Saudi Arabia has recently updated its Labour Law, with significant implications for both employers and employees. These amendments reflect the Kingdom’s commitment to enhancing worker rights, streamlining employer responsibilities, and modernizing the labour market.
Key Changes and Their Impact
1. Resignation Procedures
- Resignation is now defined as a voluntary termination of a fixed-term contract by the employee, with employer acceptance.
- Employers must respond to a resignation within 30 days, or it is considered accepted.
- Employees can withdraw their resignation within seven days.
Impact on Employers:
- Employers need clear procedures to handle resignations effectively, ensuring timely responses to avoid automatic acceptance.
Impact on Employees:
- Employees gain clarity on the resignation process, allowing them to make informed decisions.
2. Extended Probation Period
- The probation period has increased from 90 to 180 days.
- Both parties can terminate the contract during this period.
Impact on Employers:
- This provides greater flexibility in evaluating new hires but raises the risk of termination during probation.
Impact on Employees:
- Employees must understand their rights and responsibilities during this extended period.
3. Overtime and Compensation
- Employers can now offer compensatory leave instead of overtime pay, with the employee’s consent.
- Mandatory benefits include accommodation or transportation allowances.
Impact on Employers:
- Flexibility in managing overtime, but with additional costs related to accommodation or transportation.
Impact on Employees:
- Employees have a choice between overtime pay and compensatory leave, emphasising the importance of provided benefits.
4. Termination of Employment Contract
- Bankruptcy is now a lawful reason for termination.
- The timeframe for employees to object to disciplinary actions has been extended.
Impact on Employers:
- Employers must update termination procedures and be aware of the extended timeframe for disciplinary actions.
Impact on Employees:
- Employees have more time to respond to disciplinary actions and understand the new grounds for termination.
Practical Steps for Employers
- Review and Update Contracts: Ensure compliance with new regulations.
- Develop Resignation Policies: Establish clear procedures for handling resignations.
- Implement Overtime Strategies: Decide between compensatory leave or overtime pay.
- Assess Accommodation Policies: Ensure compliance with new requirements.
- Strengthen Disciplinary Procedures: Align with revised timelines for objections.
Summary
Saudi Arabia’s Labour Law updates of August 2024 introduce significant changes that affect resignation procedures, probation periods, overtime compensation, and termination grounds. Employers must stay informed and adapt their policies to ensure compliance and foster a positive work environment.
Key Takeaways
- Resignation Process: Clear procedures and timelines are essential.
- Extended Probation: Provides flexibility but requires careful consideration.
- Overtime Options: Employers must balance flexibility with employee rights.
- Termination Grounds: Bankruptcy is now a valid reason for termination.
- Updated Policies: Employers should review and update contracts and procedures.
How 360 Business Law Can Assist
The 360 Business Law team offers expert guidance on navigating Saudi Arabia’s evolving labour laws. We provide tailored legal advice to ensure your business remains compliant with the latest regulations. Our services include contract reviews, policy development, and strategic consultations to help you manage your workforce effectively. Partner with us to safeguard your business and stay ahead of legal changes in Saudi Arabia.