Employment

Improved labour laws benefit Saudi workers

August 8, 2024

Riyadh's King Abdullah Finance District. Amended labour laws, in addition to increased funding for businesses, should boost job creation in the kingdom

12 weeks maternity leave right
Trial and notice periods set
Aligns with global employment norms

Saudi Arabia has enacted amendments to its labour laws to establish more clarity on hiring and firing and improve employee rights.

The regulations, which cabinet approved on August 6, will “enhance job stability, protect the rights of all parties involved in employment contracts and increase job opportunities for Saudi citizens”, the state-owned Saudi Press Agency said.

Among the new regulations, maternity leave has been set at 12 weeks, trial periods for new employees are fixed at 180 days, and notice periods for employees are locked in at 30 days and for employers at 60 days.

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Employees also now have the right to paid leave following the death of family members.

The law also includes penalties for job recruiters operating without a permit from the ministry of human resources and social development and requires employers to provide on-the-job training, SPA said.

Unemployment has come down to 7.6 percent but the labour market is still chaotic as young Saudis scramble to be hired by dozens of Public Investment Fund subsidiaries leading Saudi Arabia’s Vision 2030 economic diversification plan.

The new regulations apply to anyone hired on a Saudi job contract.

Saudi Arabia still has a large expatriate population, forming over 40 percent of a total 32 million population, according to the 2022 census.

Creation Business Consultants, which helps businesses work in Saudi Arabia, said the changes would help encourage foreign companies to operate in the country.

“These amendments meet the needs of the labour market,” said executive assistant Yvonne Biesinger. “They’re in line with the changes and developments witnessed worldwide.”

Foreign companies are still wary about the ease of doing business, but Saudi Arabia has succeeded in becoming the region’s venture capital centre. Funding for small companies from banks, financial institutions and venture capitalists rose sharply in 2023.

The government introduced a new commercial code last year and anti-corruption measures in a further effort to encourage foreign investment.

Saudi Arabia says companies must base their regional headquarters in the kingdom if they want access to government contracts worth SAR1 million ($260,000) or more.