When doing business or employing people in Saudi Arabia you are required to comply with the employment laws.There have been huge changes that the government has made to Saudi labor law to change the way companies hire and manage their employees. For international investors or managers, it is beneficial to comprehend these updates in order to keep your business operating as usual and without experiencing any legal impediments.
Everything in the Kingdom must now be done online and there are strict terms on how a contract is ended as per MHRSD regulations. Businesses that fail to comply with the fresh guidelines will have Qiwa accounts frozen quickly by the government. This means that you won’t be able to apply for new work visas or transfer anyone over. Cash transactions go online and fast.
Well, now the Saudi government mandates that every single employment contract be fully digital. Dispute with an employee or government inspection no longer accepts paper contracts. You can only go through the Qiwa online system for legal purposes.
The MHRSD has very tight deadlines for companies to upload them on Qiwa:
Failure to comply with these deadlines will ensure that your business has been automatically enjoined from one or more of the essential government services. You can not issue new visas and cannot change your workers job titles either. Additionally, Saudi employees will count towards your hiring quotas only if their online contracts are fully approved under the local Nitaqat system.
The new amendments to the Saudi labor law draw very clear boundaries for different occupations. There are different rules for full-time and part-time work, for temporary as well as remote work.
The website raises the maximum number of contracts to ensure minimum competition in getting jobs for Saudi citizens. Saudi employees can sign no more than seven contracts in a 12-month period. After they reach this upper limit, the system prevents them from signing any new contracts for a date roughly one year later. Also, a Saudi citizen may not have more than two active employment contracts at the same time.
In the case of foreign workers, the rules are closely linked to their visa status. Tank Jobs: All of these businesses are necessary to terminate the digital tracking used by any Workers that should leave the Kingdom, in case of Validity expiration after performing services. Likewise, this rule also applies to a foreign worker absent from work for more than three months after 30th June 2026.
New labour law related to recruitment and resignation of the employee. These updates protect your business and the employee, so they must be addressed in your company handbook today.
Where there was a maximum for an initial trial or probation period – it is now 180 days. This is an increase from the previous 90-day limit. It gives managers more time to determine whether new hires are good for the job. Just keep in mind that when you fill out the online agreement, this 180-day period has to be explicit before an employee starts working.
A resignation is now more succinctly defined in law as a written communication from an employee indicating their desire to voluntarily leave their employment under a fixed contract.
The government has a tight schedule for these requests on Qiwa portal:
These days, you have to give the appropriate notice and have everything written down if ending a working relationship. Even firing an employee without cause can result in expensive lawsuits or fines.
Also for open contracts without an end date, the notice times have been altered depending on who is terminating. In the event that an employee desires to resign from their position, they are required to provide written notice at least thirty 30 days in advance. In the event that the employer terminates the worker, they must provide a written notice of no less than 60 days.
Special situations where contracts automatically expire. For instance, a contract ceases to be valid as soon as a court adjudicates your business bankrupt. If you terminate a contract outside of these legal parameters, the labor courts can order your company to pay the employee an amount equivalent to what they would have earned during their time working for you.
The standard time-off balances were globalized by the government. Such regulations preserve employees at work whilst allowing for the flexibility that businesses need.
Basically, you get paid 150% of your regular hourly wage for working overtime. But the new rules grant a second option. Under the new law, upon an employee’s written agreement, companies may reward additional paid time off instead of compensation for the overtime hours worked.
The government relies on automatic software systems to check whether your company is compliant, rather than employing human inspectors. Every single day, these systems audit your records in the digital portal.
The software will independently cross-verify your digital contracting entries against WPS payroll details on a monthly basis. Whenever it encounters a worker that does not have a contract or if the pay does not match, the system records an immediate violation.
Breaking these rules carries big fines. Employing a foreign worker without obtaining the appropriate permit or bypassing quotas around nationalization may be subject to fines ranging from SAR 10,000 to SAR 500,000 for each offence. Serious violations lead to your company’s entry into a “great wall blacklist”, so, you can not participate in the bidding for government projects.
Note: All targets, deadlines and leave rules pertaining to contracts are taken from the official guide published by Saudi Arabia’s Ministry of Human Resources and Social Development (MHRSD).
Three simple steps to remain secure under the new labor regulations are:
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