HR Policies in Saudi Arabia

Human Resources (HR) policies are the foundation of any organization, providing the groundwork for effective employee management, engagement, and shaping the overall workplace culture. In the context of Saudi Arabia, the development of robust HR policies is integral to the prosperity and longevity of businesses.

This blog explores the fundamental aspects of HR policies in The Kingdom of Saudi Arabia, delving into the legal framework, prevalent practices, and emerging trends.

Understanding HR Policies:

HR policies encompass a set of guidelines, rules, and procedures formulated by an organization to govern its human resources.

Serving as a comprehensive framework, these policies facilitate the smooth functioning of various business activities, including recruitment, compensation, employee benefits, performance management, employee retention, training and development, and adherence to statutory compliance.

HR Policies and Labor Laws in Saudi Arabia

In the Kingdom of Saudi Arabia, the intricate web of employer-employee relations is thoroughly governed by the Labor Law. Understanding the fundamental principles of this legal framework is vital to ensuring compliance and optimal functioning of the organization.

Let's delve into the key points of Saudi Arabia's Labor Law and shed light on the nuances that shape the employment landscape.

Employment Contract:

A written employment contract, usually spanning two years, is mandatory. The contract, written in Arabic (or another language alongside Arabic), covers essential details like names and addresses of employer and employee, job specifics, duration, wages, benefits, and dispute resolution mechanisms.

Probation Period:

Should a probationary period be stipulated, it generally lasts up to 90 days, extendable up to 180 days by mutual agreement. During this period, either party can terminate the agreement without compensation, though the cost of the return journey is the worker's responsibility.

Working Hours/Weekly Holiday/Overtime Allowance:

Standard working hours are 8 hours daily and 48 hours weekly, with reduced hours during Ramadan for Muslim workers. Overtime rates stand at 150% of the hourly wage. Friday serves as the weekly rest day, and a 30-minute rest period during the workday is mandated.

Accommodation and Food Allowance:

Employers must provide residential accommodation or a house rent allowance. Additionally, it is the employer's responsibility to supply food, or a food allowance as specified in the employment contract.

Leave:

Workers are entitled to annual leave, medical leave, paternity leave, and maternity leave, among others. Public holidays like Saudi National Day and Eid al-Fitr are fully paid, with overtime compensation if work is required.

Costs and Insurance:

Employers bear recruitment fees, medical test costs, residence permit fees, and more. Health insurance is mandatory for workers, and a medical test is required to obtain the necessary documents.

Costs and Insurance:

Employers bear recruitment fees, medical test costs, residence permit fees, and more. Health insurance is mandatory for workers, and a medical test is required to obtain the necessary documents.

Air Ticket:

The employer covers the cost of the expatriate worker's airfare to Saudi Arabia and returns after the contract period. Exceptions exist for specific circumstances, such as termination during the probation period.

Renewal of Employment Contract:

Fixed-term contracts terminate upon expiry, and renewal terms are outlined in the initial agreement. Non-Saudi contracts without a specific duration align with the work permit's duration.

Termination of Contract:

Contracts can be terminated for various reasons, including mutual consent, completion of the contract period, or retirement. Specific conditions apply for termination without notice, ensuring fair treatment for both parties.

End of Service Benefits:

Workers are entitled to end-of-service benefits after two years of service. The calculation is based on the duration of service, with specific conditions for resignation or termination.

Labour Disputes:

Labor disputes are addressed through the Labor Offices, with resolutions sought amicably or referred to the Commission for Settlement of Labour Disputes if necessary.

Non-competition/Confidentiality Clauses:

Contracts may include clauses restricting workers from competing with the employer or disclosing business secrets post-employment, typically for up to two years.