Amid the sweeping transformations underway in Saudi Arabia, Defense Lawyers & Consultants plays a central role in enhancing the work environment and improving labor relations. The firm supports Saudi Vision 2030 by actively helping to build a balanced and thriving labor market. This mission aligns with the introduction of the new Labor Law, which strengthens employee rights and elevates workplace standards. The updated law addresses crucial areas such as employment contracts, leave policies, termination procedures, and more, making it highly relevant for both employers and employees.
Below is a detailed overview of the most important amendments and how they improve upon the previous system.
Major Amendments in the New Labor Law Compared to the Previous Version
New Definitions
The revised Article 2 introduces important terms:
- Outsourcing: Involves a licensed agency supplying workers to perform services for entities other than their direct employer.
- Resignation: Refers to a worker’s written declaration to end a fixed-term contract voluntarily, subject to employer approval.
Contracts for Non-Saudi Workers
Under Article 37, contracts for non-Saudi employees must be written and fixed-term. When the term is not specified, the law sets the default duration at one year from the employee’s start date. If employment continues beyond this period, the contract automatically renews for a similar term.
Transfer of Services Without Employer Approval
Article 35 grants the Ministry of Human Resources and Social Development the power to refuse work permit renewals if the employer fails to comply with Saudization regulations or other legal requirements. In such cases, the worker can transfer to a new employer without needing the previous employer’s consent.
Employer Responsibility for Fees
The new version of Article 40 clearly outlines the employer’s financial obligations, including:
- Recruitment expenses for non-Saudi workers.
- Fees for residence permits, work permits, and renewals.
- Penalties arising from delays caused by the employer.
- Costs associated with job title modifications, exit/re-entry permits, and return tickets after contract termination.
Training and Development of Saudi Workers
Amendments to Articles 42, 43, and 44 require employers to implement programs for training and upskilling Saudi nationals, aiming to improve their capabilities in technical, administrative, and professional domains.
Probation Period
The revised Article 35 mandates that contracts must explicitly state if a worker is under probation, along with the specific duration, capped at 180 days. During this period, either party may terminate the contract, provided that this right is clearly established.
Overtime Pay
According to Article 107, employers must compensate employees for overtime work at 150% of the standard hourly wage. Alternatively, employees may agree to receive paid leave instead. Additional details are found in the executive bylaws.
Labor Inspection
Article 98 empowers labor inspectors to enter any workplace covered by the law at any time, without prior notice, to ensure full compliance with labor regulations.
Training and Qualification Contracts
Under the updated Article 46, training agreements must:
- Be documented in writing.
- Define the target profession and the skills being developed.
- Specify the training stages, duration, and related compensation.
The contract must also outline the rights and responsibilities of both parties and indicate whether training will occur in-house or through an external provider.
Clarification on Resignation
An added clause in Article 74 defines resignation as the worker’s documented intent to terminate a fixed-term contract voluntarily, subject to the employer’s acceptance.
Role of Defense Lawyers & Consultants ofthe New Labor Law
Defense Lawyers & Consultants delivers legal services tailored to Saudi labor law, guiding individuals and companies to understand and comply with the new legislation effectively.
Our Core Services
Legal Consultation
- Interpreting the new Labor Law’s provisions.
- Advising on employment contract structures and legal obligations.
- Explaining rights and duties for both employers and employees.
Documentation & Review
- Drafting and reviewing employment contracts for legal compliance.
- Handling termination documentation and dispute resolution.
- Creating internal HR policies aligned with current laws.
Client Representation
- Representing clients before labor dispute committees.
- Managing wrongful termination and financial claim cases.
- Providing legal solutions for internal workplace issues.
Preventive Legal Services
- Conducting corporate training on the new legal requirements.
- Updating HR strategies in line with the latest legislation.
- Offering preemptive legal advice to avoid future disputes.
Why Choose Defense Lawyers & Consultants?
- A team of experts in Saudi labor law.
- Proven experience in resolving employment disputes.
- Practical knowledge of how to apply new legal frameworks.
- A strict commitment to confidentiality and professional ethics.
📞 Contact Us: 920013824
📍 Our Offices: Riyadh | Dammam | Al-Qassim
In Conclusion
The updated Labor Law represents a pivotal shift in Saudi Arabia’s labor landscape. By advancing employee rights and ensuring employer obligations, the law moves the Kingdom closer to the goals outlined in Vision 2030. These legislative improvements foster a competitive and fair labor market while promoting Saudization and enhancing the quality of life for all residents.
With its deep legal expertise, Defense Lawyers & Consultants stands ready to help clients navigate this new era of labor regulations, ensuring full compliance and the protection of everyone’s rights.
