Evolving Workplaces: Key Amendments to the Saudi Labor Law (Effective February 19, 2025)

Saudi Arabia's commitment to modernizing its economy and enhancing its investment environment extends significantly to its labor market. On February 19, 2025, a series of comprehensive amendments to the Saudi Labor Law came into effect, marking a pivotal moment in the Kingdom's efforts to create a more dynamic, equitable, and efficient workforce. These changes reflect a progressive approach aimed at balancing employer flexibility with enhanced employee protections, aligning directly with the objectives of Vision 2030 and fostering a more attractive environment for both local and foreign investment.

These sweeping updates impact various facets of employment relationships, affecting both employers and employees across all sectors in Saudi Arabia. Understanding these amendments is paramount for ensuring legal compliance, fostering positive workplace environments, and effectively mitigating potential legal and operational risks.

Significant Amendments to the Saudi Labor Law for 2025:

• Clarified Resignation Procedures: The updated law provides clearer guidelines for employee resignations, particularly concerning fixed-term contracts. An employer's failure to respond to a resignation request within 30 days now results in automatic acceptance. Employees also gain a 7-day window to withdraw their resignation, provided it hasn't already been accepted. Employers, with written justification, can delay acceptance for up to 60 days.

• Extended Probation Period: The maximum allowable probation period has been extended from 90 days to 180 days (approximately six months). This provides both employers and employees with a more comprehensive period to assess mutual suitability without immediate long-term commitment.

• Overtime and Wage Transparency: New provisions allow for compensatory paid leave to be offered instead of monetary overtime pay, subject to employee agreement. Crucially, the law now mandates that employers provide itemized monthly pay slips, significantly enhancing transparency regarding wages, deductions, working hours, and allowances.

• New Termination Grounds: Bankruptcy is now explicitly recognized as a valid reason for employment termination, providing much-needed clarity for businesses facing severe financial distress.

• Enhanced Leave Entitlements: The amendments introduce expanded and new leave provisions:

  • Maternity Leave: Extended to a total of 12 weeks, with 6 weeks mandatory after childbirth.

  • Paternity Leave: Fathers are now entitled to 3 paid days of paternity leave, to be taken within the first 7 days following the birth of their child.

  • Bereavement Leave: An additional 3 paid days of leave have been introduced specifically for the loss of a sibling.

• Anti-Discrimination and Remote Work Compliance: The law now explicitly prohibits discrimination based on personal status, reinforcing principles of equal opportunity. Furthermore, remote and hybrid work arrangements must now be formally documented and registered on the Qiwa platform, ensuring regulatory oversight and clarity for flexible work models.

• Stricter Saudization and Training Obligations: Employers, regardless of company size, face stricter obligations to train Saudi employees. Non-compliance can lead to significant consequences, including work permit suspensions or restrictions on transferring employees, emphasizing the Kingdom's commitment to local workforce development.

• Revised Notice Periods: For employees on indefinite contracts, the required notice period for resignation is now 30 days. For employer-initiated terminations of indefinite contracts, the notice period remains 60 days.

• Streamlined Grievance and Digital Contracting: Disciplinary notices issued to employees must now be in writing, and employees are granted 30 days (excluding official holidays) to file grievances. A significant digital transformation measure is the mandatory requirement for all employment contracts to be uploaded to the Qiwa platform to be considered legally valid.

• Faster Wage Dispute Resolution and Enforcement: The amendments aim for faster resolution of wage disputes, requiring employers to settle such disputes within 15 days of formal notification. New enforcement tools allow the Ministry of Human Resources and Social Development (MHRSD) to impose fines or restrict business services in cases of non-compliance.

These comprehensive amendments reinforce the Saudi government's dedication to fostering a modern, flexible, and protective labor market, creating an environment conducive to both sustainable business growth and enhanced employee welfare.

How SHP Law Can Help with Saudi Labor Law Amendments:

SHP Law stands as a trusted advisor to businesses and individuals navigating the dynamic landscape of Saudi Arabia's labor regulations. Our specialized legal team offers comprehensive support to ensure your full compliance with the latest amendments to the Saudi Labor Law and optimize your human resources strategies. Our services in this critical practice area include:

• Labor Law Compliance Audits & Risk Assessment: We conduct thorough reviews of your existing employment contracts, HR policies, internal procedures, and operational practices to identify areas requiring alignment with the updated labor law, pinpointing potential risks and liabilities.

• HR Policy Development & Implementation: Our experts assist in drafting, reviewing, and implementing robust and compliant HR policies, including those related to recruitment, onboarding, probation, leave management, anti-discrimination, disciplinary actions, grievance procedures, and termination processes.

• Employment Contract Management (Drafting & Digitalization): We draft and review various employment agreements (fixed-term, indefinite, remote, flexible work arrangements) ensuring legal validity and facilitating their proper digital documentation and submission on the Qiwa platform.

• Workforce Planning & Saudization Strategy: We provide strategic advice on Saudization requirements, assist in developing compliant training programs for Saudi nationals, and help you establish frameworks to meet your nationalization targets and enhance local talent development.

• Labor Dispute Resolution & Representation: Our team offers strategic counsel and robust representation in all forms of labor disputes, including mediation through Qiwa, negotiations, and litigation before the Saudi Labor Courts. We handle cases ranging from unfair dismissal to wage claims and workplace grievances.

• Qiwa Platform Management & Integration: We provide practical guidance and support on navigating all mandatory digital requirements of the Qiwa platform, including contract uploading, wage management, and compliance reporting.

• Workplace Investigations & Employee Relations: We advise on best practices for conducting internal workplace investigations, managing employee grievances, and fostering positive employee relations to minimize disputes.

• Training & Capacity Building: We offer tailored training sessions for HR teams, line managers, and executive leadership on the implications of the new amendments, fostering internal expertise and proactive compliance.

• Ongoing Advisory Services: We provide continuous legal advice on day-to-day employment matters, ensuring proactive compliance, effective risk management, and strategic decision-making for your organization's labor relations in Saudi Arabia.

Partner with SHP Law to confidently adapt to the evolving Saudi labor landscape, ensuring legal compliance and fostering a productive, harmonious workplace.