General Overview

Saudi Arabia is the Middle East’s largest economy. Oil and petrochemicals remain its backbone, yet “Vision 2030” reforms are rapidly expanding tourism, logistics, and technology. Recent labour‑law amendments aim to modernise hiring practices, increase private‑sector efficiency, and raise Saudi‑national participation.

‍

‍

Employment Contracts

Employment agreements must be in Arabic (bilingual versions are common) and are either fixed‑term or indefinite. If the duration is omitted—or the employee keeps working five working days beyond a fixed expiry—the contract is treated as indefinite.

‍

‍

Probation Period

Probation may run up to 90 days and, with the employee’s written consent, once‑only to 180 days in total. Either side may end the relationship on one day’s written notice (or the notice specified in the contract), with no severance.

‍

‍

Working Hours

Standard hours are eight a day and forty‑eight a week; Muslim staff work six‑hour days and thirty‑six‑hour weeks during Ramadan. Time beyond these limits counts as overtime and must be paid at 150 percent of the basic hourly rate.

‍

‍

Vacation Days

Employees receive at least 21 days of fully paid annual leave, rising to 30 days after five consecutive years with the same employer. Holiday should be taken in the year earned, though it may be carried into the following year by mutual agreement and used no later than the year‑end.

‍

‍

Sick Leave

Within any twelve‑month span a worker may take up to 120 sick‑leave days: the first thirty on full pay, the next sixty at 75 percent, and a final thirty unpaid. A doctor’s certificate must normally be presented within three days of falling ill.

‍

‍

Wages and Salary Payment

For Saudis the official minimum for full Saudization credit is SAR 4,000 per month; no statutory floor applies to expatriates. Wages must be transferred through the Wage Protection System at least monthly, with payslips showing all deductions.

‍

‍

Public Holidays

Private‑sector employees enjoy four‑day breaks for Eid al‑Fitr (starting 30 Ramadan) and Eid al‑Adha (starting 9 Dhu al‑Hijjah), plus paid days off for Founding Day on 22 February and National Day on 23 September. Work performed on these days is paid at the normal rate plus 100 percent.

‍

‍

Employer Taxes

For Saudi staff the employer pays 9 percent into the pension fund, 0.75 percent into the unemployment (SANED) scheme, and 2 percent for occupational hazards, totalling 11.75 percent of monthly wages. For expatriates only the 2 percent occupational‑hazard charge is due.

‍

‍

Employee Taxes

There is no personal income tax. Saudi nationals contribute 9 percent of salary to pensions and 0.75 percent to SANED (9.75 percent combined). Expatriates make no social‑insurance contributions but may fall under the separate expatriate‑levy regime, which the employer often bears.

‍

‍

Notice Period

Monthly‑paid employees on indefinite contracts are entitled to sixty days’ notice; others receive thirty. Earlier termination of a fixed‑term contract generally requires payment of the wages that would have been earned to expiry, unless both parties agree otherwise.

‍

‍

Termination and Severance Pay

All employees qualify for an end‑of‑service award: half a month’s wage for each of the first five years of service and a full month’s wage for every subsequent year. Resignations after two, five, and ten years trigger one‑third, two‑thirds, or the full award respectively. Payment must be made within seven days of the last working day.