The Saudi Labor System regulates the mutual relationships between employees and employers within workplaces, aiming to establish a fair and productive work environment.

The Saudi Labor System includes numerous legal provisions that clearly define the rights and obligations of both parties, along with penalties for any violations.

In today’s article, we will highlight the main features of The Saudi Labor System, offering a simplified explanation of its key articles and what they stipulate in terms of obligations.

The Saudi Labor System

The Kingdom of Saudi Arabia pays significant attention to labor affairs and has issued various laws and regulations to govern employment matters.

Given that Saudi Arabia hosts a large number of foreign workers, there was a need for a legal framework to regulate their status. A Royal Decree was issued in 2005 (1426H) to establish The Saudi Labor System, which has since undergone several amendments.

The Saudi Labor System consists of 245 articles aimed at enforcing legal frameworks that govern work relations and employment conditions.

Article 59 of the Saudi Labor Law

Article 59 of The Saudi Labor System addresses the issue of transferring a monthly-paid worker to a position paid on a daily or weekly basis.

The article strictly states that such a transfer is not allowed without the worker’s written consent, as it would invalidate the original employment contract and eliminate some mutual obligations.

Article 77: Unlawful Termination Compensation

Article 77 is one of the most important clauses in The Saudi Labor System, as it deals with compensation in cases of contract termination without a legitimate reason.

The article grants the aggrieved party, whether the employee or the employer, the right to compensation of no less than two months’ salary. Compensation is calculated as follows:

• If the contract specifies compensation, that amount is to be followed.

• For indefinite-term contracts, compensation equals 15 days’ wages for each year of service.

• For fixed-term contracts, the compensation is equivalent to the remaining contract period.

Article 79: End of Employment Due to Death or Incapacity

Article 79 clarifies that the employment contract does not terminate with the employer’s death. However, it does end upon the worker’s death or if the worker is medically proven to be incapable of performing their duties.

Article 80: Termination Without Compensation

Article 80 outlines the cases in which an employer may terminate the employment contract without severance, compensation, or prior notice. The employer must allow the employee an opportunity to respond before finalizing the decision.

New Work Hours Regulation

As part of labor organization, The Saudi Labor System defines the maximum number of working hours as 8 hours per day or 48 hours per week. During Ramadan, working hours are reduced to 6 hours per day or 36 hours per week.

Foreign Worker Rights in Saudi Arabia

The Saudi Labor Law also emphasizes the rights of foreign workers. These include:

• The employer is responsible for the cost of recruitment, residency, work permit, occupation change, and repatriation.

• Workers are entitled to rest breaks during the workday and to weekly, annual, and sick leaves.

• Employers must comply with the standard working hours for both local and foreign workers.

For more information and details about the Saudi labor system, you can visit the official website of the Ministry of Human Resources and Social Development.

Read also:

Business Pillars CPAs Company – Accountants and Legal Auditors

Professional Accounting Certification in Saudi Arabia: Key Requirements and Their Costs