An Overview of The Saudi Labor Law

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HRM 301
An Overview of the Saudi Labor Law
21/03/1433 Dr. Hatim S. Abuljadayel
Learning Objectives
1. Define key terms of The Saudi Labor Law. 2. Explain Organization of recruitment. 3. Describe Training and qualification. 4. Discuss Work relations and work contract. 5. Describe Work conditions and circumstances.
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Learning Objectives
6. Discuss Part-time work. 7. Describe Protection against occupational hazards, major industrial accidents and work injuries, and health and social. 8. Discuss Employment of women. 9. Explain Employment of minors. 10.Describe Commissions for settlement of labor disputes.
LABOR LAW Royal Decree No. M/51 23 Sha'ban 1426 / 27 September 2005
1. Definitions of Key Terms

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1. Definitions And General Provisions: Chapter One Definitions

Term Law Ministry: Minister: Labor Office: Definition This law shall be called the Labor Law. Ministry of Labor. Minister of Labor.
The administrative authority assuming jurisdiction over the labor affairs within an area specified by a decision of the Minister. Employer: Any natural or corporate person employing one or more workers for a wage.
1. Definitions and General Provisions: Chapter One: Definitions

Term Worker: Definition Any natural person working for an employer and under his management or supervision for a wage, even if he is not under his direct control.
Minor:
Work:
Any person of fifteen and below eighteen years of age. The effort exerted in all human activities in execution of a (written or unwritten) work contract regardless of their nature or kind, be they industrial, trade, agricultural, technical or otherwise, whether physical or mental.
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1. Definitions and General Provisions: Chapter One Definitions

Term Original Work: For individuals: Original Work: For firms: Temporary Work: Definition Their usual business activities.
The activities for which the firm has been established as stated in its articles of incorporation, franchise contract- if a franchise company-or Commercial Register Work considered by its nature to be part of the employers activities, the completion of which requires a specific period or relates to a specific job and ends with its completion. It shall not exceed ninety days in either case.
Dr. Hatim S. Abuljadayel
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Term Definition Incidental Work that is not considered by its nature to be part of the usual activities of an Work: employer, and its execution does not require more than ninety days. Seasonal Work that takes place in known Work: periodical seasons. Part-time Work performed by a part-time worker for an employer and for less than half the Work: usual daily working hours at the firm, whether such a worker works on a daily basis or on certain days of the week.
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Term Continuous Service: Definition Uninterrupted service of a worker for the same employer or his legal successor from the starting date of service. Service shall be deemed continuous in the following cases: 1. Official holidays and vacations. 2. Interruptions for sitting for examinations in accordance with the provisions of this Law. 3. Workers unpaid absences from work for intermittent periods not exceeding twenty days per work year.
Basic Wage:
All that is given to the worker for his work by virtue of a written or unwritten work contract regardless of the kind of wage or its method of payment, in addition to periodic increments.
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Term Actual Wage: Definition The basic wage plus all other due increments decided for the worker for the effort he exerts at work or for risks he encounters in performing his work, or those decided for the worker for the work under the work contract or work organization regulation. This includes: 1. The commission or percentage from sales or profits paid against what the worker markets, produces, collects or realizes from increased or enhanced production. 2. Allowances the worker is entitled to for exerted effort, or risks he encounters while performing his job.
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Term Actual Wage: Definition 3. Increments that may be granted in accordance with the standard of living or to meet family expenses. 4. Grant or reward: What the employer grants to the worker and what is paid to him for honesty or efficiency and the like, if such grant or reward is stipulated in the work contract or the work organization regulation of the firm or if customarily granted to the extent that the workers consider it part of the wage rather than a donation.
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Term Actual Wage: Definition 5. In rem privileges: what the employer commits himself to provide to the worker for his work by stating it in the work contract or the work organization regulation and its estimated at a maximum of two months basic wage per annum, unless it is otherwise determined to exceed that in the work contract or the work organization regulation. Thirty days, unless it is otherwise specified in the work contract or the work organization regulation.
Month:
Regulations The Implementing Regulations of this Law. :

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LABOR LAW Royal Decree No. M/51 23 Sha'ban 1426 / 27 September 2005
2. Organization of Recruitment Employment Units

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Employment Units
Every citizen of working age who is capable of and willing to work may register his name at the employment unit, his date of birth, qualifications, previous employment, preferences and address.
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Employment Units Duties and responsibilities

Assisting job seekers in finding suitable jobs and employers in recruiting suitable workers Gathering and analyzing necessary information on the labor market for development purposes Registration of job seekers. Obtaining data on vacant jobs from employers. Referring workers applications to suitable vacant jobs. Providing advice and assistance to job seekers with respect to vocational qualification and training or the required retraining to fill vacancies. Other matters decided by the Ministry
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Employers Responsibilities
To provide the competent labor office with the following information: o A statement of vacant and new jobs, their types, locations, wages, and qualifications within a period not exceeding fifteen days from the date of vacancy or creation. o A notice of measures taken to employ the citizens nominated by the employment unit within seven days from receiving the nomination letter. o A list of names, jobs, professions, wages, ages, nationalities of his workers, numbers and dates of work permits for non- Saudis and other data specified in the Regulations. o A report on the status, conditions and nature of work and the anticipated increase or decrease in jobs during the year following the date of the report.
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Employment of Saudis
1. All firms in all fields, and regardless of number of workers, shall work to:
a) Attract and employ Saudis, b) Provide conditions to keep them on the job c) and avail them of an adequate opportunity to prove their suitability for the job by guiding, training and qualifying them for their assigned jobs.
2. The percentage of Saudi workers employed by the employer shall not be less than 75% of the total number of his workers.
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NITAQAT
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Ranges - NITAQAT
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Employment of the Disabled

Each employer employing twenty- five workers or more where the nature of his work allows recruitment of the professionally disabled Shall employ at least 4% of the total number of his workers whether through nomination by the employment units or otherwise
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Private Offices for Recruitment of Citizens and Private Offices for Recruitment from Abroad
1. Private Offices for Recruitment of Citizens 2. Private Offices for Recruitment from Abroad
Must be licensed by the ministry The Regulations shall determine: o The functions of these two types of activities o The conditions for granting and renewing a license to each of them o The duties and prohibitions
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Employment of Non-Saudis
He possesses the professional and academic qualifications which the country needs and which are not possessed by citizens has lawfully entered the country and is authorized to work He has a contract with the employer and is under his responsibility. shall be written and of a specified period Prior to renewing the work permit, it shall be ascertained that none of the Saudi applicants possesses the required qualifications. An employer may not allow a worker to work for his own account and a worker may not work for his own account.
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Employment of Non-Saudis
Employer incur
The fees pertaining to recruitment of non-Saudi workers, The fees of : o the residence permit (Iqama) o and work permit together o with their renewal and the fines resulting from their delay, The fees pertaining to: o change of profession, o exit and re-entry visas o and return tickets to the workers home country at the end of the relation between the two parties.
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Non-Saudi Worker incur A worker shall incur the costs of:

returning to his home country if he is unfit for work or if he wishes to return to his home country without a legitimate reason.
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Employment of Non-Saudis an employer shall incur

The fees of transferring the services of a worker who wishes to transfer his service to him. The cost of preparing the body of a deceased worker and transporting it to the location where the contract was concluded, or where the worker was recruited unless the worker is interred in the Kingdom with the approval of his family The employer shall be relieved if the General Organization for Social Insurance (GOSI) undertakes the same.
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HRM 301
3. Describe Training and Qualification Contract
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Training and qualification contract

A contract which commits the employer to train and qualify a person for a specific profession In the Qualification and Training Contract The employer May require the trainee to work for him upon completion of the training period for a period not to exceed twice the duration of the training or one year, whichever is longer
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Training and Qualification

An employer shall be required to prepare his Saudi workers and enhance their technical, administrative, vocational and other skills: Every employer employing fifty or more workers for the purpose of gradually replacing non-Saudis.
shall annually train, in his business, a number of his Saudi workers not less than 6% of the total number of his workers. 27
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HRM 301
4. Discuss Work relations and work contract
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Work Contract
A contract concluded between an employer and a worker, whereby the latter undertakes to work under the management or supervision of the former for a wage A work contract shall be: o in duplicates, one copy to be retained by each of the two parties. o deemed to exist even if not written. o Either party may at any time demand that the contract be in writing.
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Work Contract
Dimension The work contract shall primarily include: Definitions / Implications o The name of the employer o Venue o The name of the worker o Nationality o Identification o Wage agreed upon o Type and location of work o Date of employment o Duration of the contract if fixed.
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Probationary Period
Shall be clearly stated and specified. Shall not exceed ( 90 ) days exclusive of Eid al-Fitr and Eid al-Adha holidays and sick leaves. Each party shall have the right to terminate the contract during this period, unless the contract embodies a clause giving the right to terminate the contract to only one of them. A worker may not be placed on probation more than once by the same employer. As an exception to this, the worker may, with the approval of the contract parties, be subjected to another probation period of not more than ninety days on the condition that this period involves another profession or work.
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Employers Duties
Refrain from using the worker without pay and shall not, without a judicial instrument Refrain from withhold the workers wages or any part thereof. Treat his workers with due respect and refrain from any action or utterances that may infringe upon their dignity and religion. Facilitate for the employees of the competent authorities any task related to the enforcement of the provisions of this Law.
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Workers Duties
1. Perform the work in accordance with the trade practice and the employers instructions provided that such instructions do not conflict with the contract, the law or public morality and that they do not expose him to any undue hazards 2. Take due care of the employers machinery, tools, supplies and raw materials placed at his disposal or in his custody and return to the employers the unused materials. 3. Abide by proper conduct and ethical norms during work. 4. Extend all assistance and help without making it contingent on additional pay in cases of disasters or hazards threatening the workplace or the persons working therein.
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Workers Duties
5. Undergo, upon the employers request, the medical examinations required prior to or during employment to ensure that he is free from occupational or communicable disease 6. Keep confidential the technical, trade and industrial secrets of the products or which he directly or indirectly contributed to their production, as well as all trade secrets related to the work or the firm, the disclosure of which is likely to cause damage to the employers interests.
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Types of Work Contract

Fixed Term Contract
The fixed-term contract shall terminate upon expiration of its term. If the two parties continue to implement it, it shall be deemed renewed for an indefinite period of time. If the fixed-term contract incorporates a clause providing for its renewal for a similar term or a specified term, the contract shall be renewed for the period agreed upon.
Indefinite Contract
If the contract is renewed for two consecutive terms or if the original contract term and the renewal period amount to three years, whichever is less, and the two parties continue to implement it, the contract shall become an indefinite term contract.
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Termination of Work Contract

1. If both parties agree to terminate it, provided that the workers consent be in writing. 2. If the term specified in the contract expires, unless the contract has been explicitly renewed in accordance with the provisions of this Law in which case it shall remain in force until the expiry of its term. 3. At the discretion of either party in indefinite term contracts. 4. The worker attains the age of retirement, which is sixty years for males and fifty five years for females, unless the two parties agree upon continuing work after this age. 5. Force majeure
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Termination of Work Contract without an award, advance notice or indemnity

1. 2. If, during or by reason of the work, the worker assaults the employer, the manager in-charge or any of his superiors. If the worker fails to perform his essential obligations arising from the work contract, or to obey legitimate orders, or if, in spite of written warnings, he deliberately fails to observe the instructions related to the safety of work and workers as may be posted by the employer in a prominent place. If it is established that the worker has committed a misconduct or an act infringing on honesty or integrity. If the worker deliberately commits any act or default with the intent to cause material loss to the employer, provided that the latter shall report the incident to the appropriate authorities within twenty-four hours from being aware of such occurrence.
3. 4.
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Termination of Work Contract without an award, advance notice or indemnity Contd

5. If the worker resorts to forgery in order to obtain the job. 6. If the worker is hired on probation. 7. If the worker is absent without valid reason for more than twenty days in one year or for more than ten consecutive days, provided that the dismissal be preceded by a written warning from the employer to the worker if the latter is absent for ten days in the first case and for five days in the second. 8. If the worker unlawfully takes advantage of his position for personal gain. 9. If the worker discloses work- related industrial or commercial secrets.
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Termination of Work Contract Worker may leave his job without notice in any of the following cases
1. If the employer fails to fulfill his essential contractual or statutory obligations towards the worker. If the employer or his representative resorts to fraud at the time of contracting with respect to the work conditions and circumstances. If the employer assigns the worker, without his consent, to perform a work which is essentially different from the work agreed upon and in violation of provisions of Article (60) of this Law.
4. If the employer, a family member or the manager in-charge commits a violent assault or an immoral act against the worker or any of his family members. If the treatment by the employer or the manager in-charge is characterized by cruelty, injustice or insult. If there exists in the workplace a serious hazard threatening the safety or health of the worker, provided that the employer is aware thereof but fails to take measures indicating its removal. If the employer or his representative, through his actions and particularly his unjust treatment or violation of the terms of the contract, has caused the worker to appear as the party terminating the contract.
2.
5.
3.
6.
7.
2/13/2012 Instructor: Dr. Hatim S. Abuljadayel - 2011
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Disciplinary Rules
The disciplinary penalties that the employer may inflict on the worker: Warning. Fines. Withholding allowance or postponing it for a period not exceeding one year if prescribed by the employer.
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Postponement of promotion for a period not exceeding one year if prescribed by the employer. Suspension from work and withholding of wages. Dismissal from work in cases set forth by the law. 40
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Disciplinary action is administered by the responsible supervisor.

Employees who commit an offence in the Rules of Conduct are subject to disciplinary action There are five degrees of disciplinary action: 1. Verbal Warning 2. Written Warning 3. Final Written Warning 4. Suspension 5. Termination
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Retirement Age
Gender Men Women Age 60 years years55
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End-of-Service Award
Length of Service Less than 1 Year 1 to 5 Years 6 to 10 Years Over 10 Years Service A ward Eligibility Nil 1/2 Month Final Basic Salary for each year 1 Month Final Basic Salary for each year over 5 years 1 Month Final Basic Salary for each year over10 years for all the 10 years Not less than two one third of the years of Service award Five successive years Two third of the but less than ten years award Ten or more years Full Award
In case of Resignation
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HRM 301
5. Work conditions and circumstances
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wages
Shall be paid in local currency during working hours and workplace. Paid as follows:
Type of labor Workers paid on a daily basis Workers paid on a monthly basis Piece labor Others
Wage payment Once a week at least. Once a month. Weekly payment equivalent to amount of work completed. Once a week.
Payment through accredited banks in Saudi Arabia is possible provided: o in specified times mentioned earlier oWorker's consent
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Wage Deductibles
loss and damage caused by worker. Maximum ( 5 ) day wage per month. Mutual right for grievances for both employer and worker within 15 work days. 10% 9% If applicable If applicable Repayment of loans extended by the employer. Social insurance ( Saudi only ) Workers contributions to thrift funds or loans due to such funds Installments of any scheme undertaken by the employer involving home ownership programs or any other privilege
Fines imposed on the worker on account of As per regulations violations committed, as well as deductions made for damages caused Any debt collected in implementation of a judicial judgment Alimony
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Shall not exceed 25% of monthly wage unless determined otherwise by court Has first priority over other wage deductibles
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Wage Deductibles Contd

Wage deductibles shall not exceed 50% of worker's monthly wage except if: Labor disputes commission approve higher % of wage deductibles Labor disputes commission approve that worker needs higher % of his / her wage Gets 75% of his/her wage Maximum in all cases
In case of any other deductibles made by employer without worker written consent: oWorker has the right to complaint to competent labor office / Labor disputes commission.
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Working Hours
Actual Working Eight hours a day if the employer uses the hours daily work criterion, Forty-eight hours a week if he uses the weekly criterion. Actual Working shall be reduced to a maximum of six hours a hours During day Ramadan for or thirty-six hours a week. Muslims Raised to nine hours a day for: Reduced to seven hours for:
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certain categories of workers or in certain industries and jobs where the worker does not work continuously. Such as working under ground
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Rest Periods and Weekly Rest Days

Rest Periods No worker shall work for more than five consecutive hours without a break of no less than thirty minutes each time during the total working hours for rest, prayer and meals, shall not be included in the actual working hours. During such periods, the worker shall not be under the employers authority worker shall not remain at the workplace for more than eleven hours a day The employer shall not require the worker to remain at the workplace during such breaks. Friday shall be the weekly rest day for all workers. After proper notification of the competent labor office, the employer may replace this day for some of his workers by any other day of the week. The employer shall allow the workers to perform their religious obligations. The weekly rest day may not be compensated by cash. The weekly rest day shall be at full pay and shall not be less than twenty-four consecutive hours.
Weekly Rest Days
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Overtime
Overtime 1. The employer shall pay the worker for overtime working hours an additional amount equal to the hourly wage plus 50% of his basic wage. 2. If the firm is operated on the basis of weekly working hours, the hours in excess of the hours taken as the criterion shall be deemed overtime hours. 3. All working hours performed during holidays and Eids shall be deemed overtime hours.
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Leaves
Leave Type Entitlement Annual paid leave: Not less than ( 21 ) days to be increased to no less than ( 30 ) after ( 5 ) years of service with employer. Vacation wage paid in advance. To be enjoyed during the year it is due. Not to be financially compensated during service. Employer determine date of vacation based on work requirements / by rotation. Employee can ask to defer it to the following year with employer approval. Employer with the consent of employee may defer it for ( 90 ) days maximum the end of the following year with employee agreement. Un used vacation shall be compensated at the end of service,
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Leaves Contd
Childbirth: Marriage: Death of spouse or ascendants or descendents: Death of husband Performing Hajj: Unpaid leave: 1 day 3 days 3 days
Maternity leave:
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15 days 10 15 days one time during service 20 days if more contract will be suspended for the duration agreed upon between the employer and the worker Four weeks before expected date of delivery and six weeks after delivery
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Leaves Contd
Educational ( Period required to set for the exam leave: for unrepeated educational year ). Unpaid educational leave for repeated educational year. Worker shall apply for it ( 15 ) days prior to exam dates. During one year starting from first sick leave , weather consecutive or interrupted: First ( 30 ) days full wage. Next ( 60 ) days 75% paid. Next ( 30 ) days unpaid
Sick leave:
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Employment of Women
Labor law does not differentiate between male and female workers except for the following: Dangerous Work and It is prohibited to employ women in hazardous jobs or industries.
Hazardous jobs Mines and quarries and Materials extraction of metal from or industries are: the ground Energy / Power generation, conversion and transfer. Work in sanitation, Gas Pipe and distribution, and other petroleum derivatives. Night Work Women may not work during a period of night the duration of which is not less than eleven consecutive hours, except in cases determined pursuant to a decision by the Minister. If nature of work is medical ,charitable, educational and training work. family members only In case of force majeure and emergency If night work is necessary to preserve the materials from rapid Spoilage /damage
Exceptions
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Maternity leave
Wage during Maternity leave Half her wage if she has been in service for one year or more, Full wage if she has served for three years or more as of the date of commencement of such leave. Half wage during paid annual leave if enjoyed paid maternity leave during the same year. An employer shall provide medical care for female workers during pregnancy and delivery.
Medical care
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Employment of Women
Benefits An employer who employs fifty female workers and more. Employer who employs a hundred women and more in a single city. Implications Shall provide them with a suitable place with adequate number of babysitters to look after the children under the age of six years, if the number of children reaches ten and more. To set up a nursery, either on his own or in conjunction with other employers in the same city, or alternatively to contract with an existing nursery to care for the children of the female workers who are under six years of age during the work periods.
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Employment of Minors
Any person under the age of fifteen years may not be employed or allowed to enter places of work. Minors may not be employed in hazardous jobs or harmful industries or in occupations or jobs that may endanger their health, safety or morals due to the nature or conditions of the same. As an exception to Paragraph (1) of this Article, the Minister may allow the employment or work of persons between 13 and 15 years of age in light works, subject to the following conditions: Such jobs shall not be potentially harmful to their health or growth. Such jobs shall not hinder their school attendance, participation in orientation or vocational training programs, or impair their ability to benefit from their schooling.
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HRM 301
7. Protection against Occupational Hazards, Major Industrial accidents and Work Injuries, and Health and Social Services
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Employment injury and occupational disease

The employment injury is: Any accident suffered by the contributor during performance or by reason of work.
The occupational disease is: the one developed as a result of working in a profession that causes such disease
The Occupational Hazards Branch applies mandatory to Saudis and non Saudis. The contribution rate is 2% of the wage paid only by the employer.
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HRM 301
9. Commissions for Settlement Of Labor Disputes
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Commissions for Settlement of Labor Disputes

Commissions for settlement of labor disputes are: 1. The Preliminary Commissions for Settlement of Disputes. 2. The High Commission for Settlement of Disputes.
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The 1. Render final decisions on: Preliminary 1. Labor disputes, irrespective of their type, Commission the value of which does not exceed ten shall have thousand riyals. jurisdiction to: 2. Objection to the penalty imposed by the employer upon the worker. 3. Imposition of the punishments provided for in this Law for a violation of which the punishment does not exceed five thousand riyals and violations with a combined punishment not exceeding five thousand riyals.
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The 2. Render preliminary decisions Preliminary on: Commission 1. Labor disputes the value of shall have which exceeds ten thousand jurisdiction riyals. to: 2. Disputes over compensations for work injuries, irrespective of the amount of the compensation. 3. Disputes over termination of service.
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The Preliminary Commission shall have jurisdiction to:
4. Imposition of the punishments provided for in this Law for a violation the punishment of which exceeds five thousand riyals and violations with a combined punishment exceeding five thousand riyals.
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The High Each of the circuits of the High Commission Commission shall have jurisdiction to for Settlement decide finally and definitively on all of Disputes
appeals brought before it against decisions of the circuits of preliminary commissions. Decisions may be appealed within thirty days from the date of utterance of the preliminary circuits decisions made in the presence of the parties and from the date of notification in other cases.
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An Overview of The Saudi Labor Law

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21/03/1433

1. Definitions of Key Terms

1. Definitions And General Provisions: Chapter One Definitions

1. Definitions and General Provisions: Chapter One: Definitions

1. Definitions and General Provisions: Chapter One Definitions

1. Definitions and General Provisions: Chapter One Definitions

1. Definitions And General Provisions: Chapter One Definitions

1. Definitions And General Provisions: Chapter One Definitions

1. Definitions And General Provisions: Chapter One Definitions

1. Definitions and General Provisions: Chapter One Definitions

Regulations The Implementing Regulations of this Law. :

2. Organization of Recruitment Employment Units

Dr. Hatim S. Abuljadayel

Employment Units Duties and responsibilities

Dr. Hatim S. Abuljadayel

Dr. Hatim S. Abuljadayel

Employment of the Disabled

Dr. Hatim S. Abuljadayel

Dr. Hatim S. Abuljadayel

Non-Saudi Worker incur A worker shall incur the costs of:

Dr. Hatim S. Abuljadayel

Employment of Non-Saudis an employer shall incur

Dr. Hatim S. Abuljadayel

Training and qualification contract

Dr. Hatim S. Abuljadayel

Training and Qualification

Dr. Hatim S. Abuljadayel

Dr. Hatim S. Abuljadayel

Types of Work Contract

Dr. Hatim S. Abuljadayel

Termination of Work Contract

Termination of Work Contract without an award, advance notice or indemnity

Termination of Work Contract without an award, advance notice or indemnity Contd

2/13/2012 Instructor: Dr. Hatim S. Abuljadayel - 2011

Dr. Hatim S. Abuljadayel

Disciplinary action is administered by the responsible supervisor.

Dr. Hatim S. Abuljadayel

Dr. Hatim S. Abuljadayel

Dr. Hatim S. Abuljadayel

Wage Deductibles Contd

Dr. Hatim S. Abuljadayel

Rest Periods and Weekly Rest Days

Weekly Rest Days

Employment injury and occupational disease

Commissions for Settlement of Labor Disputes

Dr. Hatim S. Abuljadayel

Commissions for Settlement of Labor Disputes

Dr. Hatim S. Abuljadayel

Commissions for Settlement of Labor Disputes

Commissions for Settlement of Labor Disputes

Dr. Hatim S. Abuljadayel

Commissions for Settlement of Labor Disputes

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