Key Amendments to Saudi Arabia's Labour Law Coming into Effect in February 2025

Key Amendments to Saudi Arabia's Labour Law Coming into Effect in February 2025

As part of Saudi Arabia's Vision 2030, the Ministry of Human Resources and Social Development (MHRSD) has announced amendments to the Labour Law, which will come into effect on February 18, 2025. These changes, approved by the Saudi Council of Ministers, aim to create a more attractive and equitable labor market in the Kingdom.

The amendments introduce several key changes, including new definitions in Article 2, such as “manpower activity” and “resignation.” For non-Saudi nationals, Article 37 will now stipulate that indefinite-term contracts are deemed to have a fixed one-year duration, renewable annually. A new mandate under the amendments requires employers to either provide accommodation and transportation or offer a cash allowance. Furthermore, there is a significant emphasis on equal opportunities, prohibiting discrimination based on race, gender, disability, and other factors.

Other notable changes include adjustments to the probation period, which can now extend to 180 days, and Article 72 now requires an internal appeal process for disciplinary sanctions. Articles on termination, resignation, and notice periods have also been revised to provide clarity and fairness for both employers and employees. Article 107 will allow time off in lieu of overtime pay, while Articles 113 and 151 have expanded leave entitlements for paternity, bereavement, and maternity.

Additionally, the new regulations impose substantial fines of up to SAR 500,000 for unlicensed manpower activities or employing non-Saudi nationals without proper authorization. Companies operating in Saudi Arabia must review and update their contracts, handbooks, and policies to align with these amendments to ensure compliance and mitigate potential risks. The full scope of the changes, including Executive Regulations, is expected to be released soon.