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.

 

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