an overview of the saudi labor law

8/2/2019 an Overview of the Saudi Labor Law

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HRM 301

An Overview of the Saudi LaborLaw

Dr. Hatim S. Abuljadayel 121/03/1433

Learning Objectives

1. Define key terms of The Saudi LaborLaw.

2. Explain Organization of recruitment.3. Describe Training and qualification.4. Discuss Work relations and work

contract.5. Describe Work conditions and

circumstances.

Dr. Hatim S. Abulj adayel 221/03/1433


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Learning Objectives

6. Discuss Part-time work.7. Describe Protection against

occupational hazards, majorindustrial accidents and work injuries,and health and social.

8. Discuss Employment of women.9. Explain Employment of minors.10. Describe Commissions for

settlement of labor disputes.Dr. Hatim S. Abuljadayel 321/03/1433

LABOR LAW

Royal Decree No. M/5123 Sha'ban 1426 / 27 September 2005

1. Definitions of KeyTerms



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1. Definitions And General Provisions:

Chapter One DefinitionsTerm Definition

Law This law shall be called the Labor Law.Ministry: Ministry of Labor.

Minister: Minister of Labor.

Labor

Office:

The administrative authority assuming

jurisdiction over the labor affairs within anarea specified by a decision of the Minister.Employer: Any natural or corporate person employing

one or more workers for a wage.


1. Definitions and General Provisions:Chapter One: Definitions

Term DefinitionWorker: Any natural person working for an

employer and under his management

or supervision for a wage, even if he is notunder his direct control.

Minor: Any person of fifteen and below eighteenyears of age.

Work: The effort exerted in all human activities inexecution of a (written or unwritten) workcontract regardless of their nature or kind,be they industrial, trade, agricultural,technical or otherwise, whether physical ormental.



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1. Definitions and General Provisions:

Chapter One DefinitionsTerm DefinitionOriginalWork:Forindividuals:

Their usual business activities.

OriginalWork:For firms:

The activities for which the firm has beenestablished as stated in its articles ofincorporation, franchise contract- if a franchisecompany-or Commercial Register

TemporaryWork:

Work considered by its nature to be part of theemployers activities, the completion of whichrequires a specific period or relates to a specificjob and ends with its completion. It shall notexceed ninety days in either case.


1. Definitions and General Provisions:Chapter One Definitions

Term DefinitionIncidentalWork:

Work that is not considered by its natureto be part of the usual activities of anemployer, and its execution does notrequire more than ninety days.

SeasonalWork:

Work that takes place in knownperiodical seasons.

Part-timeWork:

Work performed by a part-time workerfor an employer and for less than half theusual daily working hours at the firm,whether such a worker works on a dailybasis or on certain days of the week.



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Chapter One DefinitionsTerm DefinitionContinuousService:

Uninterrupted service of a worker for the sameemployer or his legal successor from the starting dateof service. Service shall be deemed continuous in thefollowing cases:1. Official holidays and vacations.2. Interruptions for sitting for examinations in

accordance with the provisions of this Law.3. Workers unpaid absences from work for

intermittent periods not exceeding twenty daysper work year.

Basic Wage: All that is given to the worker for his work by virtueof a written or unwritten work contract regardless ofthe kind of wage or its method of payment, inaddition to periodic increments.


1. Definitions And General Provisions:Chapter One Definitions

Term DefinitionActualWage:

The basic wage plus all other due incrementsdecided for the worker for the effort he exerts

at work or for risks he encounters inperforming his work, or those decided for theworker for the work under the work contractor work organization regulation. This includes:1. The commission or percentage from sales

or profits paid against what the workermarkets, produces, collects or realizesfrom increased or enhanced production.

2. Allowances the worker is entitled to forexerted effort, or risks he encounters whileperforming his job.



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Chapter One DefinitionsTerm DefinitionActualWage:

3. Increments that may be granted inaccordance with the standard of living orto meet family expenses.

4. Grant or reward: What the employergrants to the worker and what is paid tohim for honesty or efficiency and thelike, if such grant or reward is stipulated

in the work contract or the workorganization regulation of the firm or ifcustomarily granted to the extent thatthe workers consider it part of the wagerather than a donation.


1. Definitions and General Provisions: ChapterOne Definitions

Term DefinitionActualWage:

5. In rem privileges: what the employer commitshimself to provide to the worker for his work

by stating it in the work contract or the workorganization regulation and its estimated at amaximum of two months basic wage perannum, unless it is otherwise determined toexceed that in the work contract or the workorganization regulation.

Month: Thirty days, unless it is otherwise specified in thework contract orthe work organization regulation.

Regulations:

The Implementing Regulations of this Law.



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LABOR LAWRoyal Decree No. M/51

23 Sha'ban 1426 / 27 September 2005

2. Organization of RecruitmentEmployment Units


Employment Units Every citizen of working age who is

capable of and willing to work may

register his name at the employmentunit, his date of birth, qualifications,previous employment, preferences andaddress.



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Employment Units

Duties and responsibilitiesAssisting job seekers in finding suitable jobs andemployers in recruiting suitable workersGathering and analyzing necessary information on thelabor market for development purposesRegistration of job seekers.Obtaining data on vacant jobs from employers.Referring workers applications to suitable vacantjobs.Providing advice and assistance to job seekers withrespect to vocational qualification and training or therequired retraining to fill vacancies.Other matters decided by the Ministry

21/03/1433 15r. Hatim S. Abu ljadayel

Employers ResponsibilitiesTo provide the competent labor office with the followinginformation:

o A statement of vacant and new jobs, their types, locations,wages, and qualifications within a period not exceedingfifteen days from the date of vacancy or creation.

o A notice of measures taken to employ the citizensnominated by the employment unit within seven days fromreceiving the nomination letter.

o A list of names, jobs, professions, wages, ages,nationalities of his workers, numbers and dates of workpermits for non- Saudis and other data specified in theRegulations.

o A report on the status, conditions and nature of work andthe anticipated increase or decrease in jobs during theyear following the date of the report.



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Employment of Saudis

1. All firms in all fields, and regardless ofnumber of workers, shall work to:

a) Attract and employ Saudis,b) Provide conditions to keep them on the jobc) and avail them of an adequate opportunity to

prove their suitability for the job by guiding,training and qualifying them for their assigned

jobs.2. The percentage of Saudi workers employed

by the employer shall not be less than 75%of the total number of his workers.


NITAQAT

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Ranges - NITAQAT


Employment of the Disabled Each employer employing twenty- five

workers or more where the nature of

his work allows recruitment of theprofessionally disabled Shall employ atleast 4% of the total number of hisworkers whether through nominationby the employment units or otherwis e



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Private Offices for Recruitment of Citizens and

Private Offices for Recruitment from Abroad1. Private Offices for

Recruitment ofCitizens

2. Private Offices forRecruitment fromAbroad

Must be licensed bythe ministry

The Regulationsshall determine:

o The functions ofthese two types ofactivities

o The conditions for

granting andrenewing a licenseto each of them

o The duties andprohibitions


Employment of Non-SaudisHe possesses the professional and academicqualifications which the country needs and which are notpossessed by citizens

has lawfully entered the country and is authorized toworkHe has a contract with the employer and is under hisresponsibility.shall be written and of a specified periodPrior to renewing the work permit, it shall be ascertainedthat none of the Saudi applicants possesses the requiredqualifications.An employer may not allow a worker to work for his ownaccount and a worker may not work for his own account.



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Employment of Non-Saudis

Employer incur The fees pertaining to recruitment

of non-Saudi workers, The fees of :

o the residence permit (Iqama)o and work permit togethero with their renewal and the

fines resulting from theirdelay,

The fees pertaining to:o change of profession,o exit and re-entry visaso and return tickets to the

workers home country at theend of the relation between thetwo parties.

Non-Saudi Worker incur A worker shall incur

the costs of: returning to his home

country if he is unfit forwork

or if he wishes to returnto his home country

without a legitimatereason.

21/03/1433 24r. Hatim S. Abuljadayel

Employment of Non-Saudisan employer shall incur

The fees of transferring the services of a workerwho wishes to transfer his service to him.The cost of preparing the body of a deceasedworker and transporting it to the location wherethe contract was concluded, or where the workerwas recruited unless the worker is interred in theKingdom with the approval of his familyThe employer shall be relieved if the GeneralOrganization for Social Insurance (GOSI) undertakesthe same.



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HRM 301

3. Describe Training andQualification Contract


Training and qualificationcontract

A contract which commits the employer totrain and qualify a person for a specificprofessionIn the Qualification and Training ContractThe employer May require the trainee towork for him upon completion of thetraining period for a period not to exceedtwice the duration of the training or oneyear, whichever is longer



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Training and Qualification An employer shall be

required to prepare hisSaudi workers andenhance theirtechnical,administrative,vocational and otherskills:

Every employeremploying fifty or moreworkers

for the purpose ofgradually replacingnon-Saudis.

shall annually train, inhis business, a numberof his Saudi workersnot less than 6% of thetotal number of hisworkers.


HRM 301

4. Discuss Work relations andwork contract



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Work Contract

A contract concluded between an employerand a worker, whereby the latter undertakesto work under the management orsupervision of the former for a wage

A work contract shall be:o in duplicates, one copy to be retained by

each of the two parties.o deemed to exist even if not written.o Either party may at any time demand that

the contract be in writing.


Work Contract

Dimension Definitions / ImplicationsThe workcontract shallprimarilyinclude:

o The name of the employero Venueo The name of the workero Nationalityo Identificationo Wage agreed upono Type and location of worko Date of employmento Duration of the contract if

fixed.



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Probationary PeriodShall be clearly stated and specified.Shall not exceed ( 90 ) days exclusive of Eid al-Fitr and Eidal-Adha holidays and sick leaves.Each party shall have the right to terminate the contractduring this period, unless the contract embodies a clausegiving the right to terminate the contract to only one ofthem.A worker may not be placed on probation more than onceby the same employer.As an exception to this, the worker may, with the approval

of the contract parties, be subjected to another probationperiod of not more than ninety days on the condition thatthis period involves another profession or work.


Employers Duties

Refrain from using the worker without pay andshall not, without a judicial instrumentRefrain from withhold the workers wages or anypart thereof.Treat his workers with due respect and refrain fromany action or utterances that may infringe upontheir dignity and religion.Facilitate for the employees of the competentauthorities any task related to the enforcement ofthe provisions of this Law.



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Workers Duties1. Perform the work in accordance with the trade practice

and the employers instructions provided that suchinstructions do not conflict with the contract, the law orpublic morality and that they do not expose him to anyundue hazards

2. Take due care of the employers machinery, tools,supplies and raw materials placed at his disposal or in hiscustody and return to the employers the unusedmaterials.

3. Abide by proper conduct and ethical norms during work.4. Extend all assistance and help without making it

contingent on additional pay in cases of disasters orhazards threatening the workplace or the personsworking therein.


Workers Duties

5. Undergo, upon the employers request, themedical examinations required prior to orduring employment to ensure that he is freefrom occupational or communicable disease

6. Keep confidential the technical, trade andindustrial secrets of the products or whichhe directly or indirectly contributed to theirproduction, as well as all trade secretsrelated to the work or the firm, thedisclosure of which is likely to cause damageto the employers interests.



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Types of Work Contract

Fixed Term ContractThe fixed-term contract shallterminate upon expiration ofits term.If the two parties continue toimplement it, it shall bedeemed renewed for anindefinite period of time.If the fixed-term contract

incorporates a clause providingfor its renewal for a similarterm or a specified term, thecontract shall be renewed forthe period agreed upon.

Indefinite Contract If the contract is renewed

for two consecutive termsor if the original contractterm and the renewal periodamount to three years,whichever is less, and thetwo parties continue toimplement it, the contractshall become an indefiniteterm contract.


Termination of WorkContract

1. If both parties agree to terminate it, provided that theworkers consent be in writing.

2. If the term specified in the contract expires, unless the

contract has been explicitly renewed in accordancewith the provisions of this Law in which case it shallremain in force until the expiry of its term.

3. At the discretion of either party in indefinite termcontracts.

4. The worker attains the age of retirement, which is sixtyyears for males and fifty five years for females, unlessthe two parties agree upon continuing work after thisage.

5. Force majeure



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Termination of Work Contractwithout an award, advance notice or

indemnity1. If, during or by reason of the work, the worker assaults the

employer, the manager in-charge or any of his superiors.2. If the worker fails to perform his essential obligations

arising from the work contract, or to obey legitimate orders,or if, in spite of written warnings, he deliberately fails toobserve the instructions related to the safety of work andworkers as may be posted by the employer in a prominentplace.

3. If it is established that the worker has committed a

misconduct or an act infringing on honesty or integrity.4. If the worker deliberately commits any act or default withthe intent to cause material loss to the employer, providedthat the latter shall report the incident to the appropriateauthorities within twenty-four hours from being aware ofsuch occurrence.


Termination of Work Contractwithout an award, advance notice or

indemnity Contd5. If the worker resorts to forgery in order to obtain the

job.6. If the worker is hired on probation.

7. If the worker is absent without valid reason for morethan twenty days in one year or for more than tenconsecutive days, provided that the dismissal bepreceded by a written warning from the employer tothe worker if the latter is absent for ten days in thefirst case and for five days in the second.

8. If the worker unlawfully takes advantage of his positionfor personal gain.

9. If the worker discloses work- related industrial orcommercial secrets.



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Termination of Work ContractWorker may leave his job without notice in any of the

following cases1. If the employer fails to fulfill his

essential contractual or statutoryobligations towards the worker .

2. If the employer or hisrepresentative resorts to fraud atthe time of contracting withrespect to the work conditionsand circumstances.

3. If the employer assigns theworker, without his consent, toperform a work which isessentially different from thework agreed upon and inviolation of provisions of Ar ticle(60) of this Law.

4. If the employer, a family member orthe manager in-charge commits aviolent assault or an immoral actagainst the worker or any of his familymembers.

5. If the t reatment by the employer orthe manager in-charge ischaracterized by cruelty, injustice orinsult.

6. If there exists in the workplace aserious hazard threatening the saf etyor health of t he worker, provided thatthe employer is aware thereof but failsto take measures indicating itsremoval.

7. If the employer or his representative,through his actions and parti cularlyhis unjust tr eatment or violation ofthe terms of the contract, has causedthe worker to appear as the partyterminating the con tract.

Instructor: Dr. Hatim S. Abuljadayel - 2011 392/13/2012

Disciplinary Rules

The disciplinarypenalties that theemployer may inflict on

the worker:Warning.Fines.Withholding allowanceor postponing it for aperiod not exceedingone year if prescribedby the employer.

Postponement ofpromotion for a periodnot exceeding one year

if prescribed by theemployer.Suspension from workand withholding ofwages.Dismissal from work incases set forth by thelaw.



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Disciplinary action is administered by

the responsible supervisor.Employees who commit an offence in theRules of Conduct are subject to disciplinaryactionThere are five degrees of disciplinary action:1. Verbal Warning2. Written Warning

3. Final Written Warning4. Suspension5. Termination

Dr. Hatim S. Abu ljadayel 4121/03/1433

Retirement Age

Ageender60 yearsen

years55omen



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End-of-Service AwardLength of Service Service A ward Eligibility

Less than 1 Year Nil1 to 5 Years 1/2 Month Final Basic Salary for each year6 to 10 Years 1 Month Final Basic Salary for each year over

5 yearsOver 10 Years 1 Month Final Basic Salary for each year

over10 years for all the 10 years

In case ofResignation

Not less than twoyears of Service

one third of theaward

Five successive yearsbut less than ten years

Two third of theaward

Ten or more years Full Award


HRM 301

5. Work conditions andcircumstances



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wagesShall be paid in local currency during working hours and workplace.Paid as follows:

Type of labor Wage paymentWorkers paid on a daily basis Once a week at least.Workers paid on a monthlybasis

Once a month.

Piece labor Weekly payment equivalent toamount of work completed.

Others Once a week.Payment through accredited banks in Saudi Arabia is possible

provided:o in specified times mentioned earliero Worker's consent


Wage Deductiblesloss and d amage caused by worker. Maximum ( 5 ) day wage per month.

Mutual right for gri evances for bo themployer and worker within 15 work days.

Repayment of loans extended by theemployer.

10%

Social insurance ( Saudi only ) 9%

Workers contributions to thrift funds orloans due to such funds

If applicable

Installments of any scheme undertaken bythe employer involving homeownership programs or any other pr ivilege

If applicable

Fines imposed on the worker on account ofviolations committed, as wellas deductions made for damages caused

As per regulations

Any debt collected in implementation of ajudicial judgment

Shall not exceed 25% of monthly wageunless determined otherwise by court

Alimony Has first priority over other wagedeductibles



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Wage Deductibles ContdWage deductibles shall notexceed 50% of worker'smonthly wage except if:

Labor disputescommission approve higher% of wage deductibles

Labor disputescommission approve thatworker needs higher % of his/ her wage

Gets 75% of his/her wageMaximum in all cases

In case of any other deductibles made by employerwithout worker written consent:

o Worker has the right to complaint to competent laboroffice / Labor disputes commission.


Working HoursActual Workinghours

Eight hours a day if the employer uses thedaily work criterion,

Forty-eight hours a week if he uses theweekly criterion.

Actual Workinghours DuringRamadan forMuslims

shall be reduced to a maximum of six hours aday

or thirty-six hours a week.

Raised to ninehours a dayfor:

certain categories of workers or in certainindustries and jobs where the worker does notwork continuously.

Reduced toseven hoursfor:

Such as working under ground



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Rest Periods and Weekly Rest

DaysRestPeriods

No worker shall work for more than five consecutive hourswithout a break of no less than thirty minutes each time during thetotal working hours for rest, prayer and meals,

shall not be included in the actual working hours.During such periods, the worker shall not be under the

employers authorityworker shall not remain at the workplace for more than eleven

hours a dayThe employer shall not require the worker to remain at the

workplace during such breaks.

Weekly RestDays

Friday shall be the weekly rest day for all workers.After proper notification of the competent labor office, the

employer may replace this day for some of his workers by anyother day of the week.

The employer shall allow the workers to perform their religiousobligations.

The weekly rest day may not be compensatedby cash.The weekly rest day shall be at full pay and shall not be less than

twenty-four consecutive hours.


Overtime

Overtime 1. The employer shall pay the worker forovertime working hours an additionalamount equal to the hourly wage plus

50% of his basic wage.2. If the firm is operated on the basis ofweekly working hours, the hours inexcess of the hours taken as thecriterion shall be deemed overtimehours.

3. All working hours performed duringholidays and Eids shall be deemedovertime hours.



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LeavesLeave Type Entitlement

Annual paid leave: Not less than ( 21 ) days to be increased to no lessthan ( 30 ) after ( 5 ) years of service with employer.

Vacation wage paid in advance.To be enjoyed during the year it is due.Not to be financially compensated during service.Employer determine date of vacation based on

work requirements / by rotation.Employee can ask to defer it to the following year

with employer approval.Employer with the consent of employee may defer

it for ( 90 ) days maximum the end of thefollowing year with employee agreement.

Un used vacation shall be compensated at theend of service,


Leaves ContdChildbirth: 1 dayMarriage: 3 daysDeath of spouse or

ascendants ordescendents:

3 days

Death of husband 15 daysPerforming Hajj: 10 15 days one time during serviceUnpaid leave: 20 days if more contract will be

suspended for the duration agreedupon between the employer and the

workerMaternity leave: Four weeks before expected date of

delivery and six weeks after delivery21/03/1433 53r. Hatim S. Abu ljadayel


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Leaves ContdEducationalleave:

( Period required to set for the examfor unrepeated educational year ).

Unpaid educational leave for repeatededucational year.

Worker shall apply for it ( 15 ) daysprior to exam dates.

Sick leave: During one year starting from firstsick leave , weather consecutive orinterrupted:First ( 30 ) days full wage.Next ( 60 ) days 75% paid.Next ( 30 ) days unpaid


Employment of WomenLabor law does not differentiate between male and female workers except forthe following:

DangerousWork and

It is prohibited to employ women in hazardous jobs orindustries.

Hazardous jobsor industries are:

Mines and quar ries and Materials extraction of metal fromthe ground

Energy / Power generation, conversion and transfer.Work in sanitation, Gas Pipe and d istribution, and other

petroleum derivatives.

Night Work Women may not work during a period of night the durationof which is not less than eleven consecutive hours, except incases determined pursuant to a decision by the Minis ter.

Exceptions If nature of work is medical ,charitable, educational andtraining work.

family members onlyIn case of force majeure and emergencyIf night work is necessary to preserve the materials from

rapid Spoilage /damage



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Maternity leave

WageduringMaternityleave

Half her wage if she has been in servicefor one year or more, Full wage if she has served for threeyears or more as of the date ofcommencement of such leave. Half wage during paid annual leave ifenjoyed paid maternity leave during thesame year.

Medicalcare

An employer shall provide medical care forfemale workers during pregnancy anddelivery.


Employment of Women

Benefits ImplicationsAn employerwho employs

fifty femaleworkers andmore.

Shall provide them with a suitable placewith adequate number of babysitters to

look after the children under the age ofsix years, if the number of childrenreaches ten and more.

Employer whoemploys ahundredwomen andmore in asingle city.

To set up a nursery, either on his own orin conjunction with other employers inthe same city, or alternatively to contractwith an existing nursery to care for thechildren of the female workers who areunder six years of age during the workperiods.



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Employment of Minors

Any person under the age of fi fteen years may not be employedor allowed to enter places of work.Minors may not be employed in hazardous jobs or harmfulindustries or in occupations or jobs that may endanger theirhealth, safety or morals due to the nature or conditions of thesame.

As an exception to Paragraph (1) of this Article, the Minister mayallow

the employment or work of persons between 13 and 15 years ofage in light works, subject to the following conditions:

Such jobs shall not be potentially harmful to their health orgrowth.

Such jobs shall not hinder their school attendance,participation in orientation or vocational training programs,or impair their ability to benefit from their schooling.


HRM 301

7. Protection against OccupationalHazards, Major Industrial accidentsand Work Injuries, and Health and

Social Services



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Employment injury and

occupational disease


The employmentinjury is:

Any accidentsuffered by the

contributor during

performance or byreason of work.

The occupationaldisease is: the

one developed asa result of

working in a

profession thatcauses such

diseaseThe Occupational Hazards Branch applies mandatory to Saudis and non Saudis.The contribution rate is 2% of the wage paid only by the employer.

HRM 301

9. Commissions for SettlementOf Labor Disputes



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Commissions for Settlement

of Labor DisputesCommissionsfor settlementof labordisputes are:

1. The Preliminary Commissions forSettlement of Disputes.

2. The High Commission forSettlement of Disputes.

Dr. Hatim S. Abu ljadayel 6121/03/1433

Commissions for Settlement ofLabor Disputes

ThePreliminary

Commissionshall havejurisdiction to:

1. Render final decisions on:1. Labor disputes, irrespective of their type,

the value of which does not exceed tenthousand riyals.2. Objection to the penalty imposed by the

employer upon the worker.3. Imposition of the punishments provided

for in this Law for a violation of which thepunishment does not exceed fivethousand riyals and violations with acombined punishment not exceeding fivethousand riyals.



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Commissions for Settlement of

Labor Disputes

ThePreliminaryCommissionshall havejurisdictionto:

2. Render preliminary decisionson:

1. Labor disputes the value ofwhich exceeds ten thousandriyals.

2. Disputes over compensations

for work injuries, irrespectiveof the amount of thecompensation.

3. Disputes over termination ofservice.


Commissions for Settlementof Labor Disputes

ThePreliminary

Commissionshall havejurisdictionto:

4. Imposition of the punishmentsprovided for in this Law for aviolation the punishment of whichexceeds five thousand riyals andviolations with a combinedpunishment exceeding fivethousand riyals.



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Commissions for Settlement

of Labor DisputesThe HighCommissionfor Settlementof Disputes

Each of the circuits of the HighCommission shall have jurisdiction todecide finally and definitively on allappeals brought before it againstdecisions of the circuits of preliminarycommissions.Decisions may be appealed within thirtydays from the date of utterance of thepreliminary circuits decisions made inthe presence of the parties and from thedate of notification in other cases.


an overview of the saudi labor law

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