Written by: Kharisma Gita Sugito
The Kingdom of Saudi Arabia (KSA) Labor Law, enacted through Royal Decree No. M/51 on September 27, 2005, governs the labor market in the Kingdom. Recent amendments proposed on August 6, 2024, are set to take effect in 19 February 2025, marking a significant evolution in the labor framework. These changes aim to enhance compliance, worker protection, and market competitiveness while aligning with Saudi Vision 2030.
Key Changes in the 2025 Amendments
The 2025 amendments introduce comprehensive updates to the KSA Labor Law, including additional definitions, expanded employer responsibilities, enhanced worker protections, and refined regulations. Key areas of focus include:
Expanded Definitions and Contract Terms
- New Definitions: The 2025 amendments have introduced new terms, such as ‘resignation’ and ‘delegation,’ to simplify the contract terms and processes. It aims to simplify contract terms and streamline processes, reducing burdens on both employers and workers. Clearly defined resignation procedures, such as a 30-day notice period for employees and a 60-day deferment option for employers, minimize misunderstandings and disruptions. The formalization of delegation ensures clear task assignments and accountability. Additionally, standardized model contracts tailored to different employment types reduce administrative complexity, enhance compliance with labor laws, and provide employees with transparent agreements.
- Contract Duration for Non-Saudis: If unspecified, the contract will be considered open-ended, offering greater job stability for workers while ensuring compliance with the law.
- Model Contracts: The Ministry will create tailored model forms for employment contracts to standardize and simplify agreements.
Strengthened Saudization Policies
- The Ministry can now decline work permit renewals for employers violating Saudization quotas or other labor regulations.
- Employers must adopt comprehensive training and qualification policies for Saudi workers, focusing on skill development and gradual replacement of non-Saudis.
Enhanced Worker Protections
- Leave Entitlements: Expanded to include:
- Three-day paid leave for the death of a sibling.
- Childbirth leave is to be taken within seven days of the event.
- Extended maternity leave from 10 to 12 weeks, with six weeks mandatory post-delivery.
- Resignation Framework: Introduced clear procedures for resignation, including a 30-day notice period and rights for employers to defer resignation acceptance for up to 60 days if justified.
Adjustments to Working Conditions
- Employers can offer compensatory paid leave for overtime hours with worker consent.
- Training obligations are now determined by percentages set by the Ministry, removing fixed quotas from the law.
Penalties and Compliance
- Employers engaging in unauthorized employment activities face stricter penalties.
- Employment contracts must be attested to ensure legal validity and compliance with statutory provisions.
Impact on Employers
Update Employment Contracts
Employers should review their existing contracts to ensure they meet the new requirements, including clearly defining contract durations, attesting agreements for legal validity, and adopting tailored forms provided by the Ministry. These updates will ensure compliance with the 2025 amendments and help mitigate risks associated with contractual disputes. Adjusting contracts proactively will also provide clarity and security for both employers and employees.
Revise Leave Policies and Strengthen Compliance Frameworks
Expanding leave policies must include entitlements such as sibling bereavement leave and extended maternity leave, reflecting the updated labor protections. Employers must also develop comprehensive training programs for Saudi workers to align with Saudization targets. Additionally, businesses must monitor implementing regulations closely to stay informed about training quotas and other policies. Leveraging flexibilities in overtime compensation, such as offering compensatory leave, can further enhance worker satisfaction while meeting organizational needs.
Conclusion
The 2025 amendments to the KSA Labor Law under the Kingdom’s commitment to creating a fair, competitive, and dynamic labor market. By prioritizing worker protections, promoting Saudi employment, and introducing clearer frameworks for employers, these changes are set to enhance the overall efficiency and sustainability of the labor market. Employers must act swiftly to adapt their policies and procedures, ensuring compliance and positioning themselves as leaders in the evolving Saudi labor landscape.
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References:
Sethi, S., Narmah-Alqasim, S., & Azhar, R. (2024, September 18). Amendments to the Kingdom of Saudi Arabia Labor Law – key changes for employers in the KSA for 2025. Dentons. https://www.dentons.com/en/insights/alerts/2024/september/18/amendments-to-the-kingdom-of-saudi-arabia-labor-law-key-changes-for-employers-in-the-ksa-for-2025?utm_source=chatgpt.com
King & Spalding. (2024, September 12). Client alert: Amendments to the Saudi Labor
Law. https://www.kslaw.com/attachments/000/012/094/original/ca091224.pdf?1726151972