Saudi Labor Law: The Employment Contract

Newly-arrived in Saudi Arabia? Planning to apply for a job in the Kingdom? Then it’s important for you to know your rights as an employee. In particular, you should know all about the employment contract. This way, you can avoid misunderstandings, or even legal problems.

The employment contract is a written agreement between you and your employer. It serves as a guide, indicating your job description, working hours, salary, benefits, and other provisions. It also stipulates the terms and conditions for entering, ending or terminating the work agreement.

Before you sign any contracts, there are certain things you should now first.

Basic Information about the Work Contract

Based on the Saudi Labor Law, here are the basics of an employment contract:

Entering an Employment Contract

  • The contract should be written in duplicates, one copy each for the employer and employee.
  • The contract should indicate the name of employer, workplace, name of employee, nationality, salary and benefits, date of employment, and duration of contract (if fixed).
  • Employment contracts for non-Saudis should be of a definite term. If the contract does not indicate the term, then the work permit shall be the basis for duration of contract.

Ending the Employment Contract

The employment contract shall be terminated if:

  • Both the employer and employee agree to terminate it.
  • The term indicated in the contract expires (unless it has been renewed).
  • The employee reaches the age of retirement, which is 60 years old for males and 55 years old for females (unless both parties agree to extend the contract beyond this age).
  • Force majeure
  • The company is closed down permanently.
  • The party deciding to end the contract should observe the notice period. Otherwise, he/she shall pay an amount equal to the worker’s salary for the notice duration.
  • If the employer ends the work contract, the employer shall be given eight hours per week (during the notice period) to look for a new job.
  • The employer does not have to give advance notice or provide indemnity if the employee:
    assaults the employer, manager, or any of his superiors
    … fails to perform essential obligations or obey legitimate orders despite written warnings
    … has committed misconduct or any actions with dishonesty or lack of integrity
    … intentionally causes material loss to the employer
    … commits forgery
    … absents without valid reason for more than 15 consecutive days or more than 30 days in a year, despite written warnings
    … discloses work-related confidential information
  • On the other hand, the employee may leave his job without notice if the employer:
    fails to fulfill his essential contractual obligations to the employee
    … resorts to fraud during the time of contracting
    … assigns the employee (without his consent) to perform a job that is essentially different from the work agreed upon
    … assaults or commits an immoral act against the employee
    … treats employers with cruelty, injustice, or insult
    … fails to take measures regarding serious work hazards, despite knowing about them
    … causes the employee to appear as the one who terminated the contract

The Probation Period

  • If the employee is under probation, the probation period should be clearly specified in the contract.
  • The period should not exceed more than 90 days, though this may be extended to 180 days through a written agreement between both parties.
  • The employer should not be put under probation more than once under the same employer.
  • The employer or employee may end the work contract during this period, unless the contract specifies otherwise.
  • If the work contract is terminated during this period, neither the employer nor the employee is entitled to any payment or compensation.

These are just some of the things that you should know before entering an employment contract in Saudi Arabia. If you are unsure about any of the contract details, do not hesitate to ask your prospective employer about them.

Understanding your employment contract ensures a smooth working relationship.

DISCLAIMER: The details presented above are for information-sharing purposes only. To learn more about the employment contract under Saudi Labor Law, please visit the official website of the Ministry of Labor and Social Development.

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