Saudi Labour Law Updates 2025

Staying current with Saudi labour laws and regulations is essential for businesses operating in or entering the Kingdom. The Ministry of Human Resources and Social Development (MHRSD) has introduced a series of legal updates that came into force since the beginning of 2025. These updates aim to strengthen employee rights, enhance employer accountability, and simplify compliance. The law applies broadly, covering Saudi nationals and expatriate workers alike. It also explicitly includes workers employed by charitable institutions, ensuring that these organizations and their employees are subject to the same legal framework and protections.

This blog outlines the key labour law changes issued in 2025, highlighting their practical implications for employers and HR professionals. We explore the major changes and what they mean for businesses, employees, and international companies operating in the Kingdom.

Saudi Labour Law Updates in Q4 2025 

Employment Contracts Gain Legal Power as Executory Instruments 

Saudi Arabia introduced the Authenticated Employment Contract as an Executory Instrument, a landmark reform granting Qiwa-verified employment contracts full legal enforceability without requiring lengthy court procedures.

This development enhances transparency, protects employee rights, and simplifies dispute resolution by allowing contracts authenticated on Qiwa to serve as legally binding instruments.

Implementation Phases:

• Phase One (October 6, 2025): New and updated contracts.

• Phase Two (March 6, 2026): Existing fixed-term contracts.

• Phase Three (August 6, 2026): Existing open-ended contracts.

A fixed term contract incorporates clauses specifying its duration, renewal options, and termination conditions.

Impact: Employers must ensure all contracts are authenticated through Qiwa to gain full legal validity. Unregistered or manually signed contracts will no longer carry enforceable status under Saudi labour law. If a fixed term contract is not explicitly renewed but both parties continue to implement it after the renewal period, it is deemed renewed for an indefinite period under Saudi labour law. The renewal period is a critical factor in determining whether a contract transitions from fixed term to indefinite status.

New Localization Policies for Saudi Arabia’s Tourism Sector

Saudi Arabia has implemented new localization measures to strengthen national participation in the tourism and hospitality sector. Approved by the Minister of Tourism, Ahmed Al-Khateeb, the new regulations require all tourism establishments to employ at least one Saudi receptionist during operating hours. These regulations also require tourism establishments to actively employ Saudi nationals as part of the localization policy.

All employees  including contractual, seconded, or seasonal workers, must be registered with the Ministry of Human Resources and Social Development before starting work. The General Organization is responsible for overseeing social insurance and employment documentation for tourism sector employees. Employment contracts are now required to be documented through the Ajeer platform or other approved systems.

Tourism facilities with multiple licensed branches must register employees under the specific license file of each establishment. Additionally, outsourcing Saudized roles to non-Saudi entities or workers outside the Kingdom is prohibited unless the entity is licensed by the Ministry of Tourism or MHRSD to assign Saudi nationals.

Impact:
These measures aim to create more employment opportunities for Saudi citizens, enhance service quality, and ensure regulatory transparency. The Ministry has emphasised strict compliance monitoring and will impose penalties for violations. The update aligns with the Kingdom’s Vision 2030 goals and builds on earlier initiatives that increased wage subsidies for Saudi workers in tourism-related professions from 30% to 50%.

Saudi Labour Law Updates in Q3 2025 

Correction Mechanism for “Absent from Work” Cases via Qiwa 

MHRSD has launched a new initiative through Qiwa, enabling employers to correct the status of workers previously marked as “absent from work.”

Impact: This mechanism strengthens fairness in workforce management and protects both employers and employees from incorrect classifications. It helps companies stay compliant, reduces administrative disputes, and supports the Kingdom’s broader Vision 2030 goal of a transparent labour ecosystem.

Updated Saudization (Nitaqat) Counting Rules 

The Nitaqat system has been refined to reflect more accurate workforce representation, ensuring companies that support inclusion and local employment development receive proper recognition.

Key Updates:

• Saudis with disabilities may count as four employees toward the quota (within regulatory limits).

• Released Saudi ex-prisoners may count as two employees for up to two years.

• Student and part-time Saudi employees may count as 0.5.

• Saudis earning below SAR 3,000–4,000 may count at reduced weight.

• GCC nationals continue to be treated as Saudis for Nitaqat purposes.

Employers should also ensure wage equality and proper classification by considering the academic qualifications of both local and foreign employees.

Impact: Employers should review their workforce composition to ensure accurate Saudization reporting and maintain their Nitaqat classification. Understanding these special counting rules is essential for strategic workforce planning and compliance optimisation.

Mandatory National Address and New Contract Fields 

To strengthen coordination between government systems such as MHRSD, GOSI, and the Ministry of Interior, Qiwa now requires the inclusion of detailed contact and address information in every employment contract. 

Mandatory Fields: 

• Employer details: National Address, landline number, and general manager’s contact information. 

• Employee details: National Address, mobile number, and email address. 

• Contracts must clearly define working hours, rest periods, wages, benefits, and allowances. 

Impact: Employment contracts cannot be finalised without verified National Address details. This requirement improves data accuracy, reduces audit discrepancies, and ensures full compliance across all regulatory systems. 

60-Day Grace Period Before Worker is Marked Absent 

A new regulation has been introduced to provide a 60-day grace period before an employee is officially classified as “absent from work.”

During this period, workers can:

• Re-sign with the same employer.

• Transfer to a new employer through Qiwa.

• Exit the Kingdom legally. Workers intending to return must secure re entry visas in accordance with legal procedures.

If no action is taken within 60 days, the worker is automatically designated as “absent from work” and removed from the employer’s records.

Impact: This change ensures fairer handling of workforce transitions and prevents premature penalties. It also allows employers to manage staffing adjustments responsibly while maintaining compliance.

Increased Labour Law Enforcement and Penalties 

In Q3 2025, Saudi authorities intensified enforcement of labour regulations, introducing higher fines for violations related to employment practices and worker safety.

Key Penalties:

• SAR 10,000–20,000 for allowing employees to work for unauthorised third parties.

• SAR 10,000 per expatriate employed without a valid work permit.

• SAR 2,000–8,000 for hiring non-Saudis in restricted roles.

• Up to SAR 5,000 for occupational safety violations and SAR 1,000 for employing workers in extreme weather conditions without protection.

• Penalties may also apply if an employee causes material loss to the business through deliberate misconduct or negligence.

Employers must also ensure timely payment of all fees pertaining to recruitment, work permits, and any fines imposed for non-compliance.

Impact: Employers must implement regular compliance audits, verify permits, and strengthen occupational health and safety standards to avoid financial and operational risks. An employer employing workers must ensure compliance with all labor regulations, including proper registration and adherence to safety standards.

Worker Classification and Skill-Based Contracting 

Qiwa now mandates that each employee be categorised according to skill level  High Skill, Skilled, or Basic/Labour.

This classification directly affects visa processing, Saudization scoring, and MHRSD inspection ratings.

Impact: HR departments should review job titles, update classifications, and ensure that skill levels align with official MHRSD definitions to avoid compliance discrepancies. Employers should also implement a structured training program to ensure employees meet the required skill levels and to support ongoing workforce development.

Digital Certificates for Employees 

Employees in Saudi Arabia can now generate digital salary and service certificates directly through Qiwa Individuals. 

Impact: This feature promotes transparency and efficiency, allowing employees to validate their employment history instantly and enabling employers to streamline onboarding and exit processes. 

Branch and Location Verification via National Address 

Companies are now required to verify and update all registered branch addresses through Qiwa’s Location Management Service using their National Address data. 

Impact: This step unifies address verification across government platforms, minimises record inconsistencies, and enhances accountability during inspections or licensing renewals. 

How Employers Should Prepare for the Q3 2025 Changes 

The Q3 reforms reinforce Saudi Arabia’s commitment to digital governance and fair employment. To remain compliant, employers should:

• Authenticate all employment contracts on Qiwa.

• Review Saudization ratios and apply updated counting rules.

• Verify all National Address records and branch data.

• Train HR teams on new digital contract and worker-classification processes.

• Conduct periodic compliance checks to avoid fines.

• Report and manage vacant jobs efficiently to meet regulatory requirements and support workforce planning.

Impact: Early adaptation will not only mitigate risks but also enhance operational efficiency, transparency, and employee confidence across the organisation.

Saudi Labour Law Updates in Q2  

In Q2 2025, the Ministry of Human Resources and Social Development (MHRSD) rolled out a new wave of labour law amendments, reinforcing protections for employees and formalizing key employer obligations. These updates build on earlier regulatory shifts and signal the Kingdom’s continued effort to modernize workplace practices.

Key highlights:

• Maternity leave extended to 12 weeks (6 weeks postnatal mandatory) for any female worker covered by the law

• Paternity and bereavement leave introduced (3 days each)

• Probation period extended to 180 days, allowing termination without notice from either party

• Mandatory digitalization of all employment contracts via Qiwa

• Structured notice periods for resignations and terminations. These processes require advance notice as stipulated by the updated regulations. Certain procedures, such as depositing apprenticeship contracts at the Labor Office, must be completed within one week as per legal requirements.

• Wage disputes now subject to enhanced enforcement mechanisms

Impact: Employers must review and update internal policies, digitize contracts via Qiwa, and ensure leave entitlements and termination processes are clearly documented. Proactive action reduces legal exposure and improves employee relations.

30-Day Grace Period for Expired Visit Visas Facilitates Final Departure 

On 26 June 2025 (1 Muharram 1447 AH), the General Directorate of Passports (Jawazat) launched a 30-day grace period for individuals with expired visit visas to regularize their departure without penalties. 

Key details: 

• Applies to all visit visa categories 

• Strictly for final departure, not renewal 

• Requests must be submitted via Absher’s Tawasul service 

• Visa holders must pay outstanding fines and exit within 30 days 

Impact: Employers should inform short-term visitors and assist with compliance before the grace period ends, after which penalties will resume. 

Saudi Arabia Approves National Policy to Eliminate Forced Labour 

In January 2025, the Saudi Cabinet approved the National Policy to Eliminate Forced Labour the first of its kind in the Gulf region. It aligns with ILO Convention No. 29 and its 2014 Protocol. 

Key focus areas: 

• Promoting decent work and non-discrimination 

• Ensuring transparent recruitment 

• Providing victim-centered support 

• Strengthening coordination across government agencies 

Impact: Employers should adopt fair hiring practices, maintain clear contracts, and implement grievance mechanisms to align with the policy and reduce compliance risks. 

New Social Security Law: Contribution and Retirement Reforms 

On 3 July 2025, the General Organization for Social Insurance (GOSI) introduced a new law restructuring retirement ages and contribution rates. 

Three employee categories: 

• New hires (post July 2024): Retirement age set at 65; contributions rise 0.5% annually (up to 2%) 

• Employees under 50: Retirement age gradually increases to 65; contribution rates remain unchanged 

• Employees 50 and above: Continue under the current system 

Impact: Employers must upgrade payroll systems and monitor employee categories to ensure compliance and long-term planning accuracy. 

Saudi Labour Law updates Q1 

The following ten updates are central to the 2025 labour reforms and represent a significant shift in how employment is governed in Saudi Arabia. These updates aim to streamline HR operations, enforce legal protections for workers, and enhance the ease of doing business for local and international companies. Together, they signal a decisive move toward international HR best practices and improved employer-employee relations, backed by digital platforms like Qiwa and regulatory oversight from the MHRSD

Resignation Procedures

Employees may resign from fixed-term contracts. The party wishing to resign must submit a formal resignation in accordance with the law. Employers have 30 days to respond, after which the resignation is automatically accepted. If such party fails to respond within the stipulated period, the resignation is deemed accepted by default. Withdrawal is allowed within 7 days.

Impact: Ensures transparency in voluntary exits and reduces ambiguity for employers and HR teams managing offboarding.

Extended Probation Period under Saudi Labour Law

The probation period now extends to 180 days, during which either party can terminate without notice. The probation period may include a training period to ensure new employees are adequately prepared for their roles.

Impact: Offers both parties sufficient time to assess compatibility and performance while minimizing risk during onboarding.

Overtime, Allowances, and Pay Slips

Employers may offer compensatory leave instead of overtime pay (by agreement). Wage transparency rules require itemized monthly pay slips. Wage and allowance calculations must be based on actual workdays to ensure accuracy and fairness. In some cases, certain entitlements or settlements, such as end-of-service benefits, may be calculated using the employee's one month wage as a standard measure.

Impact: Gives employees full visibility of earnings while supporting employer-led compensation flexibility under cost-control strategies.

New Termination Grounds

Bankruptcy is a valid reason for termination, as are circumstances beyond the control of either party, such as force majeure. Such termination must follow formal procedures and ensure the employee’s rights are protected. Employees now have more time to respond to disciplinary actions.

Impact: Balanced legal protection and employer safeguards.

Leave Entitlements Updated

• Maternity leave extended to 12 weeks (6 weeks postnatal mandatory)

• New paternity leave: 3 paid days

• Bereavement leaves: 3 days for sibling loss. Bereavement leave is also available for the loss of other family members as defined by the law. Impact: Improved family support policies.

Anti-Discrimination & Remote Work Compliance

Discrimination based on personal status is prohibited. Any immoral act in the workplace is also subject to disciplinary measures under the law. Remote/hybrid work must be documented and registered on Qiwa. Impact: Promotes equity and transparency in flexible work.

Saudization and Training

All businesses must train Saudi employees regardless of company size. Non-compliance may result in permit suspensions or employee transfers.
Impact: Stronger local workforce development.

Notice Periods

• Employees: 30 days for resigning from indefinite contracts

• Employers: 60 days for terminations

• Resignation withdrawal allowed within 7 days (if not yet accepted)
  Impact: Structured and fair contract termination.

Grievance and Digital Contracting

Disciplinary notices must be in writing. Employees have 30 days (excluding holidays) to file grievances. Grievances may be filed by either party and must be addressed by the other party in accordance with legal procedures. All contracts must be uploaded to Qiwa to be valid. Impact: Legal consistency and digital transparency.

Wage Disputes and Enforcement

Employers are now required to settle wage-related disputes within 15 days of formal notification. This includes payment of all his entitlements as stipulated by the law. New enforcement tools allow MHRSD to impose fines or restrict business services in the event of non-compliance.

Impact: Stronger enforcement mechanisms and faster employee recourse.

Working Conditions and Environment

Saudi labour law sets clear standards for working conditions and the work environment to safeguard employee well-being and promote productivity. Employers are required to provide a safe and healthy workplace, adhering to occupational safety and health regulations enforced by the appropriate authorities. This includes ensuring that working hours, rest periods, and overtime arrangements comply with legal limits, and that employees are not subjected to unjust treatment or unsafe conditions. Workers are also required to obey legitimate orders from their employer as part of their essential obligations.

Working Hours and Rest Periods: 2025 Reforms and Employer Obligations

The 2025 updates to the Saudi labour law have introduced comprehensive changes to the regulation of working hours and rest periods, reflecting the Kingdom’s commitment to fostering a modern, productive, and employee-centric labour market. Under the revised labor law, employers are now required to implement stricter controls on working hours, ensuring that employees are not scheduled beyond the maximum period permitted by law—typically eight hours per day or forty-eight hours per week—unless otherwise specified for certain industries or roles.

A key reform is the mandatory inclusion of clearly defined working hours and rest periods in every employment contract. Both the employer and employee must agree to these terms, which must be registered through Qiwa to ensure legal enforceability. The law also stipulates that employees are entitled to a minimum rest break of at least thirty minutes after five consecutive hours of work, and a daily rest period of no less than twelve hours between shifts. During Ramadan, Muslim employees benefit from reduced working hours, as mandated by the labour law.

Employers must maintain accurate records of actual workdays, overtime, and rest periods, and are responsible for ensuring that no employee is required to work more than the statutory limits without proper compensation or compensatory leave. The reforms also prohibit scheduling employees for more than six consecutive working days without a full day of rest, supporting a healthier work-life balance and reducing the risk of burnout.

Failure to comply with these updated working hours and rest period requirements can result in significant penalties, including fines and potential restrictions on business operations

How Employers Can Prepare for the New Labour Updates

To ensure alignment with the 2025 Labour Law updates and avoid compliance risks, employers should:

• Review employment contracts and HR policies

• Implement formal resignation and termination procedures

• Ensure that such transfer of employees or contracts is conducted in compliance with legal procedures

• Digitize contracts via Qiwa

• Document remote work policies

• Offer itemized pay slips

• Launch Saudization-compliant training programs and track participation

• Track the renewal period amount for all fixed-term contracts to ensure timely renewals or transitions to indefinite status

• Support employees in finding suitable jobs through employment offices or digital platforms

Frequently Asked Questions (FAQs)

1. When do the new laws apply? 19 February 2025
2. Can employers terminate during probation? Yes, without notice
3. What if no response to the resignation? It’s automatically accepted after 30 days
4. Have gratuity rules changed? No
5. Must housing/transport be provided? Or an equivalent allowance must be paid
6. Are digital employment contracts mandatory? Yes. All contracts must be legally binding and submitted through Qiwa.

What Else Employers Should Know

It’s important to note that Qiwa now serves as the central digital hub for all employment contract registration, remote work declarations, Saudization reporting, and more. While employment contracts may be provided in a foreign language alongside Arabic, the Arabic text will always prevail in case of any discrepancies. Employers must also align with the Human Capability Development Program to support the upskilling of Saudi talent in compliance with national quotas.

Partner with TASC Outsourcing for Strategic Labour Law Compliance

If you’re navigating labour law reforms or expanding your business operations in Saudi Arabia, partnering with a trusted HR compliance expert can make all the difference. TASC Outsourcing brings over 18 years of experience in workforce strategy, regulatory alignment, and payroll management across the GCC.

We assist organizations with:

• Labour law compliance and Qiwa onboarding

• HR audits, documentation, and policy reviews

• Employee outsourcing and Saudization support

• Implementing policies to protect business secrets and commercial secrets through confidentiality agreements and non-compete clauses

These measures help prevent employees from using proprietary information for personal gain during or after employment, ensuring your sensitive data and competitive advantage remain secure.

Contact TASC Outsourcing today and let us support your success under the new legal framework. With 18+ years of HR expertise in the region, we help companies align with Saudi employment laws and scale efficiently