Amendments to the Saudi Labor Law
(August 6, 2024)

Amendments to the Saudi Labor Law (August 6, 2024)

On August 6, 2024, several amendments to the Saudi Labor Law were announced. These changes aim to modernize the labor market, enhance employee rights, and align Saudi Arabia’s practices with global standards and Saudi Vision 2030. Understanding these amendments is crucial for effective business management and compliance. The new amendments will come into effect 180 days after their publication in the Official Gazette.

KEY AMENDMENTS

1. Definitions and Procedures
   1. Added definitions for ‘resignation’ and ‘assignment’ along with a new article specifying the resignation procedures.
2. Employment Contracts
   1. Standardization: Contracts must now include specific details about job roles, contract duration, and compensation. This move enhances transparency and protects both employers and employees.
   2. Fixed Term Contracts: Employment contract type with expats will always be on fixed terms for one year from the date of joining. If there is no renewal clause, it will be extended for one year.
   3. Contract Termination: To end a fixed term employment contract, either parties must give the notice mentioned in the contract else, the employee must give 30 days prior notice in case of resignation and the employer must give 60 days prior notice in case of termination.
   4. Probation Period: The probation period cannot exceed 180 days.
3. Leave Entitlements
   1. Death Leave: A paid leave of three days (previously 1 day) for employees in the event of the death of a sibling, employee’s brother or sister.
   2. Maternity leave: A paid leave of 12 weeks will be granted to female employees.
   3. Overtime: Employee can agree to take paid leave instead of receiving additional overtime compensation.
4. Training
   1. Employers must provide a training and qualification policy to enhance workers’ skills and improve their proficiency.
5. Dispute Resolution
   1. A streamlined processes The amendments introduce more efficient dispute resolution mechanisms, including expedited arbitration processes and clearer grievance handling guidelines.
6. Health and Safety
   1. Stricter health and safety regulations are now in place, requiring employers to adhere to more rigorous safety protocols and reporting requirements.

IMPLICATIONS FOR BUSINESSES

1. Compliance: Businesses must update employment contracts, policies, and procedures to align with the new regulations. This includes revisions to work hours, leave entitlements, and termination processes.
2. Training: HR personnel need to be trained on the new requirements to ensure smooth implementation and compliance.
3. Cost Management: Adjustments in severance pay and work arrangements may impact operational costs. Businesses should plan for these potential financial impacts.
4. Legal Risks: Non-compliance with the updated regulations could lead to legal challenges and penalties. It is essential to review and adjust practices to avoid legal repercussions.

The amendments to the Saudi Labor Law, effective August 6, 2024, mark a significant shift towards modernizing labor practices and enhancing employee rights. Leadership must ensure that these changes are thoroughly understood and integrated into company operations to ensure compliance and mitigate risks.

For detailed guidance and support with implementation, contact our experts at contact@sharkbx.com.