Everything employers, HR professionals, and expatriate workers need to know, from the foundational rules and landmark 2025 amendments to Qiwa digital contracts, Saudization reforms, and the future of KSA employment law through 2028.
Saudi Arabia’s labour landscape has changed more in the past 18 months than in the previous decade. If you are an employer operating in the Kingdom, an HR professional managing a workforce, or an expatriate navigating your rights this is the only guide you need.
What’s Covered in This Guide
- The Saudi Labour Law System
- Employment Contracts 2026
- Working Hours & Overtime
- Wages & Salary Protection (WPS)
- Leave Entitlements, All Types
- Probation Period Rules
- End-of-Service Benefits
- Termination & Resignation
- Saudization & Nitaqat 2026
- Workplace Safety Rules
- Worker Mobility Reforms
- Anti-Discrimination Laws
- Penalties & Enforcement
- Future Expected Rules (2026–2028)
- FAQ
- Hire Compliant Staff with Prime Resources
01 · Foundation
Understanding the Saudi Labour Law System
Saudi Arabia’s employment framework is governed by the Labour Law, managed and enforced by the Ministry of Human Resources and Social Development (MHRSD). Issued under Royal Decree No. M/51, the law sets out the rights and responsibilities of all private-sector employers and employees, both Saudi nationals and expatriate workers.
The Labour Law applies broadly across the private sector. Certain groups, including domestic workers, are subject to separate regulatory frameworks. Government and semi-government employees follow distinct civil service regulations.
Governing Authority
Ministry of Human Resources and Social Development (MHRSD) hrsd.gov.sa, oversees all labour law compliance, inspections, dispute resolution, and regulatory updates in the Kingdom.
Saudi Arabia’s labour system has evolved significantly under Vision 2030, the Kingdom’s comprehensive economic transformation plan. The overarching goals of the updated framework are to attract global investment, diversify the economy away from oil dependency, increase female workforce participation, and create a transparent, digitally governed employment environment.
The most significant legal development in recent years was the August 2024 Council of Ministers approval of sweeping amendments to the Labour Law, which came into force on 19 February 2025, described by employment lawyers as the biggest reform since 2015.
02 · Contracts
Employment Contracts in Saudi Arabia, 2026 Rules
Every legal employment relationship in Saudi Arabia must be supported by a written contract, registered digitally on the Qiwa platform. As of 2025–2026, unregistered contracts have no legal enforceability in Saudi courts or labour dispute channels.
Contract Types
Saudi labour law recognises two primary contract types: fixed-term contracts (with a defined start and end date) and open-ended (indefinite) contracts (which continue until legally terminated). A third category task-based contracts applies to project-specific roles.
The Qiwa Unified Contract, A Major 2026 Reform
One of the most consequential reforms currently being rolled out is the Authenticated Employment Contract initiative, an integration between the MHRSD’s Qiwa platform and the Ministry of Justice’s Najiz platform. Once a contract is authenticated on Qiwa, its wage clauses become directly legally enforceable without requiring a labour court proceeding.
Qiwa Contract Rollout Timeline
Phase 1 (6 Oct 2025): All new contracts and new employment relationships.
Phase 2 (6 Mar 2026): All existing fixed-term contracts upon renewal or extension.
Phase 3 (6 Aug 2026): All existing open-ended/indefinite contracts.
Every contract must clearly state the job title and duties, base salary and all allowances, working hours, annual leave entitlement, contract duration, housing and transport arrangements, and termination conditions. For non-Saudi employees specifically, contracts must be written and time-limited. If no duration is specified, the contract automatically defaults to a period of one year from the employee’s actual start date.
| Rule | Detail | Status |
|---|---|---|
| Written contract mandatory | All employment relationships require a written agreement | Existing |
| Qiwa digital registration | Contracts must be registered on Qiwa to be enforceable | New 2025 |
| Non-Saudi must have fixed term | Default to 1 year if no term specified | Updated 2025 |
| Auto-renewal clause | Contracts renew automatically at expiry unless otherwise stated | Updated 2025 |
| Housing/transport clause required | Must specify provision or equivalent allowance | New 2025 |
Employer Action Required
All employers must ensure contracts are Qiwa-authenticated before the Phase 2 and Phase 3 deadlines. Non-authenticated contracts carry no legal weight in wage disputes from August 2026 onwards.
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03 · Working Hours
Working Hours, Rest Periods & Overtime Rules
Saudi labour law sets clear limits on working time to protect employees from overwork and ensure fair compensation for additional hours.
| Rule | Standard | Ramadan |
|---|---|---|
| Daily working hours | 8 hours | 6 hours (Muslim employees) |
| Weekly working hours | 48 hours | 36 hours |
| Max continuous hours without break | 5 hours | 5 hours |
| Break entitlement | Prayer, rest & meals | Prayer, rest & meals |
| Overtime rate | 150% of hourly wage | 150% of hourly wage |
Compensatory Leave in Lieu of Overtime, New 2025 Rule
A notable 2025 amendment now allows employers, with the employee’s written consent, to offer paid time off in lieu of overtime payment rather than cash compensation. This gives businesses greater flexibility in managing staffing costs whilst remaining fully compliant.
Summer Heat Protection Regulation
Under Ministerial Decision No. 3337, all private sector employers are prohibited from requiring outdoor work under direct sunlight between 12:00 noon and 3:00 pm from 15 June to 15 September each year. Violations carry significant fines.
04 · Wages
Wages & Salary Protection (WPS) in Saudi Arabia
Saudi Arabia operates the Wage Protection System (WPS), requiring all private-sector employers to transfer employee salaries digitally through the banking system. This creates a verifiable record of payment and acts as a safeguard against wage theft and delays.
Under the new Qiwa contract framework, the salary recorded in the authenticated contract must precisely match the amount paid through WPS. Any discrepancy between the Qiwa-documented salary and actual payments creates legal exposure for the employer.
Wage Dispute, New Enforcement Powers (2026)
The Qiwa–Najiz integration fundamentally changes how wage disputes are resolved. Employees can now file salary claims directly via the Najiz enforcement portal, bypassing the traditional labour court process entirely:
- Non-payment of full wages: claim must be submitted within 30 days
- Non-payment of partial wages: claim must be submitted within 90 days
- Enforcement orders are issued directly no lengthy court proceedings required
💰
Nitaqat Salary Threshold
For a Saudi national employee to count towards a company’s Saudization (Nitaqat) quota, their registered salary must be at least SAR 4,000 per month. Employees earning between SAR 2,000–SAR 3,999 count as only 0.5 towards the quota.
05 · Leave Entitlements
Complete Leave Entitlements Guide, Saudi Arabia 2026
The 2025 amendments significantly expanded leave rights across multiple categories. This is now one of the most employee-protective leave frameworks in the GCC region.
| Leave Type | Entitlement | Pay | Status |
|---|---|---|---|
| Annual Leave (under 5 years) | 21 working days/year | Full pay | Existing |
| Annual Leave (5+ years) | 30 working days/year | Full pay | Existing |
| Maternity Leave | 12 weeks (extended from 10) | Full pay | Updated 2025 |
| Paternity Leave | 3 days (within 7 days of birth) | Full pay | Updated 2025 |
| Bereavement Spouse/Family | 3 days | Full pay | Existing |
| Bereavement Sibling | 3 days | Full pay | New 2025 |
| Sick Leave | 90 days total | Full (30d), 75% (30d), unpaid (30d) | Existing |
| Hajj Leave | 10–15 days (once per service) | Full pay | Existing |
| Iddah Leave (Muslim widow) | 4 months and 10 days | Full pay | Existing |
| Iddah Leave (non-Muslim widow) | 15 days | Full pay | Existing |
| Special needs child leave | 1 month additional post-maternity | Full pay | New 2025 |
| Compensatory (overtime) Leave | In lieu of overtime pay (with consent) | Paid time off | New 2025 |
👶
Maternity Leave, Key Detail
Of the 12 weeks maternity leave, a minimum of six weeks must be taken immediately after childbirth. The remaining six weeks may be distributed at the employee’s discretion, with up to four weeks usable before the expected due date.
06 · Probation
Probation Period Rules, Updated 2025
The 2025 amendments extended the maximum probation period from 90 days to 180 days (six months) without the need for written agreement with the employee to extend beyond 90 days. This change was broadly welcomed by employers, who now have a more practical window to assess new hires.
| Rule | Detail |
|---|---|
| Maximum probation duration | 180 days (previously 90 days, extendable by agreement) |
| Termination during probation | Either party may terminate without notice or stated reason |
| End-of-service benefit during probation | Not applicable in most cases |
| Medical insurance during probation | Legally required from day one |
⚠️
Probation Cannot Be Abused
Whilst employers have broader flexibility during probation, the law prohibits using the probation period as a mechanism to deny employees their basic rights. Dismissal during probation based on discriminatory grounds remains unlawful.
07 · End-of-Service Benefits
End-of-Service Benefits (ESB), A Complete Calculation Guide
End-of-service benefits (ESB) are a legally mandated gratuity paid to employees when their employment ends, regardless of whether they were terminated or resigned. ESB is calculated on the employee’s final basic salary (excluding allowances).
| Years of Service | ESB Rate | Notes |
|---|---|---|
| First 5 years | ½ month’s wage per year | Applies to both resignation and termination |
| Beyond 5 years | 1 full month’s wage per year | Applies to all additional years |
| Resignation (under 2 years) | No ESB entitlement | Employee-initiated exits |
| Resignation (2–5 years) | ⅓ of entitlement | Partial entitlement |
| Resignation (5–10 years) | ⅔ of entitlement | Partial entitlement |
| Resignation (10+ years) | Full entitlement | Full ESB regardless of reason for leaving |
| Unfair termination by employer | Full entitlement + compensation | Additional compensation may be awarded |
🔢
Official ESB Calculator
MHRSD provides an officially approved online ESB calculator at hrsd.gov.sa. Both employers and employees can use this tool to verify accurate entitlement figures before any separation.
08 · Termination & Resignation
Termination & Resignation Rules, 2025 Amendments
The 2025 amendments introduced the most structured and codified resignation and termination procedures Saudi Arabia has ever had, with new definitions, notice requirements, and digital processing requirements through Qiwa.
Resignation, New Rules
- Employees must provide written notice standard is 30 days for monthly-paid employees, 60 days in some contract types
- A resignation can be withdrawn within 7 days of submission, provided the employer has not yet accepted it
- If an employer does not respond to a resignation within 30 days, it is deemed automatically accepted
- Resignation process must be documented through the Qiwa platform
Employer-Initiated Termination
- Notice must be given: typically 60 days for monthly-paid employees, 30 days for others
- Disciplinary penalties must now be communicated in writing
- Employees have the right to submit a written grievance against any penalty within 30 days (excluding public holidays)
- Wrongful termination entitles the employee to full ESB plus additional compensation
🚫
Grounds for Immediate Lawful Dismissal (Without Notice)
Employers may only dismiss without notice in limited cases, including: proven gross misconduct, serious breach of company policy, physical assault in the workplace, or disclosure of confidential business information. All such dismissals must be carefully documented.
09 · Saudization & Nitaqat
Saudization (Nitaqat Programme), 2026 & Beyond
Saudization, enforced through the Nitaqat system, is a cornerstone of Vision 2030 mandating that private sector companies employ a defined proportion of Saudi nationals. Compliance determines visa privileges, government contract eligibility, banking access, and ultimately the legal right to operate in KSA.
Nitaqat Band Classifications
🏆 Platinum
Highest Saudization ratio. Full hiring privileges, fast-track visa processing, unrestricted transfers.
🟢 High Green
Exceeds requirements. Broad visa flexibility and priority transfer rights.
🟩 Mid Green
Meets requirements. Standard compliance benefits and work permit renewals.
🌿 Low Green
Minimum compliance. Some restrictions on new visas. Upgrade recommended.
🟡 Yellow
Partial compliance. Significant restrictions on foreign worker hiring.
🔴 Red
Non-compliant. Visa blocks, transfer restrictions, fines up to SAR 400,000/year.
Developed Nitaqat 2026–2028, The New Phase
Effective 26 April 2026, Saudi Arabia launched the Developed Nitaqat programme the most significant structural update to the Saudization framework in years. The existing logarithmic compliance formula remains in place, but “c” values (the key variable determining sector-specific Saudization rates) are being increased for most sectors through to 2028, targeting the creation of 340,000+ new jobs for Saudi nationals in the private sector.
📊
Sector-Specific Saudization Targets (2025–2026 Active)
Marketing/Sales: 60% for companies with 3+ staff (active 2025).
Accounting: Starting at 40%, rising to 70% over 5 years (from Oct 2025).
Engineering: 30% minimum for firms with 5+ engineers (from Jul 2025).
Dentistry: 55% for practices with 3+ dental workers.
Healthcare/Hospitals: 65% Saudization rate now in effect.
Companies currently sitting comfortably within the Green zone should not assume continued compliance the rising “c” values mean that thresholds will tighten progressively through 2028. Proactive workforce planning is essential.
🌐
Remote Workers Now Count
Saudi citizens working fully remotely now qualify as standard employees for Nitaqat calculation purposes. Foreign investors who own private establishments in Saudi Arabia are also now counted equivalently to Saudi nationals when calculating Saudization ratios.
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10 · Workplace Safety
Workplace Safety & Health Requirements
Occupational safety in Saudi Arabia is governed by Chapter Eight of the Labour Law, supported by the National Strategic Programme for Occupational Safety and Health, managed by the MHRSD in partnership with Hadaf (Human Resources Development Fund).
- Employers must provide a safe working environment and all necessary safety equipment
- Medical insurance is compulsory for all employees from the first day of employment
- All workplace accidents must be formally reported to the MHRSD
- Employees injured on the job are entitled to full medical care and compensation
- Outdoor work under direct sunlight is prohibited between 12:00–15:00, 15 June to 15 September
- Industries including oil and gas, construction, and manufacturing face heightened compliance requirements
- Remote and hybrid work arrangements must now be formally documented and registered on Qiwa
The MHRSD’s Occupational Safety and Health Cadres Programme offers two training tracks Practitioner and Professional to develop Saudi safety professionals and raise compliance standards across establishments.
11 · Worker Mobility
Expatriate Worker Mobility Reforms
One of the most transformative changes to Saudi Arabia’s expatriate employment landscape is the reform of worker mobility rules. Previously, foreign workers were effectively bound to their sponsor employer and required explicit employer consent to change jobs.
- Expatriate workers can now transfer employment without employer consent after the contract period ends, or if certain conditions are met (such as non-payment of wages or an expired Iqama)
- Work permit renewal can be withheld by the MHRSD if the employer is non-compliant with Saudization or other regulations, without penalising the employee
- When work permits are withheld due to employer violations, employees retain the right to transfer to another employer without restriction
- Exit and re-entry visa procedures have been significantly streamlined for expatriate professionals
🔄
Passport Withholding is Illegal
Saudi Arabia explicitly prohibits employers from confiscating employee passports. This constitutes a serious violation of the Labour Law and can be reported directly to the MHRSD via the e-services portal.
12 · Equality
Anti-Discrimination & Equal Treatment Laws
The 2025 amendments introduced the Kingdom’s most explicit anti-discrimination provisions to date, a significant development aligned with Vision 2030’s goal of broadening female workforce participation and creating a meritocratic labour market.
- Discrimination in hiring, pay, or promotion based on gender, age, nationality, or disability is explicitly prohibited
- Job advertisements may not mention gender, age, or nationality as requirements unless the role is genuinely job-specific
- All employees are entitled to equal access to professional opportunities and benefits
- Female workforce participation in Saudi Arabia reached 35.6% in 2026, up from 30% in 2022
- Any immoral act in the workplace is subject to formal disciplinary measures under updated regulations
👩💼
Women’s Employment Rights Expanded
Saudi women now have legally protected access to roles across all industries, including oil and gas, construction management, legal services, and senior leadership positions. Employers must ensure recruitment processes are free from gender-based barriers.
13 · Penalties
Labour Law Violations & Penalties
The MHRSD issued a major update to the list of labour violations and penalties in early 2026, reclassifying violations into clearer sector-specific categories and increasing enforcement powers. Non-compliance carries significant financial and operational consequences.
| Violation Type | Consequence |
|---|---|
| Unlicensed manpower/recruitment activities | Fines of SAR 200,000–SAR 500,000 |
| Poor Nitaqat band (Yellow/Red) | Visa blocks, transfer restrictions, fines up to SAR 400,000/year per gap |
| Salary payment delays | WPS flag, escalation to MHRSD, potential operational suspension |
| Failure to provide contracts | Financial penalties; contract deemed unenforceable |
| Passport withholding | Criminal violation; referral to Ministry of Interior |
| Outdoor heat work violation | Immediate fines; potential site closure |
| Failure to register contracts on Qiwa | Contracts legally unenforceable from Aug 2026 |
| Anti-discrimination violations | Penalties plus reputational blacklisting |
⚖️
Dispute Resolution: Now Faster and Fully Digital
As of 2026, the majority of labour disputes are handled digitally through the MHRSD’s e-services portal, with most cases resolved through mediation before escalating to formal labour courts. The Qiwa–Najiz integration further accelerates wage-related enforcement to days, not months.
14 · Future Rules
Future Expected Labour Law Changes, 2026 to 2028
Saudi Arabia’s labour reform agenda is ongoing and ambitious. Based on confirmed regulatory announcements and Vision 2030 policy trajectories, the following changes are expected or already in motion.
Q2 26
Developed Nitaqat: Rising “c” Values Across Sectors
From April 2026, Saudization thresholds increase across most private sector industries. Companies must review Nitaqat band positions and adjust workforce compositions through 2028.
Aug 26
Qiwa Phase 3: All Open-Ended Contracts Digitised
By 6 August 2026, every open-ended/indefinite employment contract in the Kingdom must be authenticated on Qiwa or it loses legal enforceability for wage claims.
Late 26
Dental Sector Saudization: Phase 2 Expansion
From November 2026, dental sector Saudization rises to 60% for marketing roles in private establishments with 3+ workers. Dental practices must plan Saudi hiring now.
2027
Accounting Saudization: Phased Increase Continues
The accounting sector Saudization rate rises annually by 10% toward a 70% target. Firms with five or more accountants should plan Saudi hiring pipelines well in advance.
2027
Internal Work Regulations (IWR) Full Compliance Required
MHRSD expects full compliance with updated IWR including housing/transport allowance provisions (Clause 24) and formal training policies for Saudi employees. Employers without updated IWRs face increasing enforcement risk.
2028
Nitaqat “c” Value Ceiling, Final Phase
By 2028, the full three-year Developed Nitaqat cycle concludes with significantly higher Saudization thresholds across all major sectors. Companies currently at minimum compliance levels will need substantial workforce restructuring.
🔮 Anticipated Future Reforms (Analyst Expectations)
What May Be Coming Beyond 2026
Based on Vision 2030 trajectories, employment law experts anticipate: further expansion of flexible work regulations (including formal part-time frameworks), potential introduction of a universal private-sector minimum wage, enhanced ESB portability mechanisms as the Kingdom moves toward pension-style models, and deeper AI-driven MHRSD enforcement capabilities that reduce human inspectors in favour of digital compliance monitoring via Qiwa data.
15 · Frequently Asked Questions
Saudi Arabia Labour Law, Top FAQs 2026
What is the standard working week in Saudi Arabia?
The standard working week is 48 hours eight hours per day, six days per week. During Ramadan, working hours for Muslim employees reduce to 36 hours per week (six hours per day).
Can an employee resign at any time in KSA?
Yes. Employees can resign at any time, but must observe the contractual notice period, typically 30 to 60 days. Under the 2025 amendments, a resignation can be withdrawn within seven days if the employer has not yet accepted it.
What is the maternity leave entitlement in Saudi Arabia?
Maternity leave was extended to 12 weeks on full pay under the 2025 amendments. A minimum of six weeks must be taken immediately after childbirth. The remaining six weeks may be distributed at the employee’s discretion, with up to four weeks usable before the expected due date.
How is End-of-Service Benefit (ESB) calculated?
ESB is calculated at half a month’s basic salary for each of the first five years of service, and one full month’s salary for each additional year thereafter. The exact amount varies depending on whether the employee resigned or was terminated, and the total years of service.
What is Saudization and how does Nitaqat work?
Saudization (Nitaqat) requires private sector companies to employ Saudi nationals at defined proportions. Companies are classified into Platinum, Green (High/Mid/Low), Yellow, and Red bands based on their Saudi employment ratio. Higher bands unlock visa privileges and government contract eligibility. Non-compliant companies face visa blocks and fines up to SAR 400,000 per year.
Must all contracts be registered on Qiwa?
Yes. From October 2025 onwards, all new contracts must be authenticated on the Qiwa platform. Existing fixed-term contracts must migrate by March 2026, and open-ended contracts by August 2026. Unregistered contracts will not be legally enforceable for wage claims.
Can expatriate workers change employers freely in Saudi Arabia?
Under recent labour mobility reforms, expatriate workers can now transfer employment without employer consent once their contract term has ended, or if certain conditions are met such as unpaid wages, an expired Iqama, or employer non-compliance. This is a significant departure from the historical sponsorship model.
What is the overtime rate in Saudi Arabia?
Overtime must be paid at a minimum of 150% of the employee’s regular hourly wage. Alternatively, from 2025, employers may offer paid compensatory time off in lieu of overtime payment provided the employee gives written consent to this arrangement.
16 · Work with Prime Resources
Hire Fully Compliant Talent Across KS, Prime Resources
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What Prime Resources Handles for You
- Talent sourcing from pre-vetted professional networks in Pakistan, the Philippines, and other approved countries
- Thorough credential verification, background checks, and reference assessment
- Skills evaluation and preliminary interviews before candidate presentation
- Employer review facilitation, we present only the best-matched shortlist
- Medical examination coordination and health clearance processing
- Visa processing and all immigration documentation in full KSA regulatory compliance
- Qiwa contract registration support and onboarding coordination
- Deployment logistics across all KSA cities and regions
Industries We Serve
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