The employment contract in Saudi Arabia according to Article (50) of the Saudi Labor Law is a significant document that outlines the terms and conditions of the working relationship between an employer and an employee. It serves as a legal agreement that protects the rights of both parties and ensures clarity regarding job responsibilities, compensation, and other employment-related matters. In this article, we will explore the key aspects of an employment contract
المحتويات
Key Elements of an employment contract in Saudi Arabia
An employment contract typically includes the following elements:
1- Employer and Employee Information: It’s crucial to include specific details in Saudi employment contracts, such as the employer’s name, job location, and the employee’s personal information, including nationality, ID number, and national address. This ensures proper documentation and clear communication.
2- Job Role and Description: Saudi employment contracts must clearly outline the employee’s role and provide a thorough description of their responsibilities, ensuring mutual understanding and transparency.
3- Start Date and Contract Duration: Every contract should clearly state the start date. For fixed-term contracts, the end date must also be mentioned. It’s common for contracts to include a notice period (usually between 30 to 60 days) and specify compensation terms in case of unlawful termination.
Read also: Saudi Labor Law Article 80: Employee Termination Rights
4- Salary Breakdown: When detailing salary in an employment contract, it’s essential to specify both the base salary and any additional allowances. This ensures a full understanding of the compensation package.
5- Confidentiality and Non-Compete Clauses: The Confidentiality Clause in Saudi employment contracts protects a company’s proprietary information, preventing employees from disclosing or misusing confidential data, even after employment ends. The Non-Compete Clause restricts employees from joining competitors or starting similar businesses within a defined timeframe and geographical area. For both clauses to be enforceable, they must be reasonable in terms of duration, scope, and location. Clear and explicit employee consent strengthens their enforceability.
6- Working Hours and Overtime: Contracts should outline standard working hours, overtime policies, and days off. The maximum working time is six days a week, with no more than 8 hours per day (excluding break time). Workers should not work more than 5 continuous hours without a break.
7- Probation Period: Employment contracts in Saudi Arabia must specify the probation period, typically 90 days but extendable to 180 days with mutual consent. Both employer and employee have the right to terminate the contract without compensation during this period. Any extension beyond 180 days is not allowed.
8- Holiday Entitlements: Saudi employees are entitled to annual leave and public holidays. The minimum annual leave is 21 days, increasing to 30 days after five years of service with the same employer. For more details, check our blog on Saudi Labor Law’s leave policies in the private sector.
Check out: What is The Limited Liability Company Saudi Arabia?
8- End-of-Service Benefits: Upon termination of employment contract in Saudi Arabia, employers in Saudi Arabia must provide an end-of-service award, calculated as half a month’s salary for the first five years and a full month’s salary for each additional year. The definition of “wage” for this calculation is comprehensive, including salary and commission benefits, unless otherwise specified in the contract.
Employment Contract Sample in Saudi Arabia
Employment Contract includes a set of essential elements that must be present for the contract to be valid and in compliance with the law, as follows:
This agreement is made on [Date] between [Employer’s Name], located at [Address], and [Employee’s Name], residing at [Address].
- Position: The employee is hired as [Job Title].
- Duration: This contract is valid for [Duration] starting from [Start Date].
- Working Hours: The employee is required to work [Number of Hours] per week.
- Salary: The employee will receive a monthly salary of [Amount] SAR, payable on [Payment Date].
- Probation Period: A probation period of [Duration] will apply, during which either party may terminate the contract with [Notice Period] notice.
- Leave Entitlements: The employee is entitled to [Number of Days] annual leave per year.
- Termination: This contract may be terminated by either party with [Notice Period] notice or in accordance with Saudi labor laws regarding the termination of employment contract in Saudi Arabia.
Signed by:
[Employer’s Signature]
[Employee’s Signature]
Learn about: Saudi Labor Law Article 81: The Employee Rights
In Summary, understanding the employment contract in saudi arabia is crucial to safeguarding your rights and ensuring a smooth working relationship. Given the complexities of labor laws and potential legal consequences of contract breaches, it is highly recommended to seek legal advice from experienced professionals for a better understanding and protection of your rights.
The Etqan Al Mutamayza Law Firm can provide the necessary support. You can contact their team
through the following mobile numbers: 056113776, 0541110440, 504315333
Alternatively, you can visit our branches:
- Jeddah: Al-Aziziyah District–Mohammed bin Abdulaziz Street (Tahlia)
- Riyadh: King Abdulaziz Street – In front of Kingdom
- Dammam: Al-Ashri’a Street, Al-Badeea, Dammam 32415.
FAQ
How can I check my Saudi employment contract?
To check your employment contract in saudi arabia, carefully review the signed copy, whether physical or digital, ensuring it includes details like job role, salary, working hours, and leave entitlements. Verify that it complies with Saudi Labor Law, especially regarding termination clauses and end-of-service benefits. If you have questions, consult your HR department for clarification. For legal concerns, seek advice from a legal expert familiar with employment contracts in Saudi Arabia.
What is the contract law in Saudi Arabia?
The employment contract in Saudi Arabia is governed by the Saudi Labor Law according to Article (50), ensuring fair terms for both employers and employees. Contracts can be either fixed-term or indefinite, with specific conditions regarding termination, working hours, and benefits. The law guarantees employees’ rights, such as end-of-service benefits and compensation. In case of disputes, both parties can seek resolution through the Labor Court or the Ministry of Human Resources and Social Development.
What is the penalty for breaking employment contract in Saudi Arabia?
The penalty for breaking an employment contract depends on the terms outlined in the contract and the nature of the breach. If an employee terminates the contract without proper notice, they may be required to pay compensation to the employer. Similarly, employers who terminate the contract unfairly may be liable to compensate the employee. In some cases, both parties may face legal action through the Saudi Labor Court for breach of contract.
Can I resign before my contract ends in Saudi Arabia?
Yes, you can resign before your employment contract ends, but you must adhere to the notice period specified in the contract, typically ranging from 30 to 60 days. If you resign without giving the proper notice, you may be required to pay compensation to the employer for the breach. Additionally, if the contract is for a fixed term, you may need to justify your early resignation with valid reasons under Saudi Labor Law. Failure to comply with these terms could result in penalties.