Employment Contracts in Saudi Arabia

1. Minimum requirements

An employer is under a duty to consider KSA nationals for all vacancies prior to engaging a foreign national. The majority of vacancies must now be posted with the Human Resource Development Fund and advertised for a minimum of two weeks to unemployed KSA-nationals registered with the Fund before a non-KSA national can be offered the role. Certain roles, including HR managers, secretaries, security officers and up to 18 specified roles are reserved for KSA nationals.

2. Fixed/unlimited term contracts

Contracts for KSA nationals may be for a limited or unlimited period. However, contracts for non-nationals must always be for a fixed term (usually linked to the period of the work permit).

3. Trial Period

It is common practice in KSA to employ persons on an initial trial period. The maximum initial probationary period is 90 days, exclusive of time off for public holidays (Saudi National Day, Eid al-Fitr and Eid al-Adha) and sick leave however this can be extended by a further 90 days by written agreement with the employee. A worker may only be required to serve an additional probationary period if they are being considered for an alternative job. The inclusion of a probationary period in an employment contract is not mandatory but if the worker is subject to a probationary period, it must be clearly stated in the contract. Employees terminated during the trial period are not entitled to end of service benefits or compensation in lieu of notice.

4. Notice periods

During any period of probation, either the employer or employee has the right to terminate the employment contract, unless the contract includes provisions reserving the right of termination to only one of the parties.

Indefinite term contracts may be terminated by either party providing at least 60 days’ written notice if the employee is paid monthly (15 days’ notice otherwise) to the other party. A fixed-term contract will terminate upon expiration of its term, unless it is terminated in accordance with the new Article 74 of the KSA Labour Law (which was introduced by the 2015 Amendments).

For more information, please contact L&E Global.
This information was contributed by Abdulaziz A. Al-Bosaily Law Office in association with Clyde & Co.
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