As part of continuous push to improve regulations and laws within the country, the Saudi Arabian leadership has updated local labour laws. Any company doing business in the KSA, local or foreign must be aware of the changes in order to meet its obligations.
By approval of the Royal decree, a total number of 38 changes and updates to the law have been approved. These changes are going into force immediately. The main points that are affected by these changes are Saudisation and worker employment rights. The things that any business needs to keep in mind are as follows:
- Permanent and ongoing contracts are now required, legally, to provide at least 2 months notice before any such contracts are terminated.
- There have been changes introduced that protect workers under invalid dismissal. These changes are to be looked at on case by case basis by the Labour Commission of the Kingdom.
- Introduction of liquidated damages to Saudi contracts, and direction of courts to accept and enforce any reasonable liquidated damages in contracts. This is especially important when such clauses are included in NDA, Contractor or Distribution contracts.
- Probation periods can be extended to a double of the time should the employer believe there is a reason to do so. Maximum probation period set in law is 90 days and that can be extended for a further 90 days. That said, it is not permitted explicitly to set one probation period of 180 days.
- There are additional clauses introduced that allow the employer to place employee on probation if the employee was away for extended period, such as extended leave (example 6 months), maternity leave or similar.
- Significant strengthening of the labour law sections that are dealing with confidentiality of the employer and protection of employer data, customers and processes. Similarly, provisions have been introduced that enable the employer to sue employee should they breach confidentiality.
- Significant strengthening of the labour law sections that are dealing with non-completion and non-solicitation of the employer and protection of employer territory, customers and revenue. Similarly, provisions have been introduced that enable the employer to sue employee should they breach non-completion and non-solicitation.
- Maternity leave clauses have been updated requiring employer provide a female employee at least 10 weeks of leave. This leave has to be fully paid, on the same terms as if the employee remained at work. The leave is extendable for at least one month on employees request. Any further extensions need to be mutually agreed.
This is a summary of most important updates and we will keep you posted once we go through all the changes. If you are in doubt please contact Tools and Solutions As part of continuous push to improve regulations and laws within the country, the Saudi Arabian leadership has updated local labour laws.