---

name: kb-employment-law-ksa
description: Use when a matter involves employment law obligations, contracts, termination, end-of-service award calculation, Saudization (Nitaqat), or HR compliance for entities operating in Saudi Arabia. Covers the KSA Labor Law (Royal Decree M/51), GOSI social insurance, Saudization quotas, notice periods, Article 80/84 termination, non-compete provisions, and the Qiwa/Mudad compliance platforms. Triggers on KSA employment contract, end-of-service gratuity KSA, Nitaqat, GOSI, Qiwa, KSA dismissal, or Saudi labor law questions.
license: MIT
metadata:
id: kb.employment-law-KSA
category: kb
practice_area: Employment Law
jurisdictions: [KSA]
priority: P0
intent: [employment-law, KSA, labor-law, Saudization, GOSI, termination, non-compete]
related: [kb-employment-law-uae, kb-employment-law-lb, kb-data-privacy-ksa-pdpl, kb-fintech-licensing-cma-ksa, draft-employment-contract]
source: Louis — HAQQ Legal AI (github.com/sboghossian/mini-claude-for-legal)
version: "1.0"

Knowledge Pack — KSA Labor Law

Primary Sources

• Labor Law — Royal Decree M/51 dated 23/8/1426H (September 2005), as amended by Royal Decrees in 2015 and 2019.
• Ministerial decisions and HRSD circulars — Ministry of Human Resources and Social Development issues implementing guidance.
• GOSI (General Organization for Social Insurance) — social insurance contributions and regulations.
• Qiwa platform — electronic labor-relations system for contract registration, mobility, and grievances.
• Mudad — Wage Protection System (WPS) compliance platform.

All onshore employment relationships in KSA are governed exclusively by the KSA Labor Law. DIFC-style free-zone exemptions do not exist in KSA; all employers (including those in special economic zones) follow KSA Labor Law unless specifically exempted by a zone-specific decree.

Working Hours

Category	Standard
General	8 hours/day, 48 hours/week
Ramadan (Muslim workers)	6 hours/day, 36 hours/week
Overtime premium	50% of hourly wage (additional on base; must be agreed in advance)
Weekly rest	Friday as minimum rest day; employer may substitute another day

Night work and hazardous work attract additional protections per HRSD regulations.

Probation

• Maximum 90 days (extendable to 180 days with mutual written consent before the 90-day period expires).
• Either party may terminate during probation without notice or end-of-service award.
• Probation time counts toward continuous service once passed.

Contract Types

Type	Default Applicability
Definite term	Default for non-Saudi nationals (max initial term 5 years; renewable). 2023 reforms: auto-renews to same terms if both parties continue without new agreement
Indefinite	Default for Saudi nationals; non-Saudis eligible if specific conditions met

• Employment contract must be in Arabic or bilingual (Arabic controls in dispute).
• Must be registered on Qiwa platform within 30 days.

Annual Leave (Art 109)

Service Duration	Annual Leave Entitlement
Less than 5 years	21 days paid leave
5 years or more	30 days paid leave

• Employees are entitled to Eid Al-Fitr, Eid Al-Adha, and National Day public holidays in addition.
• Leave must be taken within the year or carried forward with employer consent; payment in lieu on termination.

Sick Leave

• Maximum 120 days per year:
  • First 30 days: full pay
  • Next 60 days: half pay
  • Remaining 30 days: unpaid

Notice Periods (Art 76)

• Indefinite contracts paid monthly: minimum 60 days notice by either party.
• Other arrangements (e.g., weekly/daily workers): proportionate notice per Article.
• Employer may pay wages in lieu of notice.
• Notice period runs from service of written notice.

End-of-Service Award (Arts 84–85)

The end-of-service award is a mandatory entitlement based on years of service and the reason for departure:

Calculation

Service Period	Accrual Rate
First 5 years	Half-month salary per year
After 5 years	Full month salary per year

Salary base: last wage paid (basic salary + regular allowances; excludes non-regular items).

Entitlement by departure reason

Reason	Award
Termination by employer (without just cause)	Full award
End of definite-term contract by employer	Full award
Resignation (< 2 years service)	Forfeited
Resignation (2–5 years service)	1/3 of full award
Resignation (5–10 years service)	2/3 of full award
Resignation (10+ years service)	Full award
Termination for cause (Art 80)	Employer may argue forfeiture; court decides on facts

GOSI interaction

GOSI contributions may partially replace end-of-service costs for Saudi nationals — employers registered with GOSI pay monthly contributions; GOSI benefits supplement the statutory award on separation.

Termination for Cause Without Compensation (Art 80)

Employer may terminate without notice or end-of-service award if:

1. Employee assumes a false identity or forged qualifications to obtain employment.
2. Employee commits an error causing major financial loss to the employer (employer must notify HRSD within 3 days of discovery).
3. Employee violates safety instructions after written warning.
4. Employee assaults or threatens employer, supervisor, or co-workers.
5. Employee fails in essential duties and fails to rectify after written notice and investigation.
6. Employee reveals trade secrets or engages in competing business.
7. Employee absent 30 days per year or 15 consecutive days without justification (written warnings required first).
8. Employee convicted of an honor crime or dishonesty offense.

Procedural requirement: employer should conduct investigation and provide opportunity to respond before dismissing under Art 80.

Saudization (Nitaqat)

The Nitaqat program requires private-sector employers to maintain a minimum percentage of Saudi national employees, varying by:

• Industry category (construction has lower targets; services/professional sectors higher)
• Employer size tier (small / medium / large / giant)

Compliance tier	Color	Consequence
Excellent/Platinum	Green+	Access to all government services + visa quota bonuses
Satisfactory	Green	Normal services
Medium	Yellow	Restricted visa services
Non-compliant	Red	Suspended visa quotas + loss of government services

Employers must monitor Saudization ratio through Qiwa and HRSD portals. Sector-specific Vision 2030 targets are being raised annually.

Sponsorship and Worker Mobility (2021+ Reforms)

• The traditional kafala (sponsorship) system has been partially reformed:
  • Workers under Qiwa can change jobs without employer consent after 1 year of service (subject to conditions and not applicable to all categories).
  • Exit and re-entry permits no longer require employer approval for most workers.
  • Exit without return no longer requires employer approval.
• Employer remains the visa sponsor for GDRFA/Iqama purposes.
• Transfer of Iqama to new employer processed via Qiwa platform.
• Domestic workers and certain categories excluded from reformed mobility rules.

Non-Compete (Art 83)

• Enforceable for up to 2 years post-termination.
• Scope must be reasonable in geography, duration, and type of work.
• Employee must have had access to trade secrets, clients, or confidential information.
• Courts apply the proportionality test; excessively broad clauses may be reduced to reasonable scope.

Social Insurance: GOSI

Contribution	Saudi Nationals	Non-Saudis
Occupational Hazards	2% (employer)	2% (employer)
Annuities	9% (employer) + 9% (employee)	Not applicable
Unemployment (SANED)	1% (employer) + 1% (employee)	Not applicable

• Registration with GOSI mandatory within first month of employment.
• Failure to register attracts penalties and back-contributions.

Compliance Platforms

Platform	Function
Qiwa	Contract registration; labor mobility; dispute filing; Nitaqat tracking
Mudad (WPS)	Wage Protection System — mandatory payroll via approved banks
GOSI portal	Social insurance registration + monthly contribution payment
HRSD	Ministry portal — employer registration, permits, grievances

Wage Protection System (WPS / Mudad)

• All private-sector employers must pay wages electronically through Mudad-registered banks.
• Payment must be made within the first of every month (or contractual date, if earlier).
• Delays of more than 30 days trigger HRSD penalties including suspension of visa issuance and labor permits.

Practical Drafting Notes

• Employment contracts must be in Arabic (or bilingual with Arabic controlling).
• Non-compete and confidentiality clauses: add separately as appendices; courts are more willing to enforce well-scoped written covenants.
• Severance calculations: always compute on gross last wage, being careful to include regular allowances.
• Domestic workers are covered by a separate domestic worker law — different rules apply.
• Female employees: protected from dismissal during maternity leave (90-day paid maternity leave under Labor Law as amended).

Caveats & Currency

KSA Labor Law amendments continue under Vision 2030 labor-market reforms. Saudization percentages and Qiwa platform procedures are updated regularly by HRSD. The 2021 worker mobility reforms are implemented progressively; verify current scope of reform categories with latest HRSD circulars. GOSI contribution rates are subject to periodic adjustment.

Related Skills

• [[kb-employment-law-uae]]
• [[kb-employment-law-lb]]
• [[kb-data-privacy-ksa-pdpl]]
• [[kb-fintech-licensing-cma-ksa]]
• [[draft-employment-contract]]