Saudi Arabia: Key changes to labour law

Saudi Arabia’s Council of Ministers has approved amendments to the Kingdom’s labour laws, but has delayed the implementation of new Saudisation requirements.

Saudi Arabia’s Labour Minister, Adel Fakeih, has announced that a number of amendments had been made to the Kingdom’s labour laws. Key amendments include:

• maximum permitted term for fixed term contracts increased from three years to four years;
• an employee’s contract will be considered open-ended if the fixed term contract is renewed three times;
• companies with 50 or more employees will be required to train 12% of the Saudi workforce (increased from 6%);
• maximum probationary period increased from 90 days to 180 days; and
• leave entitlements increased (e.g. paternity leave will be three days and compassionate leave will be five days).

Saudi Arabia’s Labour Minister has further announced that the implementation of new legislation aimed at increasing Saudisation levels has been put on hold in order to give private companies more time to understand the new amendments. The programme has been met with criticism, with some employers commenting that the quotas are impossible to meet as nationals are either not interested or not trained to carry out certain jobs. The change was scheduled to take place by the end of April 2015 and there has been no indication as to when the programme will be implemented.

Actions for employers

Once the amendments to the labour laws come into force (expected in October 2015), employers in Saudi Arabia will need to undertake a review of their internal policies and contracts in order to bring them into line with the new requirements. Failure to adhere to the law may expose companies to fines of up to SR100,000 (US$26,646) and closure for 30 days.