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Monday, 26 October 2015

38 New Amendments in Saudi Labor Law effective from Hijri Year 1437

One of the greatest gifts given to workforce in Saudi Arabia by Saudi Government is the implementation of 38 new amendments in Saudi Labor Law effective from Hijri Year 1437. With 38 new amendments in Saudi Labor Law effective from Hijri Year 1437, several new rights have been given to employees and heavy penalties are imposed on the employers who violate the application of Saudi Law. The rules related to notice period, entitled leaves in case of marriage, birth of child, death of relative, examination leave, sick leave, maternity leave, leave for Iddah have also been changed. I have summarized all 38 new amendments in Saudi Labor Law which have already been effective from Hijri Year 1437 below.



38 New Amendments in Saudi Labor Law effective from Hijri Year 1437
  1. Article 5 represents the parties that are affected by the Saudi Labor Law (SLL) after amendments.
  2. Article 7 represents the parties that are excluded from the Saudi Labor Law (SLL) after amendments.
  3. According to Article 11, if the employer delegates take in help from another party to perform their original tasks and work, that party should be offered and given all the benefits and rights by the employer just as to his other employees. 
  4. Article 11 also includes a new rule of granting the Minister of Labor all the power to make the labor market better and hence organize the certain transfer of manpower.
  5. Articles 12,13 and 14 were merged together to form one article with two parts;
    • The Ministry of Labor (MOL) will be in charge to establish a unified pattern for Labor that would include rules/laws and regulations. Also, he will establish a functioning mechanism for the approval of these rules and laws.
    • All the employers must abide by the policies set forth by the Ministry of Labor. They can, however, add more policies keeping intact with the original SLL. It’s important for them to keep people aware and thus must announce these policies.
  6. According to article 35, the MOL must not renew the license of a particular employer which has violated the Saudization criteria originally set by the Ministry of Labor
  7. Article 43 states that any employer with a minimum of 50 employees must take in at least 12% Saudis and train them out of their original employees.
  8. Article 48 emphasizes that due to any reason if a trainee is unable to complete his training program, the employer has the right to terminate the qualification program of the training contract at least a week before the actual termination date. This includes notifying the guardian of the employee or the employee himself. The employee must then either work for the employer for an equal period or pay for the cost of the training.
  9. According to Article 52, the MOL must establish a unified pattern for the agreement of employment. To this agreement, both parties must follow and they may add to the agreement clauses they wish to keep in view of the SLL.
  10. Article 53 emphasizes the probation period that will be applicable up to a period of 90 days. The probation period can be extended to if both parties agree to a period, not more than 180 days. Both parties if come to a mutual understanding can terminate the contract unless the agreement grants this right to anyone of the party. Recommended: Probation Rules under Saudi Labor Law
  11. According to article 54, an employee can only be given probation once by the same employer unless there are mutual understanding and written evidence that the probation was for a separate job or if the employee was separated from the employer for more than 6 months. Recommended: Probation Rules under Saudi Labor Law
  12. Article 55 says that the employment agreement will terminate automatically on the “end of contract” date printed. If both the parties, however, continue the contract, it will be considered renewed for an unlimited duration keeping in view that the employment agreement includes renewal and hence shall be renewed for the indicated period. If the agreement is renewed thrice, then the employment agreement shall be considered everlasting. Recommended: Fixed Term and Indefinite Contract under Saudi Labor Law
  13. Article 58 emphasizes that until or unless in any case there happens to be a necessity and is dictated by the working conditions and for a time period of not more than a month, the employer cannot transfer the employee without a written consent from his original workplace to another workplace which may require change of place of residence. Recommended: Rights of Employees in Saudi Arabia
  14. According to article 64 of the SLL, at the end of the employment agreement, the employer must issue a certificate of employment (free of charge) to the employee. The certificate must not include anything that can harm the reputation of the employee. All the documents and certificates of the employee must also be returned immediately.
  15. Article 73 states that the employer must document any fines against the employee. The Labor committee shall look into these fines and if the committee isn’t set up, then the MOL will look into the matter.
  16. Article 74 brings forth 8 cases where the employment agreement terminates.
  17. Article 75 says that if the employment agreement is in the unlimited period, any of the two parties involved may terminate it for a valid reason that is legal. The reason should be documented and should be sent to the other party. If the employee receives payment on a monthly basis than the period would be no less than 60 days, but otherwise it would be 30 days. Recommended: Notice Period under Saudi Labor Law
  18. Article 76 states that any one of the two parties who wished to terminate the agreement which was unlimited and yet failed to take in view of the notification period as stated earlier, must pay the other party an amount that is equal to the employee’s payment within the notification time unless both parties are in mutual favor of a higher amount.
  19. Article 77 of Saudi Labor Law talk about the compensation in case of termination of contract due to invalid reasons. Before going into details, it is important to understand what is valid and invalid reason for termination of contract, we have already published an article upon this subject which can be read in this link “Completion of Contract under Saudi Labor Law”. According to Amended Article 77, if one party terminates the contact due to an invalid or illegal reason, aggrieved party will be entitled to compensate other party in the following manner;
    • If this issue has already been addressed in the contract, the contract will apply.
    • In case of fixed term contract, employer or employee whoever terminates the contract due to invalid reasons, would be required to compensate the other party with the salaries of the remainder period of the contract. The sum of compensation to be paid to aggrieved party cannot be less than 2 months salary.
    • In case of termination due to invalid reason in indefinite contract, aggrieved party is entitled to 15 days wages for each year of service. The sum of compensation to be paid to aggrieved party cannot be less than 2 months’ salary. - Saudi Gazette
    • In order to better understand the concept of Fixed Term Contract and Indefinite Contract, read into this link “Fixed Term and Indefinite Contract under Saudi Labor Law
  1. Article 78 replaces the context in the original SLL of Article 78 with “If the notification from the employer or the employee is entitled to have authorized absence with a salary during the notification period for a day or 8 hours per week until he finds another job”.
  2. Article 80 states that unless the termination of the agreement is due to any of the reasons listed below, the employer will not be authorized to terminate the agreement without giving a reward to the employee, informing him, compensating him or without giving the employee the chance to plea for an appeal.
  3. Article 83 elaborates more on “Non-Compete Clause”. Recommended: Employee cannot work for a Competitor under Article 83 of Saudi Labor Law
  4. Article 90 is regarding the way of payment of the salary and other payments to different types of employees.
  5. According to article 101 of the SLL, no less than half an hour per each break every day for prayer and lunch shall be given to the employee. Also, no more than 5 continuous hours of work without a break per day and must not stay more than 12 hours per day at his workplace.
  6. Article 113 states that the
    • Employee is entitled to a 5-day leave with pay in case of the demise of their spouse, parents or children.
    • 5 Day leave is also allowed in case of marriage
    • 3-day paternity leave with pay is also granted.
    • Recommended: Entitled Leaves for Employees as per Saudi Labor Law
  7. Article 115 talks about the examination leave that if the employer approves the employee’s registration for education, the leave would be paid only till the examination days. If for instance the employer does not grant approval, the employee is eligible for examination leave that would be compensated for his annual leave (if available) or his X-time.
  8. Article 137 states that in the case of a short-term work-related disability, there would be a 100% compensation of a monthly pay for up 60 days. Then it would be 75% of monthly pay throughout the period of treatment and recovery. If the treatment period reaches to a year and there has been no vital recovery, reports have shown that that the employee cannot resume work due to his condition than the agreement would be terminated and there would be no more funding from the employer. The employer will not be getting any of the amounts back that he has given to the employee during this period of a year.
  9. According to Article 149 of the SLL, women are not allowed to work in dangerous or harmful occupations.
  10. Article 151 and 152 have been combined in 1, stating that female employees are entitled to a 10-week maternity leave with full pay with a maximum of up to 4 weeks before delivery. She may extend her leave for a month, but this would be without pay. If the female employee delivers a baby with special needs and must need a permanent attendee, in this case, she will be entitled to a month leave with pay after the end of the maternity leave which can be further followed by an unpaid leave of an up to a month. Recommended: Rules related to Maternity Leave for working women under Saudi Labor Law
  11. Article 160 states that;
    • A female employee shall be granted a paid leave of Iddah (if her husband dies) for a period of 4 months and 10 days starting from the date of the husband’s demise.
    • If the female is pregnant then her leave is automatically extended till the delivery, but without pay
    • If the Iddah has ended before the 4month and 10 days period, she must return to work immediately.
    • For the Non-Muslim female employees, they are entitled to a 15 day leave with full pay.
    • Within all these conditions, the female employees are not allowed to work for any other employer in the days given as leave to them.
    • Recommended: Rights of Women under Saudi Labor Law
  12. Article 194 says that the inspectors of the MOL staff or other Saudis which are nominated by the Ministry of Labor (or his delegate), will conduct a full investigation and inspection of the work.
  13. Article 196 categorizes the responsibilities of MOL inspectors.
  14. Article 197 states that the acknowledgment to be signed by the MOL inspectors.
  15. Article 203 says that in case the inspectors find any violation towards the *SLL
  16. Articles 229, 230, 231, 232, 233, 234, 235, 236,237,238,239 and 241 are combined in two articles which talk about the penalties to the employer who is found violating the SLL, which will include the temporary or final closure of the facility.
  17. Article 240 states that the employer must correct his mistake within a period of time and he fails to do so then he would be subjected to another violation.
  18. Article 242 emphasizes that the fines would be deposited to the Human Resources Development Fund.
  19. A new article was introduced which stated that the Ministry of Labor may grant a value not more than 25% of the amount of the fine to the inspectors or other people who discovered the violations.


Job Continuation under Saudi Labor Law
  1. Compensation in case of Work Injury as per Saudi Labor Law
  2. Right of Air Ticket as per Saudi Labor Law
  3. Rules regarding Emergency Leave in Saudi Arabia
  4. Rights of Employees in Absence of Contract in Saudi Arabia
  5. Leave Encashment under Saudi Labor Law

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