Nov 7, 2015 3 min read

Payroll Outsourcing in Saudi Arabia Best Way to Stay Compliant with Labor Law Changes

10 things you need to know about the latest changes in the Saudi Arabian Labor Law.

The Ministry of Labor for the Kingdom of Saudi Arabia announced 38 amendments to the Labor Law. These changes went into effect from October 18, 2015. The full text of the amendments fits on about 10 pages and is not an easy reading. The Ministry of Labor is still working on the implementation guidelines and procedures related to these changes.

However, here are the 10 most important things that you as an employee or employer need to know about today:

  1. Employers must issue new employment contracts to their employees in the Ministry of Labor prescribed standard employment contract formats. Employers can add additional terms and conditions to the standard contract templates, as long as the additional terms do not contradict with the Labor Law. Amending employment contract templates will be a quite significant and time consuming process for many employers. The employees should carefully review any new contracts that they are asked to sign.
  2. The standard probationary period is still 90 days. However, with the mutual consent of the employer and employee, the probationary period can be extended by up to 90 days. Employers should be careful in their processes related to the probationary period extensions since any extension requires a written consent of the employee.
  3. Fixed term contracts can now be renewed up to three times or by total renewal periods of 4 years, whichever is less, before the fixed term-term contracts become indefinite term contracts.
  4. Employers can transfer employees from one location to another without the employees’ written consent for a maximum period of 30 days. The employer must cover all related costs.
  5. Employers are not allowed to include any negative comments regarding their former employees’ performance in the “service certificates”.
  6. An indefinite term employment contract can be terminated with a 60-day advance notification in case the employee is paid monthly and with a 15-day advance notification for all other employees.
  7. Employment contract may be terminated if an employee is absent from work, without a prior approval, more than 30 days during any service year (a written warning letter must be issued after 20 days) or 15 consecutive days (a written warning letter must be issued after 10 days).
  8. Bereavement and marriage leaves have been extended to 5 days.
  9. Childbirth leave has been extended to 3 days.
  10. Female employees can extend their maternity leave by a month after their initial 10-week maternity leave period.

Payroll Outsourcing in Saudi Arabia still an easiest way to stay compliant with the changing laws.

More regulatory changes are expected in Saudi Arabia over the coming months and years. The regulations related to the Saudization, WPS, mandatory medical insurance, GOSI and Labor Law are already hard and costly to navigate. Leave the statutory compliance and labor law advice to the specialists and outsource your payroll to Mercans. We have in-country compliance and payroll specialists who will ensure that you never run afoul of the complex labor regulations in Saudi Arabia.

 

Most viewed posts

View all posts

Client Success Story: Cochlear

360°solution with a greenfield experience with a full stack of services including HR, finance, accounting, payroll, back office setup, and reporting.

May 25, 2023 3 min read

Turkey Introduces New Social Security Law Number

Turkey has introduced the procedures and principles of the 5-point SSI premium incentive for employees who have opted for early retirement within the scope of Emeklilikte yaşa takılanlar (EYT).

May 22, 2023 1 min read

Unleashing the Power of Payroll Data Analytics

Thorough analysis of payroll data empowers businesses to extract valuable insights, enhancing customer and employee experiences and driving exceptional business outcomes.

May 18, 2023 4 min read

Kenya Changes National Social Security Fund Act

The total contributions for both employee and employer are Kshs 2,160 per month. Self-employed individuals who are members of the fund may proceed contributing the flat rate of Kshs 200 per month, which is the minimum amount of voluntary contribution

May 15, 2023 2 min read

Lebanon renews Transportation, Schooling, Cost of Living Expenses a...

Lebanese government has increased the minimum wages to LBP 9,000,000 from LBP 2,600,000 earlier and the minimum daily wage now stands at LBP 410,000.

May 10, 2023 1 min read

Ghana Amends Income Tax Rates For Residents

Effective from 1st May, the annual and monthly income tax bands and rates are applicable to the chargeable income of resident individuals.

May 9, 2023 1 min read