Introduction

Recent developments in the Saudi Labour Law demonstrate an increasing emphasis on legal certainty, statutory precision and enforceability. Legislative amendments and ministerial decisions have continued to refine the legal framework governing employment relationships, and digital systems are assuming an increasingly significant function in the administration and enforcement of employment rights and obligations. This article considers the principal legal developments shaping Saudi employment law over the past period.

Labour Law Modernisation Continues

The Labour Law, promulgated under Royal Decree No M/51 of 23 Sha’ban 1426H (corresponding to 27 September 2005), has been subject to a number of amendments approved in 2024. These amendments represent one of the most comprehensive revisions to Saudi employment legislation since the Law’s issuance. The amendments revise 38 provisions, and collectively they demonstrate a legislative preference for greater legal certainty, increased contractual autonomy and clearer statutory regulation of the employment relationship.

One notable feature of the amendments is the increased emphasis on contractual certainty. Several provisions have been revised to clarify the rights and obligations of employers and employees throughout the employment relationship, from recruitment through to termination.

For example, the amendments further reinforce the digitalisation of employment regulation. Article 51 of the Labour Law now requires employment contracts to be authenticated, while Article 18 of the Implementing Regulations provides that authentication must occur through the Ministry’s designated electronic platform (such platform has been identified by way of further decisions as the Qiwa platform).

The amendments also expand employee protections by revising provisions relating to statutory leave and employment entitlements. Article 113 was amended to include the introduction of three days’ paid leave upon the death of a sibling, in addition to existing bereavement leave entitlements. Similarly, Article 151(1) was amended to increase maternity leave from ten weeks to 12 weeks. These particular changes demonstrate an increasing focus on employee welfare.

The amended Labour Law strengthens employers’ obligations in relation to training and qualification programmes, reflecting the Kingdom’s policy objective of improving workforce capability and increasing private sector participation by Saudi nationals. Article 42 (together with the amended Article 15 of the Implementing Regulations) require employers to create a training policy and submit it to the Ministry on an annual basis. These legislative changes complement broader localisation initiatives by recognising that achieving sustainable workforce nationalisation requires not only recruitment obligations but also continued investment in employee development and skills enhancement.

The amendments also seek to strengthen legal certainty regarding the end of a contractual relationship. The principal problem before these amendments was that the Labour Law regulated the consequences of resignation without defining what resignation actually was or prescribing a uniform procedure. As a result, the legal character of resignation was left largely to contractual arrangements, ministerial practice and judicial interpretation. In particular, uncertainty arose as to:

• whether resignation constituted a unilateral act by the employee or a bilateral agreement requiring the employer’s acceptance;
• whether an employer could indefinitely refuse a resignation; and
• when the employment relationship legally came to an end.

The recent amendments sought to eliminate this uncertainty by introducing both a statutory definition of resignation and a dedicated procedural framework. Article 2 now defines resignation as the employee’s written expression of a desire, made voluntarily and without coercion, to terminate a fixed-term employment contract without conditions or reservations, subject to the employer’s acceptance. The newly inserted Article 79 (repeated) supplements this definition by prescribing the procedure governing resignation, including:

• its submission;
• the employer’s period for responding;
• circumstances in which resignation is deemed accepted; and
• the employer’s limited right to defer its effectiveness.

Taken together, the amendments reflect the continued evolution of Saudi employment law into an even more sophisticated and comprehensive regulatory framework. They demonstrate a legislative commitment to greater legal certainty, enhanced employee protection, stronger workforce development and the integration of digital governance into the employment relationship, equipping the Labour Law to accommodate an increasingly diverse and internationally focused labour market.

Workforce Localisation Becomes Increasingly Targeted

As briefly mentioned, workforce localisation remains one of the central pillars of Saudi Arabia’s labour market reforms under Vision 2030. Since the launch of the Vision in 2016, reducing unemployment and increasing the participation of Saudi nationals in the private sector have been key policy objectives. The unemployment rate, which stood at 12% in 2016, fell to 6.4% in 2026, exceeding the Vision 2030 target of 7% four years ahead of schedule.

As these reforms have progressed, workforce localisation has evolved from a long-term policy objective into a comprehensive regulatory framework supported by targeted sector-specific measures. Rather than adopting a uniform approach across all industries, Saudi Arabia has increasingly introduced localisation requirements tailored to sectors where greater participation of Saudi nationals is considered both achievable and economically significant.

Recent developments illustrate this targeted approach. In the engineering sector, private sector employers are required to achieve a 30% localisation rate for engineering professions. Similar measures have been introduced in the healthcare sector, where the localisation rate for dental professions has increased to 55%, reflecting the continued expansion of localisation requirements across strategic professions. Recent decisions have increased the localisation rate to 70% for procurement and supply chain professions and to 60% for marketing professions, further extending localisation requirements into a broader range of strategic business functions.

Saudi Arabia has also recognised that some additional measures may be required to achieve sustainable workforce participation. Accordingly, in November 2020, a minimum wage threshold of SAR4,000 a month was established as an umbrella condition for Saudi employees to be counted towards Saudization requirements. However, higher thresholds have been established for specific professions (such as SAR7,000 for pharmacists, SAR5,000 for technicians and SAR6,000 for accounting professions with bachelor’s degrees). This measure is intended to promote meaningful employment opportunities while supporting the development and retention of Saudi talent within the private sector.

A notable feature of Saudi Arabia’s localisation policy is its phased implementation. Rather than imposing immediate compliance, localisation rates are commonly introduced in stages to allow employers sufficient time to adapt their workforce planning and recruitment strategies. The localisation of dental professions provides a clear example of this approach, with the required localisation rate increasing from 45% on 27 July 2025 to 55% on 27 January 2026. A phased implementation helps reduce labour market disruption, mitigates the risk of skills shortages, and supports the gradual integration of qualified Saudi nationals into the private sector while enabling employers to plan for compliance in an orderly manner.

Digitalisation Is Transforming Employment Compliance

The continued digitalisation of employment administration remains one of the defining developments in Saudi labour law.

While the substantive rights and obligations governing the employment relationship continue to derive from the Labour Law and its implementing regulations, the manner in which those obligations are discharged, monitored and, increasingly, enforced has fundamentally changed. Compliance is no longer assessed solely by reference to contractual documentation or employer records; it increasingly depends on the completion of prescribed procedures through government-operated digital platforms.

Central to this transformation is the Qiwa platform, which has become the primary digital interface for managing employment relationships in the private sector. Importantly, as mentioned above, employers are now required to authenticate employment contracts electronically through Qiwa. The platform also facilitates a range of employment procedures, including workforce mobility, occupational changes, the issuance of employment certificates and the monitoring of Saudization compliance.

This represents an important shift in the nature of employment compliance. Historically, digital systems served primarily as evidential tools, recording actions already undertaken by employers. Increasingly, however, completion of the prescribed electronic process forms part of the legal compliance obligation itself. An employer may, for example, have entered into a legally compliant employment contract yet still face regulatory consequences where that contract has not been properly authenticated through the relevant government platform. The digital process itself has become an integral component of statutory compliance.

These digital compliance obligations extend beyond employment contracts, and employers are increasingly required to submit other statutory information electronically. Annual training plans and other workforce-related documentation are required by the Ministry of Human Resources and Social Development (MHRSD). These requirements complement the Ministry’s broader efforts to encourage workforce development while enabling regulators to monitor compliance more effectively. As government platforms become increasingly integrated, employers should expect continued expansion of electronic reporting obligations across the employment life cycle.

Similarly, the Wage Protection System (WPS) continues to play an important role in strengthening regulatory oversight of salary payments. Implemented through MHRSD regulations, the WPS requires employers to process employee salaries through approved banking channels, enabling the Ministry to verify that wages are paid accurately and within the statutory timeframes prescribed by the Labour Law. Failure to comply with WPS requirements may result in financial penalties, restrictions on access to government services and other regulatory consequences. Accordingly, employers should ensure that payroll processes are aligned not only with contractual obligations but also with the technical reporting requirements imposed through the WPS.

The increasing digitalisation of employment compliance shows that, rather than relying primarily on reactive inspections or employee complaints, Saudi regulators now have greater ability to monitor compliance through integrated digital systems and electronic reporting. For employers, this means that compliance is becoming proactive. Maintaining accurate digital employment records, ensuring consistency across government platforms and regularly reviewing internal HR processes are therefore becoming essential components of effective employment compliance.

Qiwa Employment Contracts Become Executive Instruments

From August 2026, all employment contracts authenticated through the Qiwa platform will constitute enforceable instruments for salary claims. This follows an initiative launched by the MHRSD in co-operation with the Ministry of Justice (MOJ), under which the wage clause contained in authenticated employment contracts may be directly enforced through enforcement courts.

Under the Saudi Enforcement Law, enforceable instruments include, among others:

• final court judgments and orders;
• arbitral awards;
• authenticated settlement agreements;
• negotiable instruments registered through approved electronic platforms; and
• cheques.

The new initiative expands this framework by recognising the salary provisions contained in employment contracts authenticated through Qiwa as enforceable instruments.

The initiative is implemented through the electronic linkage between the Qiwa platform, which governs and authenticates employment contracts electronically, and the MOJ’s Najiz platform. Employees may submit an enforcement application where wages remain unpaid for more than 30 days after becoming due, or where only part of the wages has been paid for a period exceeding 90 days. Compliance with wage payment obligations is verified automatically through the Mudad platform, without requiring employees to submit additional supporting documents.

The initiative forms part of Saudi Arabia’s broader efforts to strengthen wage protection and enhance compliance with employment obligations. Mandatory electronic authentication of employment contracts was first introduced in 2019 under Ministerial Resolution No 156309 for newly concluded contracts, with phased implementation for existing contracts based on employer size. This was followed by Ministerial Resolution No 75506 in 2022, which required all employment contracts to be authenticated through Qiwa.

As a result, virtually all compliant employment contracts are now electronically authenticated, enabling the practical implementation of this new enforcement mechanism. Employers will need to ensure accuracy in documenting employment terms and maintain compliance with wage payment obligations, given that authenticated employment contracts may now serve as a direct basis for employees to enforce unpaid salary claims.

Recruitment and Hiring Practices Face Greater Regulatory Oversight

The principle of non-discrimination in recruitment is well established under Saudi labour legislation. Article 3 of the Saudi Labour Law provides that all citizens are equal in their right to work, and prohibits discrimination on the basis of gender, disability or age. A recent regulatory development is Ministerial Decision No 45328, dated 23 March 2025, approving the Controls for Advertising Job Vacancies and Conducting Job Interviews, which introduce detailed requirements governing how employers advertise vacancies and conduct recruitment processes.

The decision applies from the stage of announcing available vacancies. Employers are required to comply with the prescribed requirements for publishing job opportunities and to announce vacancies in a transparent manner. Each announcement must clearly specify the job title, duties and responsibilities, required qualifications, work location, and application mechanism. In addition, employers are prohibited from including any discriminatory language based on gender, age, disability or marital status.

The decision also introduces procedural requirements for conducting job interviews. Employers must provide candidates with at least three working days’ prior notice of the interview, including its format, date and time. Interview venues must be secure, appropriate for the relevant gender, and accessible to persons with disabilities. In addition, interview panels must consist of at least two Saudi nationals, including an HR specialist, while non-Saudi experts may participate only where necessary and must not constitute more than half of the panel. Employers are further required to document interview outcomes and notify candidates of the final hiring decision, together with the reasons for rejection where applicable, within 30 days.

These requirements introduce a more structured regulatory framework for recruitment practices. As a result, employers will need to ensure that recruitment processes are conducted through transparent and documented procedures rather than relying on informal hiring practices, thereby promoting fair competition among candidates and reducing the risk of qualified candidates being overlooked due to unstructured recruitment methods.

Competition for Talent Is Reshaping Employer Strategy

Saudi Arabia’s rapid economic transformation has fundamentally altered the dynamics of its labour market. Significant investment across sectors such as financial services, technology, tourism, construction and professional services has created sustained demand for experienced professionals. While legislative reforms have modernised the employment framework, commercial considerations are increasingly influencing employer strategy as organisations compete to attract and retain highly skilled talent.

The Regional Headquarters (RHQ) Programme has been a key driver of this trend. The programme has contributed to a growing concentration of international businesses, resulting in an increase in demand for executives and other specialised employees. This has intensified competition within the private sector. Recent regulatory reforms permitting greater market access for international law firms and other professional services providers are expected to reinforce this trend further, increasing demand for experienced local and international talent.

The increasingly competitive labour market has also prompted employers to place greater emphasis on the legal framework governing executive and specialist employment. As organisations compete to recruit and retain experienced professionals, there has been a corresponding increase in:

• the use of bespoke employment contracts containing tailored remuneration structures;
• long-term incentive arrangements;
• retention bonuses; and
• enhanced contractual benefits.

Employers are also paying closer attention to contractual provisions governing notice periods, termination rights and garden leave, particularly for senior employees whose departure may have a significant commercial impact.

Competition for talent has likewise renewed focus on the enforceability of post-termination restrictions under the Labour Law. Employers are increasingly seeking to protect confidential information, customer relationships and business interests through carefully drafted confidentiality, non-solicitation and non-competition provisions. While the Labour Law recognises the validity of non-competition clauses, such restrictions must satisfy the statutory conditions prescribed by the law, including limitations relating to duration, geographical scope and the nature of the protected business interest. As a result, employers should regularly review restrictive covenant provisions to ensure that they remain enforceable and appropriately tailored to the employee’s role.

These developments demonstrate that the legal management of employment relationships is becoming increasingly sophisticated alongside the Kingdom’s evolving labour market. As competition for experienced professionals continues to intensify, employers should ensure that employment documentation, remuneration structures and post-termination protections are reviewed regularly to remain compliant with the Labour Law while adequately protecting legitimate business interests.

Flexible Working and the Modern Workplace

Saudi Arabia has adopted various forms of work arrangements, including temporary work, casual work, seasonal work, part-time work and flexible work, with the aim of creating productive and attractive employment opportunities, increasing labour market participation and improving overall workforce performance. For example, the MHRSD formally introduced remote working in 2017 pursuant to Ministerial Decision No 120453. The adoption of remote working played an important role in supporting business continuity during the COVID-19 pandemic, as employers were able to build on the experience gained through the earlier implementation of this working model.

As part of broader efforts to improve mobility in the capital, the Royal Commission for Riyadh City, in co-operation with the MHRSD, introduced flexible working hours across six zones covering more than 50 employers. Effective from 2 June 2026, the flexible working window was extended to four hours, allowing employees to stagger their arrival and departure times across multiple time periods.

These developments reflect Saudi Arabia’s continued efforts to modernise working arrangements and introduce greater flexibility into the labour market while maintaining a balance between employee needs and employers’ operational requirements.