Business rules in Saudi Arabia included in your program
Bawabetna summaries of official publications, each linked to its source. The official text prevails.
Probation period
Probation must be stated expressly in the employment contract with a clear duration; in all cases the total may not exceed 180 days. Either party may end the contract during it. A worker is not placed on probation twice with the same employer, unless agreed in writing for another profession or job, or after at least six months since the previous relationship ended. Ending the contract during probation gives neither party compensation and no end-of-service award.
Reference: Labor Law, Articles 53 and 54 (consolidated text published by the Ministry of Human Resources and Social Development).
Official source
Notice period (open-ended contract)
Open-ended contract with monthly pay: the worker gives the employer written notice at least 30 days before termination; the employer gives the worker written notice at least 60 days before. If pay is not monthly, either party gives at least 30 days' written notice. Termination must rest on a legitimate reason.
Reference: Labor Law, Article 75 (consolidated text published by the Ministry of Human Resources and Social Development).
Official source
Compensation for termination without a legitimate reason
Unless the contract sets a specific amount, the harmed party is entitled to 15 days' wage for each year of service under an open-ended contract, or the wage for the remaining term under a fixed-term contract. In both cases the compensation is not less than two months' wage.
Reference: Labor Law, Article 77 (consolidated text published by the Ministry of Human Resources and Social Development).
Official source
End-of-service award
When employment ends the employer pays an award of half a month's wage for each of the first five years and a month's wage for each later year, based on the last wage, with parts of a year counted pro rata.
On resignation: one third of the award after two to five consecutive years, two thirds after more than five and under ten years, and the full award after ten years or more. The full award is due if the worker leaves because of force majeure, or if a female worker ends the contract within six months of her marriage or three months of giving birth.
Reference: Labor Law, Articles 84, 85 and 87 (consolidated text published by the Ministry of Human Resources and Social Development).
Official source
Working hours and overtime
Actual work may not exceed 8 hours a day (daily standard) or 48 hours a week (weekly standard). In Ramadan it may not exceed 6 hours a day or 36 a week for Muslims. A ministerial decision may raise it to 9 hours a day for some categories or lower it to 7 in hazardous work.
Overtime pay = the hourly wage plus 50% of the basic wage; with the worker's consent, paid compensatory leave days may be given instead. All hours worked on holidays and Eids are overtime.
Reference: Labor Law, Articles 98, 99 and 107 (consolidated text published by the Ministry of Human Resources and Social Development).
Official source
Annual leave
The worker has paid annual leave, paid in advance, of at least 21 days, rising to at least 30 days after five consecutive years with the employer. It is taken in the year it is due and may not be waived or exchanged for cash during service. The employer sets its dates and notifies the worker at least 30 days ahead. With the employer's consent the worker may carry it (or part of it) to the next year; the employer may postpone it for work reasons by up to 90 days.
Reference: Labor Law, Articles 109 and 110 (consolidated text published by the Ministry of Human Resources and Social Development).
Official source
Sick leave
A worker whose illness is proven has, within one year, sick leave with full pay for the first 30 days, three quarters of the wage for the next 60 days, and no pay for the following 30 days, whether continuous or separate. The year starts from the date of the first sick leave.
Reference: Labor Law, Article 117 (consolidated text published by the Ministry of Human Resources and Social Development).
Official source
Special leaves and Hajj leave
Leave with full pay: 5 days for marriage or the death of a spouse, parent, grandparent, child or grandchild; 3 days for the death of a brother or sister; 3 days on the birth of the worker's child, within 7 days of the birth. The employer may ask for supporting documents.
A worker who has not performed Hajj is entitled once during service to paid Hajj leave of 10 to 15 days including the Eid al-Adha holiday, on the conditions of the article.
Reference: Labor Law, Articles 113 and 114 (consolidated text published by the Ministry of Human Resources and Social Development).
Official source
Maternity leave
A female worker has fully paid maternity leave of 12 weeks, of which the six weeks after delivery are compulsory; she distributes the other six as she wishes, starting from four weeks before the expected date (set by a certified medical certificate). She may extend it by one unpaid month. If the child is ill or has a disability requiring constant care, she has a further month with full pay after maternity leave, extendable by one unpaid month.
Reference: Labor Law, Article 151 (consolidated text published by the Ministry of Human Resources and Social Development).
Official source
VAT: rate and registration thresholds
The standard VAT rate in the Kingdom is 15% on taxable supplies that are neither exempt nor zero-rated.
Mandatory registration: when taxable supplies exceed SAR 375,000 in any previous 12 months, or are expected to exceed it in the next 12 months.
Voluntary registration: a resident whose taxable supplies or taxable expenses exceed SAR 187,500 in any previous 12 months, or are expected to in the next 12 months.
Reference: Zakat, Tax and Customs Authority (ZATCA), VAT Guideline for Electronic Contracts.
Official source
