Saudi Labour Law changes 2025: what contractors need to know

Published 16 October 2026 · Muqawil

The Labour Law amendments issued by Royal Decree M/44 took effect on 19 February 2025 and changed 38 articles. For a contracting company with dozens or hundreds of workers, they touch contracts, resignations, leave and payroll. Here is a practical summary.

What changed, and from when

Royal Decree No. M/44 dated 8/2/1446H and Cabinet Decision No. 117, in force from 20/8/1446H = 19 February 2025: 38 articles amended, 7 deleted and 2 added.

Probation

Probation may not exceed 180 days in any case and must be stated in the contract (Art. 53). Either side may end the contract during probation.

Contracts for foreign workers

They must be written and fixed-term. If no term is stated, the contract runs for one year from the actual start date and renews for the same period if work continues (Art. 37).

Resignation and notice

• Resignation is now a stated ground for ending a contract (Art. 74).
• A resignation is deemed accepted after 30 days with no reply; the employer may defer acceptance by up to 60 days with a written, reasoned decision made within those 30 days (Art. 79-bis).
• The worker may withdraw within 7 days unless the employer has accepted, and a resignation cannot carry a future date.
• Indefinite contracts with monthly pay: 30 days' notice if the worker ends it, 60 days if the employer does (Art. 75). Since foreign workers' contracts are fixed-term, this mostly affects Saudi staff.

Overtime: cash or time off

Overtime pay stays at the hourly wage plus 50% of the basic wage. New: with the worker's consent, the employer may give paid days off instead of overtime pay, as the regulations set out (Art. 107).

Leave

End of service: what did not change

Articles 84 to 88 were not amended: half a month's wage for each of the first five years, a full month for each year after, on the last wage. On resignation: one third after two years, two thirds after five, the full award after ten. The final settlement is due within one week, or two weeks if the worker ended the contract.

GOSI for new Saudi hires

The new Social Insurance Law (M/273) has applied since 3 July 2024 to Saudis with no earlier contribution periods. The annuities rate rises in steps from 18% to 22%, split equally between employer and employee; the first step applied from 1 July 2025, and from July 2026 the rate is 20% (10% employer + 10% employee). Check the current rate on the GOSI portal before running payroll.

HR and payroll checklist for contractors

• Update contract templates: probation of at most 180 days and stated in the contract; one-year term for non-Saudis when none is stated.
• Resignation workflow: 30-day timer, a reasoned deferral letter of up to 60 days, a 7-day withdrawal window.
• Notice for Saudis on indefinite contracts: 30 / 60 days.
• Leave in your system: 3 days for the death of a brother or sister (new), birth leave within 7 days of the birth, maternity 12 weeks.
• Overtime: 150%, or time off only with the worker's written consent.
• End of service: no change to the formula.
• GOSI: flag Saudi hires since 3 July 2024 for the stepped rates.

How Muqawil helps

Muqawil keeps each worker's start date, wage and work periods, helps you work out end-of-service on exit and GOSI contributions, and puts the final settlement on one statement.

A summary for planning, not legal advice. Sources: the consolidated Labour Law on the Bureau of Experts site (laws.boe.gov.sa), the Ministry of Human Resources announcement, and the Social Insurance Law (M/273). Check the official text and the implementing regulations, or an adviser, before any decision.

Questions