Saudi labor law 2025: The most important amendments and their impact

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​published on 25 April 2025 | reading time approx. 3 minutes

As reported by us earlier, on 18 February 2025, comprehensive amendments to Saudi Arabia's labour law were enacted, marking the most significant reform since 2015. These changes have far-reaching implications for both employers and employees, addressing key areas such as equal treatment, employment contracts, working hours and leave entitlements. As these new regulations are in effect, it is crucial for companies to adapt their internal processes, employment contracts and policies accordingly.​

One of the most significant updates concerns equal treatment in the workplace. Employers are now prohibited from taking any actions that undermine equal opportunities or constitute discrimination based on gender, age, ethnicity, nationality, marital status or disability. This provision is expected to lead to an increase in discrimination complaints file-d with the Saudi Ministry of Human Resources and Social Development (MHRSD). Additionally, employers must now either provide suitable accommodation for their employees or compensate them with a financial allowance. The same rule applies to transportation from employees' residences to their workplace. Companies that have not yet implemented these provisions must either adjust their salary structures or provide an additional payment to their employees.

Another major change affects the probation period for new hires. Employers can now set a probation period of up to 180 days instead of the previous maximum of 90 days. The probation period must still be specified in the employment contract and both parties retain the right to terminate the employment relationship during this time. This adjustment strengthens employees' rights to end their contracts within the probationary period.

Previously, employers who failed to meet Saudization quotas risked having work permit renewals denied for non-Saudi employees. The new regulations extend this restriction to include violations of labour law in general, potentially preventing companies from obtaining new work permits if they fail to comply. Furthermore, the new rules aim to facilitate the transfer of foreign employees to new employers if their current employer is found in violation of labour laws.

A key revision concerns fixed-term contracts for non-Saudi employees. If an employment contract does not specify a fixed term, it will now automatically be deemed a one-year contract from the employee's start date. If the employee continues working beyond this period, the contract will be automatically renewed for an equivalent duration. This replaces the previous rule, which linked contract duration to the expiration of the employee's work permit. Moreover, termination rights for fixed-term contracts have been made more flexible: Employees can now resign from their contracts with written notice without being required to compensate their employer. Employers have 30 days to respond to a resignation, and if there is a valid business reason, they may delay the resignation for up to 60 days, provided this is justified in writing.

Employers and employees can now agree to compensate overtime hours with paid leave instead of monetary compensation. The legal calculation of overtime pay remains unchanged. Senior executives and certain other roles continue to be exempt from working hour regulations.

Several changes have been made regarding notice periods and leave entitlements. The notice period for employees with indefinite contracts has been reduced from 60 to 30 days, while the employer's notice period remains at 60 days. Additional leave entitlements have also been introduced. Employees are now granted three days of paid leave in the event of the death of a sibling, in addition to the existing leave for the loss of parents or children. Maternity leave has been extended from 10 to 12 weeks, with six weeks of mandatory leave following childbirth. Fathers are now entitled to three days of paternity leave within the first seven days after the birth of their child.

The reform of Saudi Arabia's labour law is a significant step toward a more balanced and modern labour market. The new regulations enhance employee rights, provide clearer guidelines for businesses, and contribute to aligning the employment system with the country's broader economic objectives. By strength​­ening labour protections and ensuring greater compliance, these amendments reinforce Saudi Arabia's commitment to a fair and competitive workforce, supporting long-term economic growth and stability.