Saudi Labor Law Basics: Contracts, Leave, End of Service

Editorial note: This guide was checked against official Saudi government sources on 2026-07-09. Labor rules and procedures can change, so confirm details through the official channels linked below before acting.

Why Saudi Labor Law Matters

Saudi Arabia's labor law sets the rules that govern the relationship between employers and employees. Whether you are an expatriate starting your first job in Riyadh, a Saudi national changing careers, or an employer writing a contract, understanding the basics protects your rights and helps you avoid costly mistakes. The law covers contracts, working hours, leave, end-of-service benefits, termination, and how to resolve disputes.

For expatriates, labor law is closely connected to residency. Your iqama is sponsored by your employer, and many employment changes must be updated through government portals such as Absher and Qiwa. Your GOSI contributions, which fund social insurance benefits, also depend on your registered wage and employer. Knowing the labor rules helps you check that your contract, leave balance, and final payments are correct.

This guide explains the core rules in plain English. It is not legal advice, but it points you to the official sources where the current text of the law and current procedures are published. If your situation is complex, consult the Ministry of Human Resources and Social Development, a licensed labor lawyer, or your company's human resources department.

Employment Contracts

A valid employment relationship in Saudi Arabia starts with a written contract. The employer must give the employee a copy in Arabic. If the employee does not read Arabic, a translated copy may be attached, but the Arabic version usually prevails in official proceedings. The contract must include the job title, job description, place of work, start date, wage, working hours, leave entitlements, and the duration if the contract is fixed-term.

Fixed-term contracts

A fixed-term contract has a clear end date. It is common for project work, seasonal jobs, and expatriate employment. If both parties continue working after the contract expires without signing a new contract, the original contract may be considered renewed on the same terms for an indefinite period, depending on the circumstances. Employers and employees should track expiry dates carefully, especially when iqama renewal and work permit renewal are linked to the contract period.

Indefinite contracts

An indefinite contract does not have a fixed end date. It continues until either party ends it according to the law. Indefinite contracts are common for Saudi nationals and for employees who have completed multiple fixed-term contracts. Terminating an indefinite contract usually requires a notice period, and either party may owe compensation if the termination does not follow the legal rules.

Part-time and flexible contracts

Saudi labor regulations also recognize part-time, temporary, and flexible work arrangements. Part-time employees are generally entitled to proportional benefits based on the hours they work compared with a full-time employee. These arrangements must still be documented in writing and registered with the relevant government systems so that wages, social insurance, and leave are calculated correctly.

Every contract should clearly state the basic wage and any allowances. The basic wage is the foundation for calculating overtime, end-of-service benefits, and some social insurance contributions. Allowances for housing, transportation, or meals may be listed separately. Employees should read the entire contract before signing and ask for clarification on any clause they do not understand. A contract that is vague or missing required terms can lead to disputes later.

Probation Periods

The probation period allows the employer to evaluate a new employee's skills and allows the employee to assess the job. Under Saudi labor law, the probation period may not exceed ninety days. Some professional or technical roles may extend the probation period to one hundred and eighty days if both parties agree in writing. During probation, either party may terminate the contract without notice or end-of-service benefits, unless the contract states otherwise.

Probation can only be used once for the same employee with the same employer. If the employee is transferred to a different role or rehired after leaving, a new probation period may not be valid. Employers should not use probation as a way to avoid giving employees their legal rights. Employees should make sure the probation terms are clearly stated in the written contract before signing.

During probation, the employee is still entitled to wages, rest days, and protection under the labor law. If an employer terminates an employee during probation for discriminatory or arbitrary reasons, the employee may still have a claim. Keep copies of the contract, pay slips, and any termination letter in case you need to file a complaint.

Employers sometimes add probation clauses that go beyond the legal limit or that deny normal rights. A clause that conflicts with the labor law is generally unenforceable. If you are asked to sign a contract with an unusually long or vague probation period, compare it with the official rules published by the Ministry of Human Resources and Social Development.

Working Hours, Rest, and Overtime

The standard working time in Saudi Arabia is eight hours per day and forty-eight hours per week. During the holy month of Ramadan, working hours are reduced to six hours per day and thirty-six hours per week for Muslim employees. Some jobs, such as security or shift work, may have different schedules, but they still must comply with maximum hour limits and rest requirements.

Employees are entitled to a rest period of at least half an hour during the working day, and the rest period is counted as working time. Friday is the weekly rest day for most employees. In practice, many companies observe Friday and Saturday as the weekend, but the law guarantees at least one rest day per week, usually Friday. If an employee is required to work on the weekly rest day, the employer must provide another day off or pay overtime compensation.

Overtime is work performed beyond the normal daily or weekly hours. Overtime pay is generally one hundred and fifty percent of the normal hourly wage. Employers must keep records of overtime hours and payments. Employees should track their own overtime hours and compare them with their pay slips. If overtime is not paid, it can be claimed through the labor dispute process.

Employers cannot require employees to work continuous shifts without adequate rest. Safety rules are especially strict for night work, hazardous jobs, and work performed by women. The Ministry of Human Resources and Social Development sets additional rules for specific sectors and categories of workers.

Wages and Timely Payment

Wages must be paid in Saudi riyals and on a regular schedule, usually monthly. The employer must provide a pay slip that shows the basic wage, allowances, deductions, and net amount. Delaying wages is a serious violation. If an employer fails to pay wages on time, employees can file a complaint through the Ministry of Human Resources and Social Development. The ministry can inspect the company, issue fines, and refer the case to a labor court.

The basic wage stated in the contract and registered on the Qiwa platform should match the amount actually paid. Some employers split pay into cash and bank transfer, which can cause problems when calculating end-of-service benefits or social insurance. Employees should keep bank statements and pay slips for at least the duration of employment. These documents are the best evidence if a wage dispute arises.

Deductions from wages are only allowed in limited cases defined by law, such as recovery of loans advanced to the employee, social insurance contributions, or disciplinary penalties within set limits. Employers cannot make arbitrary deductions for broken equipment, lost customers, or poor performance unless there is a clear agreement and the deduction complies with legal limits.

Annual Leave

Annual leave is one of the most important employee benefits. Under Saudi labor law, an employee is entitled to twenty-one days of paid annual leave after completing one year of continuous service. After completing ten years of service with the same employer, the entitlement increases to thirty days. Some employers offer more generous leave as part of their employment policies, but they cannot offer less than the legal minimum.

The employer usually sets the timing of annual leave based on work requirements, but the employee's wishes should be considered. Employers must pay the employee's wages for the leave period before the leave begins. If the employment ends before the employee uses accrued leave, the unused leave is usually paid out as part of the final settlement.

Employees should plan leave requests in advance and keep records of approved leave. Public holidays announced by the government are separate from annual leave. If a public holiday falls during annual leave, it does not count against the annual leave balance. Taking regular leave helps prevent burnout and is a legal right, not a favor from the employer.

Sick Leave and Special Leave

Sick leave allows employees to take time off for medical reasons. Under Saudi labor law, an employee may take up to one hundred and twenty days of sick leave per year, provided a medical report from an approved healthcare provider is submitted. The pay during sick leave is usually calculated in stages: full pay for the first thirty days, three-quarters pay for the next sixty days, and no pay for the remaining thirty days. These thresholds can change, so check the latest official guidance from the Ministry of Health and the Council of Health Insurance.

Besides sick leave, the law provides other types of special leave. Women are entitled to maternity leave, typically ten weeks, with pay based on their length of service and registered wage. Men may be entitled to paternity leave for a few days around the birth of a child. Employees who have completed two years of service may be entitled to paid leave to perform Hajj once during their employment, subject to the employer's operational needs.

Employers cannot dismiss an employee simply because the employee takes lawful sick leave or maternity leave. Medical information should be handled confidentially. If you need extended sick leave, keep all medical reports and receipts and share them only with the appropriate human resources staff.

End-of-Service Benefits

End-of-service benefits are a lump-sum payment that employers must give eligible employees when the employment ends. The calculation depends on the employee's length of service and the last basic wage. For the first five years of service, the employee receives half a month's wage for each year. For each additional year after the first five, the employee receives a full month's wage. The benefit is based on the basic salary, not total allowances, unless the contract states otherwise.

There are some exceptions. Employees who resign after a short period may receive a reduced benefit or no benefit, depending on the contract type and length of service. Employees who are dismissed for serious misconduct, such as theft or assault, may forfeit their end-of-service benefit. On the other hand, employees who are terminated unfairly may be entitled to compensation in addition to their full end-of-service benefit.

Social insurance contributions handled through GOSI are separate from end-of-service benefits. Some Saudi employees and certain categories of expatriates are covered by GOSI pension rules, which can affect how end-of-service payments are calculated. Always request a detailed final settlement statement and compare it with your contract and pay slips.

Termination Rules

Terminating an employment contract must follow legal rules. For an indefinite contract, either party must give written notice. The notice period is usually sixty days unless the contract specifies a longer period. During the notice period, the employment relationship continues and wages must be paid. The employer may allow the employee to stop working and pay wages in lieu of notice.

A fixed-term contract normally ends on its expiry date. If an employer ends a fixed-term contract early without a valid reason, the employer may owe compensation for the remaining period. If an employee leaves a fixed-term contract early without cause, the employee may owe compensation to the employer. Valid reasons for termination without notice include serious breaches of contract, fraud, or repeated failure to follow safety rules.

Arbitrary dismissal occurs when an employee is terminated without a valid reason related to the work. If a labor court finds that a dismissal was arbitrary, the employer may be ordered to reinstate the employee or pay compensation. Employees who believe they were dismissed unfairly should file a complaint as soon as possible and gather evidence such as emails, contracts, and witness statements.

Redundancy or business closure can also end employment. In such cases, the employer must follow legal procedures, give proper notice, and pay all owed wages and benefits. Employees affected by mass layoffs should ask for written notice and a detailed settlement statement. Transferring sponsorship to a new employer may be an option for expatriates who wish to remain in Saudi Arabia.

Labor Disputes and Where to Get Help

When an employment disagreement cannot be solved directly between the employer and employee, the Ministry of Human Resources and Social Development provides channels for complaint and mediation. Many disputes start with an online complaint submitted through the ministry's systems or through Qiwa. The ministry may try to settle the dispute amicably before referring it to a labor court.

Labor courts in Saudi Arabia hear cases about unpaid wages, wrongful termination, end-of-service benefits, workplace injuries, and other employment matters. Cases should be filed within one year from the end of the employment relationship for most claims. The court can order payment, reinstatement, or compensation, depending on the facts and the law.

Mediation is often the first step. A mediator from the ministry may contact both sides and propose a settlement. If mediation succeeds, the agreement can be recorded and enforced. If mediation fails, the case moves to a labor court. Preparing a clear timeline, copies of the contract, payment records, and correspondence will help both in mediation and in court.

Expatriates should also keep their iqama and passport documents secure and up to date while a dispute is ongoing. Some disputes can affect an employee's ability to transfer sponsorship or leave the country. For complicated cases, consult a licensed lawyer or a government labor advice center. Acting quickly improves the chances of a fair outcome.

Sources

Frequently asked questions

What are the main types of employment contracts in Saudi Arabia?

The main types are fixed-term contracts, which have a clear end date, and indefinite contracts, which continue until ended lawfully. Part-time and flexible contracts are also recognized and must be documented in writing.

How long can a probation period last?

The standard probation period may not exceed ninety days. Some professional or technical roles may extend it up to one hundred and eighty days if both parties agree in writing.

How many days of paid annual leave am I entitled to?

You are entitled to twenty-one days of paid annual leave after one year of service. After ten years with the same employer, the entitlement increases to thirty days.

How is overtime pay calculated?

Overtime is generally paid at one hundred and fifty percent of the normal hourly wage for hours worked beyond the standard eight hours per day or forty-eight hours per week.

What are end-of-service benefits?

End-of-service benefits are a lump-sum payment based on length of service and last basic wage. You receive half a month's wage for each of the first five years and a full month's wage for each additional year.

Can an employer dismiss me without notice?

An employer may dismiss an employee without notice only for serious reasons defined by law, such as fraud, assault, or repeated safety violations. Other terminations generally require notice.

Where can I file a labor complaint in Saudi Arabia?

You can start by filing a complaint with the Ministry of Human Resources and Social Development or through the Qiwa platform. Unresolved disputes may be referred to a labor court.