Saudi Labor Law 2015 by Raja Adnan Liaqat

To whom it apply? This law is applicable on the following:

Art. 5 1. Parties having employment contract for specific wage/salary.
2. Governmental and public organization
3. Charities' employees
4. Qualification & Training contracts
5. Part-time workers individuals approved by the Minister.
Not Apply? Exempted Persons;
Art. 7 The employer's family members: employed by such firm and they are the only staff in such firm.
b. Sports clubs: Athletics and coaches.
c. Domestic works and alike.
d. Shepherds and farms' works and alike.
e. Seamen working on ships (less than 500 tonnage)
f. Expatriates having assignments in Saudi Arabia for not more than 2 months.
Worker`s rights at the the predecessor and the successor may agree to transfer all the previous rights of the worker to the
time of Merger & new owner with the written consent of the worker; or
Partition if not agreed in advance than the predecessor and the successor shall be jointly and severally liable.
Liquidation or Worker`s right override the all other rights and the amount entered as privileged debts for workers.
bankruptcy?
Types of contract 1. Fixed Term
2. If no duration, the duration of the work permit shall be deemed as the duration of the contract.
Costs
What cost employer An employer shall incur
shell bear? 1. the fees of the Iqama and its renewal fee, the fines resulting from their delay, change of
profession fee, exit and re-entry visas fee and return tickets at the end of the contract
2. An employer shall bear the fees of transfer of Iqama
3. the cost of transportation of death body to workers home town.
What cost employee If worker feels unfit for work or if he wishes to return to his home country without a legitimate
shell bear? reason.
Litigation cost Art. 227 The Commision may order the losing party to pay the winning party to pay all or some of the costs.
Trainee
Trainee termination If trainee is incapable or incompetent for relevant job.
Trainee has same rights and he may terminate for same reasons.
After training The employer has the right to order the trainee, after completion of training, to work with the same
Executive Regulation employer for the same period spent for training. If the trainee ended training with no valid reason the
Art. 17/1/5, 17/2/A trainee shall be obligated to pay the employer the cost incurred for such training.
Probation
Probation period Probation period has to be clearly stated in the work contract and not exceed ninety days and can be
Art. 53, 54 extended to one hundred and eighty days max.with written mutual agreement, this period excludes
Eid AlFitr and Eid AlAdha and sick leave.
There must not be probation period more than once for the same job. In this situation worker must be
assigned to different position or both parties already terminated previous relationship 6 months before
re-employment.
Termination of contract None the party is entitled to compensation, and no EOS award for worker.
during probation.
Art. 54
Termination & Renewal of fixed term
Renewal of contract If the employment contract contains a clause for renewal for similar period(s), or specific period,
Art. 55 such contract shall be renewed accordingly.
If fixed term contract ends and worker continues to work, such contract will become indefinite
term contract.
After three renewals or the service reached 4 years in total, whichever is less, such contract shall
become a contract without definite term. For expatriates till the expiry of Iqama.
Termination/expiry of The employment contract expires in one of the following events:
Work Contract 1. If both parties agreed, and worker's consent be in writing.
 Saudi Labor Law 2015 by Raja Adnan Liaqat
Art. 74 2. On the expiry date of contract.
3. At the discretion of either party provided with prior notice in indefinite term contracts.
4. The age of retirement (60/men / 55 years for working women), unless both parties agreed in
writing to continue the service beyond such age. In case of fixed term contract, if contract exceeds
retirement age, such contract will expire at its end date.
5. Force majeure.
6. Liquidation of the firm.
7. Closure of the business where the employee assigned in.
8. Any other event stipulated in any other law.
Termination of contract Damaged party shell pay Salary of remain period of contract. If the period is less than 2 months than
without valid reason two months salary.
Art.77
Termination & Renewal of indefinite term
Termination/expiry of Either party may terminate the contract by serving a 60 days' notice to the other party (for salaried
indefinite Work employee) or 30 days' notice (for wage employee).
Contract Art.75
Failure to serve notice Party at fault will pay other party salary equal to remain amount of time of notice period if both
Art.76 parties don't agree on more.
Termination of contract 15 days pay for every year of service, and no less than two months pay.
without valid reason
Art. 77
Other compensation on If notice is from employer, employee is allowed absence for one day every week or eight hours per
termination without week within notice period to search for a new job and deserves salary during that absence.
valid reason? And employer may exempt worker from work within notice period and count his service continuous
Art. 78 until end of notice period while being liable for what results from that and obligated to give worker
his pay during notice period.

Without notice The employer shall NOT terminate an employee without severance pay, notice or compensation (and
termination by employer the employee's right to protest), except in one of the following events:
Art. 80 If the worker/employee:
1. Assaulted the employer, a supervisor or a subordinate,
2. Failed to perform his obligations as per the contract, ignored published safety instructions or orders
and the employer already dispatched a notice to such worker of such disobedience.
3. Behaved improperly or proofed to commit an act of dishonesty or dignity.
4. Committed intentional act or omission intended to cause loss or damage to the employer, and the
employer already notified competent authorities within 24 hours of such act and/or omission.
5. Forgery to be accepted for employment.
6. Under probationary period.
7. Absent for invalid reason for 30 days during 1 contractual year or 15 consecutive days, provided
the employer already dispatched a notice after 20 days for the first event or 10 days for the second
event.
8. Committed a conflict of interest act or to secure personal gain using his/her position.
9. Released industrial or commercial confidential data/information/documents.
Without notice Without prejudice to all of his statutory rights, a worker may leave his job without notice in any of
termination by the following cases:
employee 1. If the employer fails to fulfill his essential contractual or statutory obligations towards the
Art. 81 worker.
2. If the employer or his representative resorts to fraud at the time of contracting with respect to
the work conditions and circumstances.
3. If the employer assigns the worker, without his consent, to perform a work which is
essentially different from the work agreed upon and in violation of provisions of Article (60)
of this Law.
4. If the employer, a family member or the manager in-charge commits a violent assault or an
immoral act against the worker or any of his family members.
 Saudi Labor Law 2015 by Raja Adnan Liaqat
5. If the treatment by the employer or the manager in-charge is characterized by cruelty,
injustice or insult.
6. If there exists in the workplace a serious hazard threatening the safety or health of the worker,
provided that the employer is aware thereof but fails to take measures indicating its removal.
7. If the employer or his representative, through his actions and particularly his unjust treatment
or violation of the terms of the contract, has caused the worker to appear as the party
terminating the contract.
End of Service Award
In Case of Resignation of Employee
Case 1 <2 yrs Art.85 In the case of less than two years service is not entitled to an End of Service Benefit.
Case 2 2 5 yrs More than 2 years but less than 5 years is entitled to 1/3 of his or her salary for every year of service.
Art. 85 For instance, an employee worked for 3 years
Monthly salary x 1/3 x (3) = total amount
Case 3 5 10 yrs More than 5 years but less than 10 years receives 2/3 of the salary for every year.
Art. 85 For instance, an employee worked for 7 years
Monthly salary x 2/3 x (7) = Total amount
Case 4 10+ yrs For 10 years or more receives a full salary for every year.
Art. 85 For instance, an employee resigns after working for 15 years
Monthly salary x (15) = total amount

Exception to above rule 1. force majeure

Art. 86, 87 2. female worker ends her contract within six months from the date of her marriage or three
months from the date of giving birth
3. EOS may not include all or some of the commission, sales percentage, and similar wage
components that are subject to increase and decrease if parties agree.

Time limit to pay EOS Within a maximum period of one week from the date of the end of the contractual relation, or
Art. 88 maximum 2 weeks if employee resigns
End of Contractual Relation
Case 1 0-5 yrs Before completing a 5-year worker receives half salary for every year of service.
Art. 84 For instance, an employee worked for 3 years
Monthly salary x 1/2 x (3)= Total benefits
Case 2 An employee who is terminated after 5-year receives half salary for the first 5 years and full salary for
Art. 84 the succeeding years as ESB award.

For instance, an employee is terminated after 9 years;

For first 5 years : Monthly salary x 1/2 x (5) = Total benefits
+ For remaining 4 years : Monthly salary X (4) = Total benefits
What is Included in ESB Based on the last wage entitled, and consists of: the basic wage, commissions, allowances, increments,
Payment grants or rewards and in rem privileges.
Domestic Workers End For every four consecutive years, a domestic helper is entitled to a one month salary.
of Service Benefits
Art.16 of Domestic
Service Workers
Executive Regulations
(Excluded from Labour
Law)
SETTLEMENT OF LABOR DISPUTES
Stage 1 The Preliminary Commission for Settlement of Disputes
Jurisdiction : 1. Labor disputes, irrespective of their type, the value of which does not exceed ten thousand
Final Decision on: riyals.
Art. 214/1 2. Objection to the penalty imposed by the employer upon the worker.
3. Imposition of fine on employer does not exceed five thousand riyals
Preliminary Decision on 1. Labor disputes the value of which does exceed ten thousand riyals
 Saudi Labor Law 2015 by Raja Adnan Liaqat
Art. 214/2 2. Disputes over compensations for work injuries, irrespective of the amount of the
compensation.
3. Disputes over termination of service.
4. Imposition of punishments in this Law which exceeds five thousand riyals.
5. Imposition of punishments by fines with consequential punishments.
Stage 2. Art. 216 Appeal to the High Commission for Settlement of Disputes to decide finally and definitively.