KSA announces much awaited amendments to its Labour Law and Implementing Regulations 2024

On 6 August 2024, the KSA Ministry of Human Resources and Social Development (“MHRSD”) announced the Cabinet’s approval of amendments to the KSA Labour Law and its Implementing Regulations. A range of proposed amendments were originally published for public consultation in 2020 with implementation delayed due to Covid. Now these amendments will be effective 180 days from their publication in the Legal Gazette which we anticipate will occur later this month.

These amendments aim to modernize the labour market, enhance worker rights, streamline employer responsibilities, and ensure compliance with contemporary labour standards. This article is a series of articles in which we will examine the key changes and their practical application. We note that the Labour Law is supplemented by Implementing Regulations which the MHRSD update from time to time and much of the detail of these amendments will be provided in updated Implementing Regulations.

Key definitions and terms

Of note is the inclusion of two new definitions as follows:

• Resignation: "A written declaration by the employee expressing their desire to terminate, without coercion, a fixed-term employment contract, without any reservations or conditions, and the employer’s acceptance thereof."
• Manpower activity: A service that recruits and provides employees to employers on a contractual basis, through a licensed manpower agency."

Readers will be familiar that until now, the concept of resignation was not expressly acknowledged by the KSA Labour Law and this is a significant step forward for both employers and employees in managing employee relations. Similarly, while the MHRSD has long had specific regulation of manpower agencies, it has not had a definition of the service they are licensed to provide within the Labour Law which has sometimes led to confusion in the labour model businesses can adopt. 

Wage and compensation regulations

• Overtime: Employers can now, with employee consent, provide compensatory leave instead of overtime pay. The detail of how this will be regulated will be in the Implementing Regulations. 
• Accommodation and transportation: Employers must either provide accommodation and transportation or pay equivalent allowances to employees as part of their employment package.  

Resignation procedures

New provisions regulate the resignation process for employees employed on limited term employment contracts:

• Automatic acceptance: If the employer did not respond to an employee’s resignation within 30 days of submission, it is considered accepted.
• Employer's right to delay: Employers can delay the acceptance of a resignation for up to 60 days if work interests necessitate it, with written justification provided to the employee before the initial 30-day period expires. We anticipate this causing some confusion for both employers and employees.
• Effective date: The employee’s employment ends on the earlier date on which: (i) the resignation is accepted by the employer; (ii) the date 30 days after submission of the resignation if there is no response from the employer; or (iii) upon the expiration of the delay period if a justified delay was issued by the employer.
• Employee's right to withdraw: Employees can withdraw their resignation within seven days of submitting it, provided the employer has not already accepted it.
• Prohibition of postdated resignations: Resignation requests cannot specify a future date for the resignation to take effect.

Probation period

Provisions concerning the probation period have been clarified:

• Duration and terms: The probation period must be explicitly stated in the employment contract and cannot exceed 180 days. The implementing regulation will provide more details on whether the probation period can be set at 180 days, unlike the previous law which required the probation period to be 90 days with the possibility of extension.
• Exclusions: The implementing regulations will clarify which holidays will be included in the probation period and which holidays will not be included in the probation period.
• Termination rights: Both parties have the right to terminate the contract during the probation period, unlike the previous law which allowed for parties to agree otherwise.

Exemptions from the Labour Law

• Employees on ships with a load of less than 500 tons are no longer exempt from the Labour Law. 

Non-KSA national contract duration 

• The employment contract for a non-KSA national worker must be written and for a fixed-term. If the contract does not specify its duration, it is considered to be for one year from the date on which the employee started. If the employment continues after the expiry of this period, it is deemed to be renewed for a period of the same duration.

Holiday and leave 

• Maternity leave: Maternity leave has been increased to 12 weeks on full pay, with six weeks to be taken immediately after the delivery and the remaining six weeks to be taken starting (at the earliest) four months before the expected date of delivery.
• Parental leave: Male employees will be entitled to three days’ parental leave to be taken within seven days following the delivery.
• Bereavement leave: All employees will be entitled to three days’ bereavement leave in the event of the death of a sibling .

Termination of the employment contract 

• Bankruptcy: Bankruptcy has been added as a lawful reason for terminating an employment contract.
• Disciplinary actions: Employees must object to any disciplinary action within 30 days (previously 15 days). If no response is received within 15 days, the employee may file a claim in labour courts within 30 days only.

Notice period

• The notice period for terminating an indefinite contract has been modified to 30 days if terminated by the employee, and 60 days if terminated by the employer. 

Detailed amendments to specific articles

The document provides a table comparing the articles before and after the amendments. Here are some of the key changes:

Article 2

• Before amendment: Defined various terms such as the Ministry, Minister, and Labour Office.
• After amendment: Updated terms and definitions to reflect current organizational structures.

Article 199

• Before amendment: Employers and their representatives must provide necessary facilities to labour inspectors and comply with their requests.
• After amendment: Requirements reiterated with minor wording changes for clarity.

Article 178

• Before amendment: “Seamen shall be provided with food and accommodation at the expense of the vessel chandler. This shall be regulated by a decision issued by the Minister.”.
• After amendment: A distinct Ministerial Resolution will establish the Maritime Labour Provision (Regulation of Maritime Work), in coordination with the Transport General Authority. It will outline the rights and obligations of both parties, covering living conditions, safety, food, sleep, entertainment on board the ship. In addition, it will cover injury prevention, healthcare, working hours, rest periods, vacations, training, and skill development. It will also address employees repatriation, ship compliance certification, inspection and monitoring, violations, penalties, and complaint resolution procedures.

Article 230

• Before amendment: No specific penalties for violations of Article 30 (1) regarding providing recruitment and manpower activities without having a proper certification form The MHRSD.
• After amendment (new added article): Introduced new penalties with fines ranging from SAR200,000 to SAR500,000 for violations providing these services without having a proper certification form The MHRSD.

Conclusion

These changes will require all employers to review their company employment contracts and amend their employment policies and procedures. Please get in touch if you require any assistance.