Saudi Arabia’s recent amendments to its labour law mark a shift towards a more structured, transparent employment environment.
Set to take effect on February 18, 2025, these changes align with the kingdom’s Vision 2030 goals, aiming for a balanced labour market that encourages fair treatment, Saudisation and improved work conditions.
Here, we break down the core changes, their legal and practical impact, and key actions for businesses to ensure compliance.
Heightened regulations for staffing and outsourcing
The amendments bring significant changes to staffing and outsourcing regulations. As the Ministry of Human Resources and Social Development places a new emphasis on regulating companies that supply temporary labour, these businesses face stricter licensing requirements and hefty fines (200,000 Saudi riyals to 500,000 Saudi riyals, the equivalent of $53,000 to $133,000) for non-compliance.
The sectors most impacted include construction, logistics, manufacturing and technology, where temporary labour is heavily relied upon.
Employers need to verify that staffing providers hold the correct licences and that all contract terms comply with the new regulations.
This shift pushes companies to reconsider their approach to workforce management and emphasise hiring through official, licensed channels. It aligns with Vision 2030’s focus on Saudisation, which encourages the hiring of Saudi nationals by making alternative hiring routes and government-backed platforms more prominent.
Failure to comply not only risks operational disruption but can also lead to substantial reputational damage.
Enhanced leave provisions
The new amendments also expand leave entitlements, granting 12 weeks of maternity leave (six of which are mandatory post-birth), three days of paternity leave, and an additional three days of bereavement leave for the death of a sibling.
These changes reflect a progressive shift towards global labour standards, focusing on work-life balance and family support.
Employers should review current leave policies and update employee handbooks to reflect these entitlements, ensuring smooth implementation and avoiding potential conflicts.
Detailed documentation and clear communication of these policies are essential, allowing employees to understand their rights and promoting a supportive workplace culture that aligns with the new legal framework.
Reinforced anti-discrimination and equal opportunity mandates
The amendments introduce stringent anti-discrimination policies, emphasising equal opportunity across hiring and employment. The law now prohibits discrimination based on race, gender, disability, or age, requiring employers to adjust hiring practices and HR policies accordingly.
In sectors historically prone to disparities – such as recruitment, promotion and compensation – companies are now legally obliged to enforce equitable treatment.
This mandate calls for concrete action, including standardised hiring criteria, regular audits of recruitment practices, and clear job descriptions.
Streamlined probation and termination processes
The amendments provide clarity on probationary terms, now allowing a maximum period of 180 days without needing renewal agreements. Additionally, specified-term contracts can now be resigned from before their term, with resignation becoming effective after 30 days without an employer’s response.
partner – head of Saudi office, BSA Law
For indefinite-term contracts, the notice period stands at 30 days for employees and 60 days for employers.
These changes simplify contract management, reducing the administrative load for HR teams and ensuring transparency in the employer-employee relationship.
Obligations for housing, transportation and training
The new amendments impose additional responsibilities on employers, specifically concerning housing and transportation allowances, which can either be provided directly or as cash equivalents.
This mandate is particularly relevant for organisations employing a significant number of expatriates, as it aligns with the government’s goal of improving living standards for foreign workers.
Further, employers with 50 or more employees are now required to establish training programmes focused on Saudi nationals. This aligns with Vision 2030’s Saudisation goal, pushing companies to invest in upskilling local talent and reducing dependence on foreign labour.
Companies across all sectors will need to integrate formal training plans and track their effectiveness as part of this localisation effort.
Steps for business compliance
These amendments reflect a deeper commitment to regulatory alignment, presenting challenges and requiring proactive measures from employers. Key steps for businesses include:
- Review staffing contracts: Companies should ensure staffing partners comply with the new licensing requirements to avoid penalties and operational disruptions.
- Update policies and communicate with employees: Employers must update employee handbooks and internal policies to align with the new leave entitlements, anti-discrimination standards, and probation terms, ensuring these changes are effectively communicated to avoid misunderstandings.
- Develop Saudi-focused training programmes: Meeting the new training requirements for Saudi employees is essential for compliance and can contribute positively to talent development within the organisation.
- Maintain thorough documentation: Keeping detailed records of training sessions, leave entitlements, and any contract updates is essential for meeting the regulatory requirements and ensuring smooth audits or reviews by authorities.
Jean Abboud is partner – head of Saudi office at BSA Law
