New Saudi Employment Law Changes 2025: What Employers Need to Know

Saudi Arabia’s Kingdom-wide revision of its employment legislation, which took effect in early 2025, is the most extensive reform since the 2015 Labor Law amendment. The new regulations aim to promote fairness, increase worker mobility, and harmonize with international labor conventions, supporting Vision 2030’s goals of economic diversification, cultural progress, and global competitiveness.

Below, we will go over the most important modifications, outline employer requirements, and explain why lawyers in Saudi Arabia are so important in maintaining compliance.

1. Contractual Clarity & Iqama Compliance

A. Mandatory written and fixed-term contracts for expatriates.

• Non-Saudi employees now require a documented, fixed-term employment contract. If no term is selected, it defaults to a one-year period and will auto-renew unless notice is supplied.
• The Iqama (residence permit) must meet the contract’s requirements, and companies must obtain MOHRSD clearance before hiring any foreign worker.
• Lawyers in Saudi Arabia must lead the writing of contracts that adhere to Qiwa’s digital template and guarantee Iqama validity is consistent with employment requirements.

B. Easing mobility under the Kafala system

The 2021 amendments relaxed company control over exit visas and job transfers, but the 2025 adjustments confirm that expatriate employees can resign, transfer, or leave post-contract without sponsor consent. This results in increased worker liberty while placing additional obligation on employers and Saudi lawyers to advise on compliant separation arrangements.

2. Enhanced Leave & Overtime Rights

A. Extended probation period

Employers can now set up to 180-day probation periods, up from the previous 90-day limit (renewable once) (Pinsent Masons). Conditions: Employers must provide fair notice during probation and eliminate public holidays from calculations.

B. New leave entitlements:

• Maternity leave was expanded from 10 to 12 weeks (6 postpartum required).
• Paternity leave is three days and must be taken within seven days following delivery.
• Bereavement leave: 3 days paid leave for the death of a sibling; some drafts recommend 5 days for closer relatives.
• Overtime flexibility: employees may select compensatory leave (time off) instead of extra compensation, with 1.5 hours off every overtime hour, up to 30 days per year; any unused leave is due after separation.

These additions underscore an improved work–life balance and compel lawyers in Saudi Arabia to update leave policies and payroll systems accordingly.

3. Employer‑Provided Housing & Transport

Article 61 now requires employers to provide suitable housing and transportation, or provide similar allowances. While the legislation does not establish certain minimum standards, businesses must identify the type and value of such assistance. Lawyers in Saudi Arabia should advise on policy clarity to help reduce disagreements.

4. Anti‑Discrimination & Equal Opportunity

• A new legal requirement outlaws any workplace practices that hinder “equal chances or treatment,” including discrimination based on race, gender, disability, age, social standing, and more.
• Companies must aggressively develop inclusive hiring practices and internal rules. Lawyers in Saudi Arabia may help create non-discrimination rules, train HR staff, and ensure compliance, especially when female labor participation increases to 35%.

5. Saudization (Nitaqat) & Saudization Enforcement

• The labor reforms strengthen Saudization quotas by employing digital AI audits to match employment records, visa information, and payroll data for compliance.
• Misclassification or “quota dodging” carries serious penalties, including restricted government contracts, visa issuance, and access to procurement systems. Employers must submit full Saudization reports through Mudad. Lawyers in Saudi Arabia are essential for navigating Nitaqat, advising on work structure, and defending audits.

6. Dispute Resolution & Enforcement Modernization

• Digital dispute mediation and speedier timescales

Labour conflicts now begin with online pre-litigation mediation on Qiwa, with the goal of resolving pay and benefit concerns within three months. LDSC verdicts are promptly enforceable through the Enforcement Court.

• Right to grievance and appeal

Employees can now lodge internal written grievances within 30 days of receiving a penalty, and employers must respond within 15 days. Employees might take their case to court if resolutions are not reached. This provides a two-step compliance process in which attorneys in Saudi Arabia frequently assist employers in developing policies and responding to formal grievances.

7. Labour Inspection & Penalties

• A stricter inspection regime

MOHRSD inspectors can now issue electronic warnings; infractions must be remedied within three working days, otherwise formal reports and sanctions will follow. Employers must provide electronic evidence of compliance; failure to comply may result in fines or business limitations after the warning.

• Forced work policy

In January 2025, Saudi Arabia implemented its first National Policy to Eliminate Forced Labour, in accordance with ILO Convention 29. Employers must assure open recruitment, fair contracts, and no coercion. This strategy supports human rights inspection and external pressures for migrant worker safety in mega-projects such as Neom and World Cup infrastructure. Lawyers in Saudi Arabia assist with auditing recruitment procedures, implementing due diligence protocols, and addressing compliance issues.

8. Visas & Immigration Reforms

• Skill-based visa introduction: In early July 2025, Saudi Arabia transitioned from visa sponsorship to a skill-based system that centralized visas based on qualifications, digital tracking, and professional assessment.
• 30-day final leaving grace period: Expatriates with expired visit visas have a 30-day grace period to leave without penalties starting June 26, 2025. Employers managing short-term visitors must use Absher’s Tawasul platform to assist.

Saudi Arabia briefly suspended block-work visas for 14 countries, including India, Bangladesh, and Egypt, in May 2025, hurting construction and pilgrimage season workers. HR staff and attorneys in Saudi Arabia must monitor visa status changes and compliance concerns under Jawazat legislation.

9. Social Security & Retirement Restructuring

On July 3, 2025, GOSI reforms social insurance:

• New workers (after July 2024) retire at 65, with periodic contribution increments capped at +2%.
• Under-50s will retire at 65 in a staggered manner, while those over 50 will continue to use the current system.

These changes necessitate employer-employee classification, payroll system adjustments, and contribution monitoring. Legal oversight ensures proper execution.

10. Why Employers Should Partner with Lawyers in Saudi Arabia

This comprehensive reform transforms employment relationships, including recruitment, contracts, leave rights, Saudization, inspections, and digital systems. Non-compliance can result in fines, contract loss, reputational damage, or lawsuit.

Lawyers in Saudi Arabia offers:

• Legal preparation of compatible contracts and rules (leave, probation, and saudization).
• Due diligence in recruitment, forced labour audits, and visa status.
• Dispute resolution recommendations, including grievance procedures and Qiwa mediation.
• Support for digital audits, inspections, and MOHRSD enforcement.
• Provide guidance on wage transparency, payroll updates, and contract renewals.

11. Preparing for 2025 compliance: Action Plan for Employers

• Audit all employment contracts, switch to Qiwa digital templates, align Iqama terms, and validate expatriate fixed-term status.
• Update HR policies: extend probation to 180 days; specify leave (maternity, paternity, bereavement, and overtime compensatory time).
• Establish housing/transportation requirements, including allowances and benchmarks for expatriates and nationals.
• Implement equal opportunity policies, including non-discrimination training and grievance procedures.
• Saudization mapping involves assessing present quotas, restructuring staff planning, and submitting a Saudization report via Mudad.
• Conduct due diligence by auditing recruitment routes, revising contracts, and ensuring no forced labor indicators.
• Digitize payroll and social insurance systems by updating contribution rates, itemizing payslips, and accommodating social security changes.
• Implement dispute/inspection practices, including training teams on Qiwa mediation and establishing a swift reaction to inspector warnings.
• Monitor visa laws, including skill-based visas, grace periods, and suspensions for affected nationalities.
• Consult Saudi lawyers throughout, especially for contract preparation, compliance reviews, audits, and inspections.

12. Conclusion

The Saudi labor-law amendments of 2025 mark a significant shift in the kingdom’s labor relations. Saudi Arabia is making progress toward a more equal and competitive employment market by expanding leave rights, strengthening protections, upgrading dispute resolution processes, and improving enforcement.

However, with such a wide range of change, employers confront the issue of ensuring consistent compliance across contract, payroll, recruitment, Saudization, and digital integration systems. This is where Saudi attorneys may help—from risk assessment to audit representation and mediation support.

Proactive engagement, internal policy alignment, and external legal guidance can mitigate risks and position organizations for success in the face of developing job frameworks and lofty Vision 2030 ambitions.