SAUDI ARABIA Law and Practice Contributed by: Dana Halwani and Leanne Farsi, Derayah LLPC
• the Labour Regulation (Royal Decree No M/51 of 23 Sha’ban 1426 Hejra corresponding to 27 Sep - tember 2005), as amended most recently by Royal Decree No M/44 of 8 Safar 1446 Hejra correspond - ing to 12 August 2024; and • the Labour Regulation Implementing Rules (Min - isterial Resolution No 1982 of 28 Safar 1437 Hejra corresponding to 6 April 2016), as amended most recently by Ministerial Resolution No 115921 dated 19 Sha’ban 1446 Hejra corresponding to 18 Febru - ary 2025. The Labour Regulation lays down certain mandatory minimum standards for the treatment of employees, and any agreement reducing an employee’s minimum rights is void. The Nitaqat System The basic rule under the Labour Regulation is that Saudi employees shall not represent less than 75% of the total workforce, but that the Minister of Labour may decrease the percentage temporarily. In 2011, the Saudi Ministry of Labour – now the Ministry of Human Resources and Social Development (HRSD) – imple - mented a detailed list of quotas, known as the Nitaqat system, which are determined by the business sec - tor and size of the business entity, with the percent - ages of Saudi employees currently classed in Red, Low Green, Medium Green, High Green and Platinum sections. These quotas are updated frequently. Labour Reforms In February 2025, certain amendments in relation to the Labour Regulation and its Implementing Rules took effect. These amendments have included the following changes: • maternity leave has been extended to 12 weeks; • the introduction of the right to three days of pater - nity leave, which is to be taken within seven days of the child’s birth; • the maximum probationary period may now be stated to be 180 days in the work contract outright (removing the need for extensions of the previ - ous 90-day probationary period under the Labour Regulation to be by written agreement); and
• in lieu of salary for overtime, with the worker’s consent, the worker can be granted compensatory paid leave. 4.2 Characteristics of Employment Contracts Qiwa is the official online Saudi Arabian governmen - tal portal for employees and employers. It provides a standard employment agreement for companies to contract with their employees. These online templates are amendable to a certain extent. The Implementing Rules of the Labour Regulation also set out a standard employment contract, certain provisions of which are mandatory. A written employment contract must be executed, but the provisions of the Labour Regulation apply if the employer fails to do so. The HRSD has recently announced an update to the requirements for compliance with employment contract registration via Qiwa , increasing the target compliance rate to 85%, effective 30 April 2026, with the second phase to be completed by increasing the rate to 90% by the end of 30 June 2026. The HRSD has stated that this compliance rate is calculated by comparing the number of registered contracts with the total number of employees’ contracts within the company. Employment contracts with non-Saudis must be on a fixed-term basis, but Saudi employees can be employed on fixed-term contracts or indefinite-term contracts. If a fixed-term contract expires and the par - ties continue the relationship, it becomes an indef - inite-term contract for Saudi employees. If a fixed- term contract contains a renewal provision, it can be renewed twice for less than four years and remains a fixed-term contract. If the contract is renewed three times or the employment period exceeds four years, the contract becomes indefinite for Saudi employees. Accordingly, a Saudi national who has been employed by the same employer for more than four years or whose contract has been renewed three times will automatically be employed on an indefinite-term basis. 4.3 Working Time As a general rule, working hours are eight hours per day for six days per week, with a total of 48 hours per week. During Ramadan, working hours for Mus -
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