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July 15, 2025
Whether you’re launching a startup in Riyadh or managing a branch in Jeddah, understanding labor laws in Saudi Arabia is non-negotiable. These laws aren’t just legal checkboxes—they shape the way you hire, manage, and retain your workforce.
If you overlook labor compliance, the consequences are real:
Hefty government fines
Operational suspensions
Legal disputes with employees
Damaged employer reputation
But here’s the good news: Saudi Arabia’s labor framework is clear, structured, and business-friendly—as long as you know the rules.
Strong emphasis on employee protection
Requirements around Saudization (local hiring quotas)
Digital infrastructure like Qiwa and WPS to simplify compliance
A legal system that supports fair treatment and timely pay
💡 This guide breaks down the essentials every business owner needs to know—in plain English, not legalese.
Too often, employers in Saudi Arabia run into trouble not because of bad intent—but because of bad information.
If you’re not aware of:
Employee entitlements
Termination laws
Payroll requirements
Contract structures
…then you’re opening yourself up to avoidable risk.
Avoid lawsuits and penalties
Build trust with your team
Pass inspections and audits
Maintain a compliant and ethical brand
📌 Whether you employ one person or 100+, Saudi labor laws apply—and ignorance is never an excuse in court.
Saudi Arabia’s labor laws are primarily governed by the Saudi Labor Law (2015, updated frequently) and enforced by the Ministry of Human Resources and Social Development (MHRSD).
The system aims to:
Balance employer and employee rights
Increase national workforce participation
Regulate expat employment
Promote fair working conditions
🧠 Unlike some countries, Saudi Arabia’s laws apply equally to Saudi nationals and expatriates, with certain variations in benefits and termination processes.
📌 Contracts, working hours, holidays, terminations, and end-of-service benefits are all legally defined—and must be followed to the letter.
The MHRSD is your main regulatory body. They manage:
Labor law enforcement
Saudization compliance
Inspections and complaint resolutions
Legal updates and new policy implementation
✅ All labor policies stem from this ministry. Think of it as the backbone of workforce regulation in KSA.
If you’re paying employees, you’re also paying GOSI.
Social insurance (like social security or pensions)
Work injury benefits
Unemployment support (SANED)
Maternity and sick leave compensation
📌 Every employee—Saudi or expat—must be registered under GOSI, and monthly contributions must be made on time.
💡 GOSI is not optional. Failure to register staff can result in severe financial penalties and backdated dues.
Qiwa.sa is Saudi Arabia’s official digital portal for labor services.
Create and manage employment contracts digitally
Check Saudization levels
Access Saudization-friendly job seekers
Monitor company classification (Red, Yellow, Green, Platinum)
Track employee data, transfers, and disputes
🎯 Qiwa simplifies HR processes and ensures real-time compliance. It also integrates with Mudad (for WPS) and GOSI for seamless payroll tracking.
🧠 If you’re not on Qiwa—you’re behind. It’s where modern HR meets legal alignment in KSA.
Saudi law recognizes two primary types of contracts:
Duration is specified (e.g., 1 year)
Common for project-based roles or short-term hires
Automatically renews if both parties agree
No specific end date
Typically used for long-term employment
Requires valid justification for termination
📌 If a fixed-term contract is renewed three consecutive times or runs for 4 years or more, it automatically becomes indefinite under Saudi labor law.
All employment contracts in KSA must include the following mandatory fields:
Job title and description
Work location
Contract type and duration
Monthly salary (basic + allowances)
Working hours
Leave entitlements
Notice period
Termination conditions
GOSI contributions and end-of-service eligibility
🎯 Keep your contract simple, transparent, and legally vetted—it’s your best defense in case of disputes.
Under Saudi law:
Arabic is the official language of all employment contracts
Bilingual contracts (Arabic + English) are allowed, but Arabic prevails in disputes
All contracts for private-sector employees must be uploaded and approved via Qiwa
💡 Verbal agreements or “informal” job offers won’t hold in court. Always use digitally verified contracts to protect both sides.
Standard working hours in KSA are:
8 hours per day or 48 hours per week
During Ramadan, hours are reduced to 6 hours/day for Muslims
Breaks of at least 30 minutes after 5 hours of continuous work
At least one day off per week (Friday for most sectors)
🧠 Employees should not be asked to work during rest periods, holidays, or Fridays without proper compensation.
If employees work beyond 8 hours a day, overtime kicks in.
Example:
If an employee earns SAR 20/hour, overtime = SAR 30/hour
📌 All overtime must be documented, pre-approved, and paid in the next salary cycle.
🎯 Violating overtime rules is one of the most common triggers for employee lawsuits in KSA.
Employees are entitled to official public holidays:
Eid Al-Fitr
Eid Al-Adha
Saudi National Day
Founding Day
Minimum 21 days per year (after 1 year of service)
Increases to 30 days after 5 years of continuous service
🧠 Employees cannot waive their right to annual leave, even voluntarily.
Saudi Arabia introduced the Wage Protection System (Mudad) to ensure workers are paid accurately and on time.
Salaries must be transferred through bank accounts linked to WPS
Payments must be monthly, and within 7 days of the due date
Wages must match the contract submitted to Qiwa
GOSI and WPS must be synchronized to avoid discrepancies
📌 Failing to comply can result in:
Blocked visa services
Fines up to SAR 3,000 per worker
Public listing on the non-compliance registry
💡 SetupinSA can help businesses set up compliant payroll systems that are fully integrated with WPS.
As of 2023, the minimum wage for Saudi nationals is:
SAR 4,000/month to qualify under Nitaqat (Saudization) programs
For expatriates, there is no national minimum wage, but fair compensation is still required based on:
Market standards
Job nature
Skills and experience
🧠 Offering below-market salaries—even if legal—can damage your employer reputation and retention rates.
End-of-service gratuity is mandatory and calculated based on years of service:
Half a month’s salary per year for the first 5 years
Full month’s salary for each year after 5 years
📌 For a 6-year employee earning SAR 10,000/month:
5 years = 5 x 5,000 = 25,000
1 year = 10,000
Total benefit = SAR 35,000
🎯 Employers must pay this amount upon:
Contract end
Termination (lawful or resignation)
Retirement
Employee death
💡 Ensure your HR software automatically calculates this to avoid costly mistakes.
Saudi labor law strictly prohibits arbitrary or unfair dismissal.
Poor performance (with proof and written warnings)
Redundancy (documented restructuring)
Violation of contract terms
Absence without notice (more than 20 days/year or 10 consecutive)
📌 Wrongful termination can lead to:
Employee reinstatement orders
Compensation (typically 2–3 months’ salary)
Legal fees and penalties
Always issue warnings, record performance issues, and consult HR before letting anyone go.
Employees are entitled to fully or partially paid leave under medical or family circumstances.
30 days at full pay
60 days at 75% pay
30 days unpaid (if needed)
10 weeks (up to 4 weeks before delivery)
Fully paid if she has completed 1 year of service
3 days fully paid
📌 Employers cannot dismiss an employee during maternity or medical leave.
🎯 Keep proper documentation of leave requests and approvals.
The law now includes robust anti-discrimination and workplace harassment protections.
Discrimination based on gender, nationality, or religion
Workplace bullying or verbal abuse
Sexual harassment (physical or verbal)
📌 Employers must:
Provide a clear anti-harassment policy
Establish a safe reporting system
Take immediate action on verified complaints
💡 A positive, safe environment isn’t just ethical—it’s legally required.
Under the Nitaqat system, companies are rated into color categories:
Red: Low Saudi workforce—high restrictions
Yellow: Moderate compliance—limited services
Green (Low/Med/High): Compliant—standard services
Platinum: High Saudization—premium services
Faster visa processing
Access to more foreign worker quotas
Public recognition
📌 Each industry has a different target quota, and your GOSI payroll must reflect accurate nationality data.
🎯 SetupinSA can help analyze your status and create a Saudization improvement plan.
No issues during audits
No disruption in MOL, GOSI, or Qiwa services
Better employer branding
Fines ranging from SAR 5,000–10,000 per violation
Suspension of services (like new visas or iqama renewals)
Blacklisting for repeat violations
💡 Compliance protects your business—non-compliance endangers it.
You can’t just terminate employees arbitrarily.
Valid reasons include:
Job role redundancy
Breach of contract or misconduct
Absenteeism beyond legal thresholds
Business closure or legal dissolution
📌 Termination must be supported with evidence and documentation.
🧠 SetupinSA provides HR advisory and legal review before employee exits to reduce risk.
30 days for monthly-paid employees
15 days for daily/hourly workers
Employees must continue duties
You must calculate:
Pending salary
Leave balance payout
End-of-service benefit
Repatriation cost (for expats)
🎯 Delays or disputes can lead to court action or MOL involvement.
For all expats, employers are legally required to:
Provide return ticket to home country (upon contract end)
Transfer iqama or exit visa (if not renewing)
Clear all pending payments before exit
📌 Employers must complete repatriation within 10 days of contract end or face penalties.
From securing an audited company profile, handling all document attestations, and obtaining approvals from MISAto issuing your Commercial Registration, we handle the entire business setup — quickly, efficiently, and without hassle.
1. We Understand the Process, So You Don’t Have To
Navigating the regulations in Saudi Arabia can be complex. That’s why our experts handle all the paperwork, approvals, and formalities on your behalf.
2. Tailored Solutions for Every Business
Whether you’re a startup or an international corporation, our services are customized to fit your unique needs.
3. Your Success Is Our Priority
From the moment you contact us, your goals become our mission. We pride ourselves on fast results and exceptional service.
