Saudi Arabia’s recent amendments to its labour law mark a shift towards a more structured, transparent employment environment.
Set to take effect on February 18, 2025, these changes align with the kingdom’s Vision 2030 goals, aiming for a balanced labour market that encourages fair treatment, Saudisation and improved work conditions.
Here, we break down the core changes, their legal and practical impact, and key actions for businesses to ensure compliance.
Heightened regulations for staffing and outsourcing
The amendments bring significant changes to staffing and outsourcing regulations. As the Ministry of Human Resources and Social Development places a new emphasis on regulating companies that supply temporary labour, these businesses face stricter licensing requirements and hefty fines (200,000 Saudi riyals to 500,000 Saudi riyals, the equivalent of $53,000 to $133,000) for non-compliance.
The sectors most impacted include construction, logistics, manufacturing and technology, where temporary labour is heavily relied upon.
Employers need to verify that staffing providers hold the correct licences and that all contract terms comply with the new regulations.
This shift pushes companies to reconsider their approach to workforce management and emphasise hiring through official, licensed channels. It aligns with Vision 2030’s focus on Saudisation, which encourages the hiring of Saudi nationals by making alternative hiring routes and government-backed platforms more prominent.
Failure to comply not only risks operational disruption but can also lead to substantial reputational damage.
Enhanced leave provisions
The new amendments also expand leave entitlements, granting 12 weeks of maternity leave (six of which are mandatory post-birth), three days of paternity leave, and an additional three days of bereavement leave for the death of a sibling.
These changes reflect a progressive shift towards global labour standards, focusing on work-life balance and family support.
Employers should review current leave policies and update employee handbooks to reflect these entitlements, ensuring smooth implementation and avoiding potential conflicts.
Detailed documentation and clear communication of these policies are essential, allowing employees to understand their rights and promoting a supportive workplace culture that aligns with the new legal framework.
Reinforced anti-discrimination and equal opportunity mandates
The amendments introduce stringent anti-discrimination policies, emphasising equal opportunity across hiring and employment. The law now prohibits discrimination based on race, gender, disability, or age, requiring employers to adjust hiring practices and HR policies accordingly.
In sectors historically prone to disparities – such as recruitment, promotion and compensation – companies are now legally obliged to enforce equitable treatment.
This mandate calls for concrete action, including standardised hiring criteria, regular audits of recruitment practices, and clear job descriptions.
Streamlined probation and termination processes
The amendments provide clarity on probationary terms, now allowing a maximum period of 180 days without needing renewal agreements. Additionally, specified-term contracts can now be resigned from before their term, with resignation becoming effective after 30 days without an employer’s response.
These changes align with the kingdom’s Vision 2030 goals, aiming for a balanced labour market that encourages fair treatment, Saudisation and improved work conditions
Jean Abboud,
partner – head of Saudi office, BSA Law
For indefinite-term contracts, the notice period stands at 30 days for employees and 60 days for employers.
These changes simplify contract management, reducing the administrative load for HR teams and ensuring transparency in the employer-employee relationship.
Obligations for housing, transportation and training
The new amendments impose additional responsibilities on employers, specifically concerning housing and transportation allowances, which can either be provided directly or as cash equivalents.
This mandate is particularly relevant for organisations employing a significant number of expatriates, as it aligns with the government’s goal of improving living standards for foreign workers.
Further, employers with 50 or more employees are now required to establish training programmes focused on Saudi nationals. This aligns with Vision 2030’s Saudisation goal, pushing companies to invest in upskilling local talent and reducing dependence on foreign labour.
Companies across all sectors will need to integrate formal training plans and track their effectiveness as part of this localisation effort.
Steps for business compliance
These amendments reflect a deeper commitment to regulatory alignment, presenting challenges and requiring proactive measures from employers. Key steps for businesses include:
- Review staffing contracts: Companies should ensure staffing partners comply with the new licensing requirements to avoid penalties and operational disruptions.
- Update policies and communicate with employees: Employers must update employee handbooks and internal policies to align with the new leave entitlements, anti-discrimination standards, and probation terms, ensuring these changes are effectively communicated to avoid misunderstandings.
- Develop Saudi-focused training programmes: Meeting the new training requirements for Saudi employees is essential for compliance and can contribute positively to talent development within the organisation.
- Maintain thorough documentation: Keeping detailed records of training sessions, leave entitlements, and any contract updates is essential for meeting the regulatory requirements and ensuring smooth audits or reviews by authorities.
Jean Abboud is partner – head of Saudi office at BSA Law
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
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Bayern Munich v Real Madrid
When: April 25, 10.45pm kick-off (UAE)
Where: Allianz Arena, Munich
Live: BeIN Sports HD
Second leg: May 1, Santiago Bernabeu, Madrid
Day 5, Abu Dhabi Test: At a glance
Moment of the day When Dilruwan Perera dismissed Yasir Shah to end Pakistan’s limp resistance, the Sri Lankans charged around the field with the fevered delirium of a side not used to winning. Trouble was, they had not. The delivery was deemed a no ball. Sri Lanka had a nervy wait, but it was merely a stay of execution for the beleaguered hosts.
Stat of the day – 5 Pakistan have lost all 10 wickets on the fifth day of a Test five times since the start of 2016. It is an alarming departure for a side who had apparently erased regular collapses from their resume. “The only thing I can say, it’s not a mitigating excuse at all, but that’s a young batting line up, obviously trying to find their way,” said Mickey Arthur, Pakistan’s coach.
The verdict Test matches in the UAE are known for speeding up on the last two days, but this was extreme. The first two innings of this Test took 11 sessions to complete. The remaining two were done in less than four. The nature of Pakistan’s capitulation at the end showed just how difficult the transition is going to be in the post Misbah-ul-Haq era.
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Defence review at a glance
• Increase defence spending to 2.5% of GDP by 2027 but given “turbulent times it may be necessary to go faster”
• Prioritise a shift towards working with AI and autonomous systems
• Invest in the resilience of military space systems.
• Number of active reserves should be increased by 20%
• More F-35 fighter jets required in the next decade
• New “hybrid Navy” with AUKUS submarines and autonomous vessels
Honeymoonish
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UAE jiu-jitsu squad
Men: Hamad Nawad and Khalid Al Balushi (56kg), Omar Al Fadhli and Saeed Al Mazroui (62kg), Taleb Al Kirbi and Humaid Al Kaabi (69kg), Mohammed Al Qubaisi and Saud Al Hammadi (70kg), Khalfan Belhol and Mohammad Haitham Radhi (85kg), Faisal Al Ketbi and Zayed Al Kaabi (94kg)
Women: Wadima Al Yafei and Mahra Al Hanaei (49kg), Bashayer Al Matrooshi and Hessa Al Shamsi (62kg)
Dr Graham's three goals
Short term
Establish logistics and systems needed to globally deploy vaccines
Intermediate term
Build biomedical workforces in low- and middle-income nations
Long term
A prototype pathogen approach for pandemic preparedness
