Saudi Arabia Introduces Comprehensive Labor Law Amendments: Key Changes and Investor Considerations
Saudi Arabia has introduced extensive amendments to its Labor Law (Royal Decree No. M/51 of 2005), approved by the Council of Ministers in August 2024 and entering into force in February 2025. These reforms form part of the Kingdom’s broader Vision 2030 strategy to modernize the labor market, enhance regulatory clarity, and align local practices with international standards.
Key Developments
Employment Contracts and Probation
All employment contracts for non-Saudi workers must now be in writing and for a fixed term corresponding to the duration of the employee’s work permit. If no duration is stated, the contract is deemed to last one year and renews automatically if work continues. The probation period must be expressly included in the contract, may not exceed 180 days, and can only be repeated for a different position or set of duties.
Resignations and Notice Periods
Employees must submit resignations in writing, and employers are required to respond within 30 days. If no response is issued, the resignation is considered accepted. Notice periods are now 60 days for employers and 30 days for employees paid on a monthly basis. An employer may postpone the effective date of resignation for up to 60 days when necessary for business continuity.
Employee Leave and Entitlements
The amendments introduce a clearer and more protective leave framework.
Annual Leave: 21 days of paid leave after one year of service, rising to 30 days after five years. All leave balances must be tracked on the Qiwa digital platform, and employers may face penalties for failing to grant leave for two consecutive years.
Sick Leave: Up to 120 days per year (30 with full pay, 60 at three-quarters pay, 30 unpaid). Medical certificates must be verified digitally through the HRSD system.
Maternity Leave: 12 weeks with full pay, plus an optional unpaid month. Job security during and after maternity leave is explicitly guaranteed.
Paternity Leave: 3 days paid.
Marriage and Bereavement Leave: 5 days paid each.
Hajj Leave: 10–15 days of paid leave for Muslim employees who have not previously performed Hajj and have completed two years of service.
All leave requests and approvals must now be managed electronically through the Qiwa platform to ensure transparency and inspection readiness.
Digitalization and Record-Keeping
A key feature of the 2025 reforms is the mandatory digitalization of employment records. Employers must register contracts, leave data, wage records, and end-of-service settlements through Qiwa. Unregistered documents will not be recognized in disputes, and failure to maintain digital compliance may trigger administrative penalties by the Ministry of Human Resources and Social Development (HRSD).
Employee Protection and Termination
Article 81 reaffirms that employees may end their employment without notice if the employer fails to meet contractual obligations, engages in fraud or abuse, exposes the employee to health or safety risks, or transfers the employee without valid reason or consent. In such cases, termination is legally justified and the employee retains all contractual and statutory rights.
Implications for Foreign Investors
For companies from China and other foreign jurisdictions operating in construction, energy, and infrastructure, these reforms have immediate operational consequences. The shift to fixed-term contracts, digital compliance obligations, and stricter notice rules will affect project timelines, renewal processes, and workforce planning.
Businesses should review and update employment templates and internal HR policies, ensure Qiwa registration for all labor relationships and leave records, and integrate these requirements into corporate governance and compliance frameworks.
The new fixed-term rule for non Saudi employees and the tightened resignation and notice requirements directly affect workforce planning. Under the 2024 amendments to the Saudi Labor Law, all non-Saudi employment contracts must now be expressly fixed-term and linked to the duration of the work permit. If the contract is silent on duration, it will automatically be considered valid for one year from the commencement date, renewable upon mutual agreement. This reform aims to align employment status with immigration compliance and reduce indefinite employment relationships for foreign workers.
Additionally, the amendments introduced stricter resignation and notice rules. Employees are now required to submit written resignation through formal channels, and employers must respond within 30 days; otherwise, the resignation is deemed accepted. The notice periods60 days for monthly-paid employees and 30 days for othersmust be strictly observed unless both parties agree otherwise in writing.
These changes collectively impact workforce planning and contract renewal strategies, particularly for employers with a high percentage of expatriate workers. Companies are advised to review their employment templates, renewal schedules, and exit procedures to ensure full compliance with the updated provisions under Articles 37 and 79 bis of the Labor Law.