Saudi Arabia: Labor Code Revised to Boost Hiring of Locals

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July 10—Saudi Arabia’s Council of Ministers has approved 38 amendments to the country’s labor law as part of an effort to encourage more Saudi nationals to work in the private sector.

High unemployment of locals has emerged as one of the kingdom’s largest social and economic problems in the wake of the “Arab Spring” and the sharp decline in oil prices. To help address this challenge, the government has made it a priority to reduce the country's dependence on foreign labor and increase the number of Saudi nationals in the private sector.

The new amendments include several changes designed to more closely align the terms and conditions of employment in the private and public sectors. At present, the much higher costs associated with employing Saudi nationals are one of the main reasons for the disproportionate number of foreign workers in the private sector.

Among the changes set to take effect, the existing duty on employers with 50 or more employees to train a certain portion of their Saudi workforce has been raised from 6 percent to 12 percent. The amendments also increase the notice period for termination of indefinite-term contracts from 30 days to 60 days for salaried workers and boost the current maximum probationary period from 90 to 180 days.

A rest period of at least 30 minutes will also be required after five hours of work, and employers will need to provide a greater number of days for marriage, paternity and compassionate leave. Other amendments touch on employment terms related to employment contracts, wage payment and whistleblowing.

Although approved, the changes will not be effective until promulgated by the Ministry of Labor later this year.

To contact the editor responsible for this story: Rick Vollmar at rvollmar@bna.com

For more information on Saudi HR law and regulation, see the Saudi Arabia primer.