Employment and Labor

Saudization & Nitaqat

Nitaqat classification, Qiwa documentation and profession-specific localization.

Contracts & Documentation

Employment contracts, probation, workplace policies, conduct and payroll compliance.

Termination & Disputes

Termination strategy, compensation, end-of-service benefits and labor disputes.

Corporate Employment

M&A, workforce restructuring, executive transitions and organizational change.

Saudi employment law affects almost every stage of operating a business in the Kingdom — from hiring and Saudization planning to payroll, employee documentation, disciplinary processes, termination and corporate transactions.

Our Employment and Labor practice advises local and international employers on contentious and non-contentious employment matters under the Saudi Labor Law and the regulatory framework administered by the Ministry of Human Resources and Social Development. We focus on combining statutory compliance with practical workforce management, particularly where employment decisions interact with Saudization, corporate restructuring or commercial risk.

Service 01

Saudization and Nitaqat Compliance

Saudization is an ongoing workforce and regulatory requirement rather than a one-time hiring exercise. Private-sector establishments within the Nitaqat framework are assessed according to factors including their economic activity, workforce size and Saudization performance. Qiwa currently identifies five Nitaqat levels: Red, Low Green, Mid Green, High Green and Platinum. A company's classification can affect its access to labor-market services and should therefore be considered as part of workforce planning.

—	Nitaqat classification and workforce planning. We review workforce composition against the establishment's applicable Nitaqat requirements and profession-specific Saudization decisions, which may impose separate localization percentages in addition to the establishment's general Nitaqat position.
—	Saudi employee wage weighting. Under the current Nitaqat wage-counting rules, a Saudi employee earning at least SAR 4,000 per month is generally counted as one Saudi worker for Nitaqat purposes. A Saudi employee earning between SAR 3,000 and SAR 4,000 is generally counted as half a Saudi worker, while an employee earning below SAR 3,000 is not counted for this purpose, subject to the applicable rules for special categories of workers.
—	Qiwa contract documentation. Under current Ministry requirements, Saudization calculations are increasingly linked to electronically documented employment contracts through Qiwa. Documenting Saudi employees' contracts through Qiwa is therefore an important element of workforce compliance.
—	Work regulations. Article 13 of the Labor Law requires employers to prepare work regulations in accordance with the Ministry's prescribed framework, subject to applicable exceptions. We assist employers with drafting, reviewing and implementing workplace regulations and policies consistent with the statutory framework, including workplace conduct rules, anti-harassment measures and employee protection requirements under the Labor Law framework.
—	Profession-specific Saudization. Separate ministerial decisions may reserve particular professions for Saudi nationals or impose specific localization percentages and qualification requirements. We review these requirements alongside the establishment's general Nitaqat position rather than assuming one percentage governs the entire workforce.
—	Managing low Nitaqat classifications. A Red classification can restrict access to Ministry and labor-market services. Qiwa also currently requires an establishment to satisfy the minimum Nitaqat threshold of Low Green or above, together with other conditions, to issue a Nationalization Certificate. We advise employers on identifying the workforce and documentation issues affecting classification and developing a remediation plan.

Service 02

Employment Contracts, Onboarding and Workplace Documentation

Saudi employment documentation should reflect the statutory rules applicable to the worker and the employment relationship rather than relying on a generic regional employment template. Contract duration, probation, remuneration, working time, leave, workplace rules and termination provisions all require separate attention.

—	Non-Saudi employment contracts. Under Article 37 of the Labor Law, the employment contract of a non-Saudi worker must be written and for a fixed term. If the contract does not specify its duration, it is deemed to run for one year from the employee's actual commencement date. If employment continues after that period expires, the contract is considered renewed for a similar period.
—	Saudi employee contract duration. For Saudi employees, fixed-term employment contracts may become indefinite-term contracts in accordance with Article 55 of the Labor Law where the statutory conditions are satisfied, including renewal of the fixed-term contract for three consecutive times or reaching a total period of four years of continuous service. We advise employers on structuring renewals and reviewing contract status before making employment decisions.
—	Probation periods. Under Article 53, a probation period must be expressly stated and clearly defined in the employment contract. Under the current framework, the total probation period may not exceed 180 days. We advise on structuring and documenting probation correctly, including the regulatory rules governing calculation of the period and any repeat probation with the same employer.
—	Modern work arrangements. We advise employers on compliance requirements relating to non-traditional work arrangements, including remote work, flexible work and part-time employment arrangements, and assist with documenting these arrangements through the approved Ministry platforms where applicable.
—	Working hours and overtime compliance. We advise employers on statutory working-hour requirements, including the general maximum of 48 hours per week, reduced working hours during Ramadan for Muslim employees, and overtime calculations based on the employee's actual hourly wage plus an additional 50% of the basic hourly wage where overtime applies.
—	Occupational health and safety compliance. We advise employers on workplace health and safety obligations, inspection-readiness and compliance with applicable Ministry requirements and digital compliance platforms where applicable, relating to the work environment, employee protection and operational risk management.
—	Qiwa employment documentation. We assist employers with employment-contract documentation and updates through Qiwa and review the contractual terms against the Labor Law before electronic documentation. Current Ministry requirements make Qiwa documentation an increasingly important element of broader workforce compliance.
—	Wage Protection System compliance. The Wage Protection System is a separate wage-compliance framework administered through Mudad. We advise employers on wage-payment compliance, wage-file submissions and remediation of issues affecting WPS compliance rather than treating WPS reporting as the same mechanism as the Nitaqat Saudization calculation.
—	Leave and working-time policies. We advise on annual leave, sick leave, working hours and statutory leave entitlements. The current Labor Law framework provides eligible female employees with 12 weeks of fully paid maternity leave, including six mandatory weeks following childbirth, with the remaining period distributed in accordance with the statutory framework.
—	Policies, disciplinary procedures and HR guidance. We prepare and review workplace policies, employee handbooks, Codes of Conduct, disciplinary procedures and grievance processes. We also advise HR teams on recruitment, promotion, disciplinary and dismissal procedures and can support internal employment-law training where required.

Service 03

Termination, Compensation and Employment Disputes

Employment disputes often depend on the process followed before termination as much as the employer's underlying reason. We advise employers on termination strategy, disciplinary documentation, notice, compensation and end-of-service exposure before the decision is implemented. Where a dispute proceeds formally, the Ministry's Friendly Settlement for Labor Disputes service is generally the first stage. The electronic settlement process provides a statutory period of up to 21 days to attempt reconciliation before the dispute may be referred to the Labor Court where settlement is not achieved.

—	Termination under Article 80. Article 80 identifies nine circumstances in which an employer may terminate employment without end-of-service award, notice or compensation, provided the employee is given an opportunity to state the reasons for objecting to the termination. The statutory grounds include specified misconduct, failure to perform essential obligations following the required warning, deliberate acts causing material loss, forgery used to obtain employment, specified absence thresholds, unlawful exploitation of position and disclosure of industrial or commercial secrets.
—	Compensation for illegitimate termination. Under Article 77, unless the employment contract specifies compensation for termination by either party for an illegitimate reason, the prejudiced party is entitled to statutory compensation. For an indefinite-term contract, the statutory measure is generally 15 days' wages for each year of service; for a fixed-term contract, it is the wages for the remaining contractual period. The statutory compensation may not be less than two months' wages.
—	Notice periods for indefinite-term contracts. Under Article 75, where wages are paid monthly, an employee terminating an indefinite-term contract for a legitimate reason must generally provide at least 30 days' written notice, while an employer initiating termination must provide at least 60 days' written notice. Where wages are not paid monthly, the statutory minimum is generally 30 days for either party.
—	End-of-service benefits. Article 84 generally calculates the end-of-service award at half a month's wage for each of the first five years of service and one month's wage for each subsequent year, calculated on the basis of the employee's last wage. Article 85 establishes reduced entitlements in specified resignation cases according to length of service, subject to the exceptions provided elsewhere in the Labor Law. Resignation impact on end-of-service benefits. Under Article 85, resignation may affect entitlement depending on the employee's length of service, including reduced entitlement for shorter service periods and full entitlement after completing the statutory service period.
—	Restrictive covenants. Under Article 83, a post-employment non-compete can be used where the employee's role gives access to the employer's customers and the restriction is necessary to protect legitimate interests. The restriction must be written and specifically defined by time, place and type of work, and may not exceed two years from the end of the employment relationship. These restrictions are commonly relevant for senior employees and positions involving access to customers, confidential information or strategic business interests.
—	Employment disputes and sensitive workplace complaints. We advise on discrimination claims, disciplinary disputes, restrictive-covenant disputes and other sensitive workplace matters where legal exposure can also create significant operational or reputational consequences for the employer.

Service 04

Corporate Employment and Workforce Restructuring

Employment issues can materially affect mergers, acquisitions, reorganizations, outsourcing arrangements and workforce restructurings. These matters require coordination between employment, corporate and commercial advice rather than treating the workforce as a standalone post-closing issue.

—	Employment continuity in corporate transactions. Under Article 18 of the Labor Law, where ownership of an establishment transfers to a new owner or its legal form changes through merger, division or otherwise, existing employment contracts remain in force and employee service is treated as continuous.
—	Pre-transaction employee liabilities. Article 18 also addresses employee rights arising before the transfer or corporate change, including wages and end-of-service entitlements, and establishes statutory rules concerning responsibility of the predecessor and successor. We review these exposures during employment due diligence and transaction structuring.
—	Mergers and acquisitions. We advise on workforce due diligence, employment continuity, accrued liabilities, Saudization implications, management retention and post-transaction review of employment terms. Any harmonization of terms should be implemented only where legally permissible and with the contractual or employee agreement required by the circumstances.
—	Workforce restructuring. We advise on reorganizations, changes in operational requirements and workforce reductions, including whether the proposed termination route is supported by the Labor Law, the employment contracts and the facts of the restructuring. Closure of an establishment or termination of the relevant activity may have specific consequences under Article 74 and should not be treated as a general redundancy right in every restructuring.
—	Executive appointments and exits. We advise on senior-management contracts, incentive arrangements, restrictive covenants, negotiated exits and the termination and compensation issues associated with executive transitions.
—	Outsourcing, insourcing and service-provider changes. A change in service provider does not, by itself, create a universal automatic transfer of employees under Saudi law. We assess whether employees remain with the existing employer, require new employment arrangements, or are affected by a separate transfer of ownership or corporate restructuring falling within Article 18.
—	Corporate governance and workforce compliance. We advise management teams on board-level employment decisions, policy frameworks, delegations of authority and workforce-compliance issues that interact with corporate governance and operational risk.

How We Work

1	Assess the workforce and compliance position We review workforce structure, employment contracts, Qiwa documentation, Nitaqat status and relevant policies before recommending changes.
2	Build compliant employment documentation We prepare contracts, policies and employment procedures around the requirements applicable to the actual workforce rather than relying on generic regional templates.
3	Manage employment decisions before they become disputes We assess disciplinary action, termination, restructuring and employee transitions before implementation so that the legal and evidentiary record supports the business decision.
4	Represent employers when disputes arise Where a dispute cannot be resolved internally, we assist through the applicable friendly-settlement process and labor-court proceedings and advise on the commercial implications throughout the dispute.

Managing a Workforce in Saudi Arabia?

Whether you are reviewing employment contracts, managing Saudization, planning a corporate restructuring or addressing an employment dispute, our Employment and Labor team can advise on the applicable Saudi legal and regulatory framework.

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