity Leave: 3 days.
- Sick Leave: Up to 120 days (30 days fully paid, 60 days at 75% pay, remaining at no pay).
| Holiday | Date |
|---|---|
| Eid al-Fitr | Varies |
| Eid al-Adha | Varies |
| Saudi National Day | September 23 |
- Retirement Benefits: Provided through GOSI.
- Healthcare Benefits: Employers must provide medical insurance.
- Gratuity: End-of-service gratuity for employees based on their service period.
- Annual Bonuses: Generally provided at employer discretion.
Termination benefits include the end-of-service gratuity, which is calculated based on the years of service. Employees can challenge dismissals legally through the labor courts. Valid reasons for termination include poor performance, misconduct, redundancy, or breach of contract terms.
Navigating the labor laws of Saudi Arabia effectively ensures compliance and fosters a harmonious working environment. Understanding and adhering to these laws is crucial for any business intending to operate successfully within the Kingdom.