Part of the amendments to the Labour Law introduced in October 2015 included a provision for the Ministry of Labour to introduce prescribed form employment contracts and work regulations. These documents have now been published alongside the implementing regulations for the Amended Labour Law and will be of considerable interest for employers operating in the Kingdom.

Prescribed Contract

The contract is five pages long with eight main clauses which are identified as being either compulsory, optional or to be chosen depending on whether the contract is a fixed term or an unlimited term. The contract will need to be completed on line and generated electronically, printed off and signed by all parties.  

The eight clauses are:

  1. contract purpose and subject which sets out the role, whether the contract is fixed term or unlimited together with the start date of employment and the probationary period;
  2. Days and hours of work on a daily or weekly basis. This clause also confirms the entitlement to overtime payable at the rate of a 50% surplus on the basic pay;
  3. Duties of the employer which include paying the stated remuneration (which can also be expressed on a piecemeal basis); awarding annual leave, private medical insurance, registering the employee with GOSI, covering all recruitment costs, visa costs, repatriation costs (including if the employee dies), awarding maternity leave (and breastfeeding leave) if applicable, and awarding bereavement leave;
  4. Duties of the employee which include performing work to the best of his ability and in line with instructions,taking care to preserve all equipment and property of the employer, working to the best of his ability to avoid any threat to health and safety, to undergo medical examinations at the employer’s request both before the employment starts or during the employment designed to ensure that the employee is fit to perform his job, to adhere to local customs and abide by laws and work regulations of the employer, agreeing to the employer deducting as necessary GOSI contributions through payroll;
  5. Termination of contract whether on expiry of the fixed term or by written notice. This clause sets out the employer’s right to terminate under article 80 of the Labour Law and the entitlement of the employee to terminate under article 81 of the Labour Law.Importantly, this clause also provides for the employer and employee to agree the compensation payable for an unjustified termination of the employment;
  6. End of service gratuity;
  7. The application of the Labour Law, the model work regulations and the implementing regulations in conjunction with the provisions of the contract;
  8. Process or format for communications between the employer and employee, importantly the employee is under a duty to inform the employer of his current or updated contact details.

Prescribed Work Regulations

The model work regulations have fifty-five regulations and an attached table of applicable disciplinary fines.  An employer may seek to add to these provisions and apply to the Ministry of Labour for approval of these additional regulations.  The application for approval must be submitted electronically and approval will also be sent electronically. Any regulations issued by an employer which are contrary to the Labour Law, the implementing regulations, model contract or model work regulations are void.

The model work regulations are extensive and some of its notable provisions include the following:

  • Clarification that a repatriation ticket is not payable by the employer if an employee resigns without reason during the probationary period, or if the employee is not capable of performing the role he was recruited into, or if his repatriation is due to his violation of a law and a fine being imposed whether administrative or criminal;
  • Eligibility criteria for promotion and the selection of equal candidates for promotion;
  • Clarification that nursing breaks following a return from maternity leave are applicable whether the employee’s baby is being breastfed or bottle fed and, that it is the employee’s duty to provide written notice to the employer requesting the break and when she would like to take it during the working day;
  • A duty on all employees to follow and adhere to Islamic principles and morals of behavior and, a duty not to mix with employees of the opposite sex; and
  • A duty on employers to inform employees and instruct them on what is acceptable behavior in the workplace and in particular to instruct employees on the prohibition on any form of harassment or action which would undermine dignity and morals or any form of assault or harm of another employee.

Implementing Regulations

The implementing regulations provide extensive clarification of particular articles of the Labour Law, including, for example, the use of seasonal workers and the terms of their engagement, duty to keep personnel records, duties to employ Saudi nationals and the role of the Human Resources Development Fund, leave entitlements and record keeping, exemptions from overtime entitlement and procedures for reporting and dealing with work place accidents.

Of note are the following clarifications of specific articles of the Labour Law:

  • Article 20 prohibiting an employer compelling an employee to work under duress includes a duty on the employer not to retain an employee’s passport without his written consent. The implementing regulations’ second appendix is an employee consent form for his passport to be held by the employer. This form must be issued in Arabic and also a language the employee understands;
  • Article 28 on the recruitment and employment of disabled employees, and in particular the official registration and recognition of disability, as well as the management of disabled employees;
  • Article 41 on the recruitment of foreigners, the transfer of sponsorship and the change in title or profession. There are extensive provisions on when sponsorship may be transferred between employers both with and without consent, and when employers can apply to amend employee professions and titles;
  • Articles 42 and 43 on the duty to train KSA nationals. These provisions clarify that the employer has a wider remit to decide the format of training, the timing and the nature of training. However, such training cannot be regular ‘on the job’ training. It must be a programme of training, including instructive sessions and attendance by the employee. The employer must keep extensive records of who has been selected for training and the training received as well as issuing certificates of training; and
  • Article 107 on permitted overtime hours is clarified to state that employees may be asked to work 720 hours of overtime in a year (an average of three hours a day) and can be asked by written agreement to do more overtime hours. This is a change from previous Ministry guidance which stated a cap on yearly overtime of 480 hours.