Saudi Arabia Labour Law Compliance: Employer’s Guide
Saudi Arabia’s labour law framework is governed by the Saudi Labour Law (Royal Decree No. M/51 of 2005) as amended by subsequent resolutions. The Ministry of Human Resources and Social Development (MOHRE) oversees enforcement, while the Qiwa platform and Nitaqat Saudisation programme impose additional compliance obligations on private sector employers. Non-compliance can result in MOHRE fines, denial of visa services, suspension from the Nitaqat programme and legal liability. This guide provides a comprehensive overview of Saudi labour law compliance.
Published: 25 July 2026 | Last updated: 25 July 2026 | Author: Mustafa Hasan, Lead Auditor | Reviewed by: Bitrixme Compliance Team
Key Takeaways
- Saudi Labour Law (Royal Decree No. M/51) sets minimum standards for working hours, leave, termination and end-of-service benefits for all private sector employees.
- MOHRE enforces compliance through the Qiwa platform, which integrates WPS, contract registration, inspection management and Nitaqat reporting.
- The Nitaqat Saudisation programme requires employers to meet sector-specific Saudi national employment quotas or face penalties.
- The Wage Protection System (WPS) mandates salary payments through authorised banks within MOHRE’s prescribed timelines.
- End-of-service benefits are calculated at half a month’s salary per year for the first five years and one month per year for subsequent years.
Overview of Saudi Arabia’s Labour Law Framework
The Saudi Labour Law applies to all private sector employers and employees in the Kingdom, with limited exceptions for domestic workers, agricultural workers and certain categories of government employees. The law has been amended multiple times, most recently through Ministerial Resolution No. 187539 of 2024, which introduced reforms to probation periods, contractual flexibility and non-compete clauses.
MOHRE is the principal regulatory authority, operating through the Qiwa digital platform. Employers must register on Qiwa to manage employee contracts, submit WPS reports, track Nitaqat compliance and respond to inspection requests. Failure to maintain an active Qiwa account with up-to-date information is itself a compliance violation.
Key Provisions of the Saudi Labour Law
Working Hours
Standard working hours are 48 hours per week (8 hours per day, 6 days per week). During Ramadan, working hours are reduced to 36 hours per week (6 hours per day) for all employees. Overtime is payable at 150 per cent of the normal hourly rate. Friday is the statutory weekly rest day. Employers may substitute another rest day for employees working in essential services with MOHRE approval.
Annual Leave
Employees are entitled to 21 days of annual leave for the first five years of service and 30 days thereafter. Leave may be taken after the employee completes one year of service. Leave must be taken within the year it accrues unless the employer agrees to carry it forward.
Sick Leave
Sick leave entitlement is 120 days per year, calculated as 30 days at full pay, 60 days at 75 per cent pay and 30 days without pay. Sick leave must be supported by a medical report from a licensed healthcare provider. An employer may terminate an employee who exhausts 120 days of sick leave with no prospect of returning to work.
Maternity Leave
Female employees are entitled to 10 weeks of maternity leave (70 days) at full pay, provided they have completed at least 12 months of service. An additional 10 days of unpaid leave may be taken if medically required. During pregnancy and for six months after returning from maternity leave, the employee may not be terminated.
Public Holidays
Saudi Arabia observes four official public holidays: Eid al-Fitr (4 days), Eid al-Adha (4 days), National Day (1 day) and Foundation Day (1 day). Employees who work on a public holiday are entitled to 150 per cent of their normal wage plus a compensatory day off.
MOHRE Regulations and the Qiwa Platform
MOHRE’s Qiwa platform is the central hub for all labour compliance activities in Saudi Arabia. Every private sector employer must register on Qiwa and use it for the following:
- Employment contract registration and renewals.
- Wage Protection System (WPS) reporting.
- Nitaqat compliance tracking and colour band monitoring.
- Inspection management and response to MOHRE enquiries.
- Employee transfer and secondment requests.
- Training and qualification record management.
Qiwa replaces the earlier separate systems for contract registration, WPS and inspections. A single Qiwa account provides MOHRE with a unified view of the employer’s compliance status. Failure to update employee records on Qiwa within 14 days of any change is a violation subject to fines.
Nitaqat Saudisation Programme
The Nitaqat programme classifies employers into colour bands (Platinum, High Green, Medium Green, Low Green, Yellow and Red) based on their Saudi national employment percentage relative to sector-specific targets. The classification determines the employer’s ability to recruit, renew permits and access government services.
| Nitaqat Band | Saudisation % (Relative to Sector Target) | Impact on Employer |
|---|---|---|
| Platinum | > 150% of target | Full visa services, preference in government contracts |
| High Green | 100 – 150% of target | Standard visa services, no restrictions |
| Medium Green | 75 – 100% of target | Reduced visa services, limited renewals |
| Low Green | 50 – 75% of target | Significantly restricted visa services |
| Yellow | 25 – 50% of target | No new visas, limited renewals |
| Red | < 25% of target | No visas, no renewals, potential business closure |
Employers in the Yellow or Red bands cannot issue new work visas or renew existing ones. They also face restrictions on employee transfers to other employers. Maintaining at least Low Green status is essential for business continuity.
Wage Protection System
The Saudi Wage Protection System requires all salaries to be paid through authorised banks and reported to MOHRE within specific timelines. Key compliance requirements include:
- Salaries must be paid by the contractual due date, typically the 25th of each month.
- WPS data must be uploaded to Qiwa within 10 days of the salary due date.
- Salaries must be paid in full — partial payments are treated as non-compliance.
- Employers must register all employees in the WPS system with accurate salary information.
- Non-compliance for three consecutive months results in MOHRE escalation.
WPS compliance is directly linked to Nitaqat band calculation. An employer with outstanding WPS violations cannot upgrade its band regardless of Saudisation percentage.
End-of-Service Benefits
End-of-service benefits (ESB) are mandatory for all employees who complete at least one year of service. The calculation follows two tiers:
| Years of Service | Entitlement (Salary Basis) |
|---|---|
| 1 – 5 years | Half a month’s salary per year |
| 6 years and above | One month’s salary per year (for years after the first five) |
The salary used for ESB calculation is the employee’s final basic salary. An employee who resigns is entitled to 50 per cent of the ESB for service between 2 and 5 years, 66 per cent for 5 to 10 years and 100 per cent for 10 or more years. Employees dismissed for gross misconduct forfeit their ESB.
Termination Procedures
Termination of employment is governed by strict notice and procedural requirements. The notice period depends on the payment frequency:
| Payment Type | Notice Period |
|---|---|
| Monthly-paid employees | 30 days |
| Weekly/bi-weekly paid employees | 15 days |
| Probation (first 90 days) | No notice required |
Summary dismissal without notice is permitted for gross misconduct, including: assault, theft, fraud, breach of confidentiality, or absenteeism exceeding 15 consecutive days. The employer must issue a written termination notice and settle all dues, including ESB, within two weeks.
Penalties for Non-Compliance
MOHRE imposes escalating penalties for labour law violations. The table below summarises the current penalty schedule:
| Violation | Penalty |
|---|---|
| WPS non-compliance (first offence) | Fine of SAR 1,000 – SAR 5,000 |
| WPS non-compliance (repeat offence) | Suspension of visa services for 6 – 12 months |
| Employing workers without valid permits | Fine of SAR 10,000 per worker plus deportation costs |
| Failure to register on Qiwa | Fine of SAR 5,000 |
| Failure to pay end-of-service benefits | Fine of SAR 50,000 plus ESB amount |
| Below Nitaqat minimum threshold for 6 months | Business closure order by MOHRE |
| Non-compliance with MOHRE inspection | Fine of SAR 3,000 – SAR 10,000 |
Frequently Asked Questions
What is the maximum probation period under Saudi labour law?
The maximum probation period is 90 days for all employees. The probation period may be extended to 180 days with the employee’s written consent.
How does the Nitaqat programme affect my ability to hire foreign workers?
Your Nitaqat colour band directly determines your visa allocation. Employers in the Yellow or Red bands cannot issue new work visas or renew existing permits. Maintaining Low Green status or above is essential for ongoing recruitment.
What happens if I fail to upload WPS data on Qiwa?
Late or missing WPS uploads trigger automatic fines and MOHRE alerts. Three consecutive months of non-compliance can result in visa service suspension, Nitaqat band downgrading and a requirement to attend a MOHRE compliance hearing.
Can an employer terminate an employee during medical leave in Saudi Arabia?
Employers may not terminate an employee during paid sick leave. Termination is only permitted after the employee has exhausted the 120-day sick leave entitlement and a medical report confirms no prospect of returning to work within a reasonable period.
What is the difference between fixed-term and indefinite-term contracts in Saudi Arabia?
Fixed-term contracts have a defined end date and automatically expire unless renewed. Indefinite-term contracts continue until terminated by either party with proper notice. Under the 2024 amendments, fixed-term contracts are default for new hires.
How is end-of-service benefit calculated for an employee who resigns after three years?
An employee who resigns after three years is entitled to 50 per cent of the standard ESB calculation. The standard amount is 1.5 months of basic salary (half per year for 3 years), so the entitlement would be 50 per cent of that amount.
How Bitrixme Can Help
Bitrixme provides comprehensive Saudi labour law compliance services, including MOHRE registration, Qiwa account setup and management, WPS implementation, Nitaqat compliance tracking and internal compliance audits. Our team of certified compliance professionals helps employers in Saudi Arabia maintain full regulatory compliance while focusing on business growth. Contact Bitrixme today to schedule a compliance audit or reach out on WhatsApp for an immediate consultation.
Disclaimer: This article provides general guidance on Saudi labour law compliance and does not constitute legal advice. Employers should consult qualified legal professionals for advice specific to their circumstances.
