Saudi Arabia’s recent amendments to its Labour Law are set to take effect on February 18, 2025. Getty Images
Saudi Arabia’s recent amendments to its Labour Law are set to take effect on February 18, 2025. Getty Images
Saudi Arabia’s recent amendments to its Labour Law are set to take effect on February 18, 2025. Getty Images
Saudi Arabia’s recent amendments to its Labour Law are set to take effect on February 18, 2025. Getty Images

Saudi Arabia’s labour law amendments: What they mean for employers and employees


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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.

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
Jean Abboud,
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:

  1. Review staffing contracts: Companies should ensure staffing partners comply with the new licensing requirements to avoid penalties and operational disruptions.
  2. 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.
  3. 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.
  4. 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

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The years Ramadan fell in May

1987

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1921

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Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

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What is graphene?

Graphene is extracted from graphite and is made up of pure carbon.

It is 200 times more resistant than steel and five times lighter than aluminum.

It conducts electricity better than any other material at room temperature.

It is thought that graphene could boost the useful life of batteries by 10 per cent.

Graphene can also detect cancer cells in the early stages of the disease.

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Dr Afridi's warning signs of digital addiction

Spending an excessive amount of time on the phone.

Neglecting personal, social, or academic responsibilities.

Losing interest in other activities or hobbies that were once enjoyed.

Having withdrawal symptoms like feeling anxious, restless, or upset when the technology is not available.

Experiencing sleep disturbances or changes in sleep patterns.

What are the guidelines?

Under 18 months: Avoid screen time altogether, except for video chatting with family.

Aged 18-24 months: If screens are introduced, it should be high-quality content watched with a caregiver to help the child understand what they are seeing.

Aged 2-5 years: Limit to one-hour per day of high-quality programming, with co-viewing whenever possible.

Aged 6-12 years: Set consistent limits on screen time to ensure it does not interfere with sleep, physical activity, or social interactions.

Teenagers: Encourage a balanced approach – screens should not replace sleep, exercise, or face-to-face socialisation.

Source: American Paediatric Association
Updated: November 26, 2024, 9:04 AM