New Saudi Labor Law Updates 2025: A Full Guide for Employers and Employees

In 2025, Saudi Arabia introduced major updates to its Labor Law as part of its broader Vision 2030 reforms. These changes are designed to create a fair, transparent, and digitally efficient work environment. Whether you are an employer, HR professional, or employee, understanding these updates is essential for compliance and for building strong, lawful employment relationships.

This guide highlights the most important reforms, with real-world applications, legal context, and actionable insights for workplace implementation.

1. Mandatory Electronic Documentation of Employment Contracts (Article 51)

A major shift in the law is the requirement that all employment contracts must be digitally documented through the Qiwa platform. Contracts not registered electronically are considered legally invalid.

Here’s what this change means:

• The employment contract must be in duplicate—each party keeps a copy.
• Only contracts digitally registered through Qiwa are enforceable in legal disputes.
• Applies to all employment types including full-time, part-time, and temporary roles.

Example: A company in Riyadh avoided a costly legal dispute after presenting a Qiwa-verified contract during an inspection. This highlights the platform’s growing role in legal protection.

2. Housing and Transportation Benefits (Article 61)

To improve work and living conditions, the law now obligates employers to either:

• Provide adequate housing and transportation, or
• Pay a monetary allowance equivalent to their value.

This applies to sectors where housing and transport were previously informal or inconsistently managed, such as domestic labor, retail, and construction.

3. Probation Period Regulations (Articles 53–54)

The labor law now allows for a probationary period of up to 180 days, with specific terms:

• It must be explicitly stated in the employment contract.
• Both the employer and employee have the right to terminate the contract during this period without compensation.
• A second probation is only permitted if the employee is hired for a different role.

This ensures transparency and protects against abuse of extended trial periods.

4. Overtime and Holiday Compensation Flexibility (Article 107)

The law now offers greater flexibility in managing extra work hours, enabling mutually agreed-upon alternatives to cash payments.

Key options include:

• Overtime can be compensated either with:
  • 150% of the basic wage, or
  • Additional paid leave, if agreed upon.
• Holiday work may be compensated by substitute paid leave instead of financial bonuses.

This approach benefits businesses that operate during holidays, such as healthcare, hospitality, and logistics, while still safeguarding worker rights.

5. Enhanced Leave Policies for Family and Parenthood

To support employee well-being and family responsibilities, several leave entitlements have been clarified or expanded:

• Bereavement Leave: Three days of paid leave following the death of a sibling.
• Paternity Leave: Three days of paid leave within the first seven days of childbirth.
• Maternity Leave: Now extended to 12 weeks, divided into:
  • 6 weeks mandatory post-delivery
  • 6 weeks flexible, based on the employee’s preference
  • Option to extend by:
    • 1 paid month for child health needs
    • 1 additional unpaid month if further care is required

Context: According to the Ministry of Human Resources, the number of maternity leave claims rose by 21% in 2024, reflecting increasing awareness of legal entitlements.

6. Resignation and Termination of Open-Ended Contracts

The law has introduced clear rules for resignations and terminations:

Resignation:

• Must be submitted in writing, without coercion.
• Considered accepted after 30 days if no employer response.
• The employer may delay acceptance up to 60 days, with written explanation.
• The employee may withdraw the resignation within 7 days, unless already accepted.

Termination of indefinite contracts:

• Must be based on a legitimate reason.
• If wages are paid monthly:
  • The employee must give 30 days’ notice.
  • The employer must give 60 days’ notice.
• If wages are not monthly, a 30-day notice applies to both parties.

Note: For fixed-term contracts, resignation is considered a breach of contract and affects end-of-service benefits.

7. Right to Appeal Disciplinary Actions

Employees now have a structured appeal process if they receive disciplinary action:

• They must first appeal to the employer within 30 days.
• If unresolved, they can escalate the issue to the Ministry of Human Resources within the next 30 days.

This empowers employees to challenge unfair actions such as unjustified salary deductions or disciplinary warnings.

8. Regulations on Non-Saudi Employment Contracts (Article 37)

To ensure clarity and fairness in expatriate labor contracts, the law now mandates that:

• Contracts for non-Saudi employees must be written and time-limited.
• If no term is specified, the contract defaults to one year from the employee’s actual start date.
• If the worker continues after the contract ends, it is automatically renewed for an equal term.

This change addresses common issues related to undefined or open-ended contracts for foreign workers.

9. Anti-Discrimination and Equal Opportunity (Article 3)

The law strengthens the principle of equal opportunity, explicitly prohibiting discrimination in hiring.

What’s not allowed:

• Mentioning gender, age, or nationality in job postings, unless job-specific.
• Any form of preferential treatment that excludes qualified candidates based on personal characteristics.

Impact: Female workforce participation increased to 35.6% in 2025, up from 30% in 2022, reflecting improved access and inclusivity.

10. Automatic Social Insurance for Saudi Workers

The new system integrates Qiwa with the General Organization for Social Insurance (GOSI) for Saudi nationals.

• New Saudi employees are automatically enrolled when their contract is created.
• Terminated employees are automatically removed from GOSI when their contract ends.

This automation reduces paperwork, ensures prompt coverage, and improves compliance. For non-Saudi workers, manual updates are still required, such as sponsorship transfers or final exit visa procedures.

The 2025 Saudi Labor Law updates represent a milestone in creating a balanced and transparent employment landscape. By focusing on digital transformation, employee rights, and structured employer obligations, these reforms support long-term stability in the workforce.

For companies operating in Saudi Arabia, the challenge is not only compliance—but also implementation. HR teams must update contracts, policies, onboarding workflows, and disciplinary procedures to match the new standards.

Partner with Connectalents to Build a More Engaged and Loyal Workforce

At Connectalents, we help businesses develop HR strategies that drive employee satisfaction, engagement, and long-term retention. Whether you’re adapting to Saudi Arabia’s 2025 labor law reforms or building a future-ready workforce, our tailored solutions—from contract compliance and policy design to leadership development and employee feedback systems—are built to help your people thrive.