Saudi Arabia's Labour Law governs the employment relationship for virtually all private sector workers in the Kingdom — both Saudi nationals and expatriates. Whether you are signing your first contract, navigating a termination, or trying to understand your entitlements after five years of service, this guide provides a plain-language breakdown of the most important provisions every worker in Saudi Arabia should know.
Who is Covered by Saudi Labour Law?
The Labour Law (Royal Decree M/51, as amended) covers all workers employed in the private sector. Domestic workers (housemaids, drivers, gardeners) are covered under a separate domestic workers law. Government (public sector) employees are governed by the Civil Service Law and are not covered here.
Both Saudi nationals and expatriate workers are protected by the Labour Law once legally employed. Your rights apply regardless of your nationality.
Employment Contracts
Every employment relationship in Saudi Arabia must be governed by a written contract. Key points to know:
- Fixed-term vs. open-ended: Contracts are either fixed-term (a specific end date) or open-ended (no end date). Renewing a fixed-term contract twice or continuing work after the end date automatically converts it to an open-ended contract.
- Language: Your contract must be in Arabic (or Arabic plus your language). If there is any discrepancy between versions, the Arabic version takes precedence in Saudi courts.
- Probation period: Maximum 90 days (can be extended to 180 days by written agreement). During probation, either party can terminate with no notice.
- What must be included: Start date, job title, salary, work location, working hours, annual leave entitlement, and contract duration (if fixed-term).
Working Hours
The standard working day in Saudi Arabia is 8 hours, with a maximum of 48 hours per week (6 days). During the holy month of Ramadan, Muslim workers are entitled to a reduced working day of 6 hours (36 hours/week).
Workers are entitled to a daily rest break of at least 30 minutes during shifts longer than 5 hours. These breaks are not counted as working time.
Overtime is paid at 150% of the regular hourly rate. Work on official public holidays is paid at 200% of the regular hourly rate. Workers cannot be compelled to work more than 12 hours in a single day.
Annual Leave Entitlements
Saudi Labour Law provides the following minimum annual leave:
| Years of Service | Annual Leave Entitlement |
|---|---|
| Less than 5 years | 21 calendar days |
| 5 years or more | 30 calendar days |
Leave must be granted with full pay. Workers can carry over up to half their unused annual leave to the following year with employer agreement. Unused leave must be paid out on termination.
In addition to annual leave, Saudi Labour Law provides paid leave for:
- Official public holidays (Eid Al-Fitr, Eid Al-Adha, National Day, Founding Day)
- Sick leave: 30 days full pay, 60 days at 75% pay, 30 days unpaid (per illness cycle)
- Hajj leave: Once during employment, up to 10 days (for Muslim employees)
- Paternity leave: 3 days for male employees on the birth of a child
- Bereavement leave: 5 days for death of a spouse or first-degree relative
- Maternity leave: 10 weeks for female employees (4 before, 6 after birth), extendable by 4 weeks unpaid
End of Service Benefits (EOSB)
One of the most important financial provisions of Saudi Labour Law is the end of service benefit — a gratuity payment made to all workers upon termination of employment (regardless of who initiates termination). The calculation:
| Years of Service | EOSB Rate |
|---|---|
| First 5 years | Half month's salary per year |
| After 5 years | One full month's salary per year |
For example: an employee earning SAR 10,000/month who works for 7 years would receive: (5 × 5,000) + (2 × 10,000) = SAR 45,000 in EOSB. This is calculated on your final basic salary, not your total package including allowances.
Important nuance: If you resign before completing 2 years of service, you are not entitled to EOSB. After 2 years but less than 5, you receive one-third of the calculated EOSB. After 5 years, you receive the full calculation regardless of who terminates.
Termination and Notice Periods
Either party may terminate an open-ended contract with written notice. The minimum notice period is 60 days. Either party may pay salary in lieu of notice rather than requiring the employee to work through the notice period.
For fixed-term contracts, early termination by the employer without cause entitles the employee to compensation equivalent to the remaining contract salary.
Employees may be terminated without notice (and without EOSB) only for specific gross misconduct reasons listed explicitly in the Labour Law, including: impersonation, physical assault of a supervisor, repeated absence without cause, and disclosure of trade secrets. These are serious thresholds — general performance issues do not qualify.
Dispute Resolution
If you have a labour dispute with your employer, Saudi Arabia has a formal dispute resolution system:
- Step 1 — Mediation: The Ministry of Human Resources operates free mediation services. File a complaint through the Musaned platform or at a ministry office. Most disputes are resolved at this stage.
- Step 2 — Labour Courts: If mediation fails, the case proceeds to the Labour Court. Proceedings are conducted in Arabic — consider legal representation if your Arabic is limited.
- Musaned platform: For domestic workers, the Musaned platform handles complaints and dispute resolution separately from the main Labour Court system.
Non-Discrimination Provisions
Saudi Labour Law prohibits discrimination in employment on the basis of sex, disability, or age (with some exceptions for retirement age provisions). Female workers have specific protections including the right to equal pay for equal work, maternity leave protections, and restrictions on employers from terminating employees during maternity leave.
Know your rights: Many workers in Saudi Arabia — both Saudi and expatriate — are unaware of their EOSB entitlements and annual leave rights. Keep copies of your contract, payslips, and any written communications with your employer. These documents are your evidence if a dispute arises. The Labour Court system does work — and commonly finds in favour of employees when documentation is clear.