Summary
Annual leave under Saudi labor law: days owed, how leave pay is calculated, carryover limits, whether employers can cancel it, and payout on exit.
How Many Days of Annual Leave Does Saudi Labor Law Require?
Article 109 of the Labor Law sets the floor: paid annual leave of not less than 21 days per year of service, rising to 30 days once the employee completes five consecutive years with the same employer. This is a minimum that cannot be contracted below, though employers may grant more by contract or internal policy.
The same article requires the employer to pay leave wages in advance, before the leave begins, a point many HR departments miss by paying on the usual payroll date.
The rule applies to all private-sector employees, Saudi and expatriate alike; nationality does not reduce the entitlement. Public-sector employees fall under civil service regulations, and domestic workers are governed by a separate regulation.
How Is Annual Leave Pay Calculated?
Leave pay is calculated on the actual wage, not basic salary alone. The definition of wage in Article 2 covers the basic wage plus fixed allowances such as housing and transport and any other benefits fixed in the contract. An employer who pays leave on basic salary only is exposed to a claim for the difference.
An illustration: an employee earning SAR 12,000 a month (SAR 8,000 basic plus SAR 4,000 fixed allowances) with two years of service. The daily wage on a 30-day month is SAR 400, so 21 days of annual leave is worth SAR 8,400, payable before the leave starts. After five years the entitlement becomes 30 days, a full month's wage.
Leave accrues in proportion to service. Six months of a service year earns 10.5 days; nine months earns 15.75 days. Eid holidays, National Day and Founding Day falling inside a period of annual leave are not deducted from the balance, because Article 112 treats them as separate fully paid holidays.
Can the Employer Postpone Leave or Fix Its Timing?
Yes, within limits. Article 109 gives the employer the right to fix leave dates according to work requirements, provided the employee is notified of the date at least thirty days in advance.
Carryover is governed by Article 110. An employee may, with the employer's consent, defer all or part of the leave to the following year. The employer may, for work-related reasons, postpone leave for up to ninety days after the end of the year in which it fell due; postponing beyond that requires the employee's written consent, and in no case beyond the end of the year following the year of entitlement.
The practical conclusion: carryover is lawful when documented and time-limited, and any written carryover policy should set a clear window for using the deferred balance.
Can the Employer Cancel Unused Leave Balances?
This is the most frequently asked question among HR teams, and the answer is no. Accrued leave is a statutory right that does not lapse at year-end, and the employer cannot administratively zero the balance without compensation. A "use it or lose it" clause reduces a right established by mandatory law, and it is among the most common triggers of HRSD complaints and labor court claims.
Three practices must be distinguished. Carryover is lawful under the conditions of Article 110. Compulsory scheduling is lawful on thirty days' notice. Forfeiture without payment has no legal basis and typically ends in a judgment ordering the employer to pay the cash value of the cancelled days plus the cost of the dispute.
Nor may the current year's leave simply be bought out in cash instead of granting actual rest; the purpose of leave is rest, not money. Encashment belongs at the end of service or when a deferred balance cannot be taken.
How Is Unused Leave Paid Out at the End of Service?
Article 111 provides that an employee who leaves before using accrued leave is entitled to its wage for the period not taken, and to a proportionate amount for any part-year served.
This right holds in every form of exit: resignation, termination by the employer, and even dismissal for cause under Article 80, since dismissal ends the relationship but does not erase a right earned before it. The leave value is paid as part of the final settlement alongside the end-of-service award within the deadlines set by Article 88.
Because leave value and the end-of-service award are both calculated on the same wage, an error in one usually reveals an error in the other. We advise employers to reconcile leave records before issuing any final settlement to avoid a follow-on claim.
How Are Leave Disputes Resolved and What Is the Time Limit?
A dispute begins with a complaint to the Ministry of Human Resources through the amicable settlement service; if settlement fails, the case is referred to the Labor Court under the Ministry of Justice. A settlement documented at the ministry stage is binding on both parties, so it should be treated as a real opportunity rather than a formality. See our comprehensive guide to labor disputes for the full pathway.
The decisive documents: the employment contract and leave policy, the leave register with requests, approvals and dates, payslips establishing the daily wage, correspondence on refusals or forfeiture, and the final settlement statement where service has ended.
A critical note on timing: Article 222 of the Labor Law bars claims for rights arising from the contract once twelve months have passed since the end of the employment relationship. Delay extinguishes the right however certain it is.
Our recommendation to employers: review the leave policy and delete any forfeiture clause, calculate leave pay on the full wage, and settle balances in cash at exit. To employees: keep a personal record of leave taken and refused. Faisal Siddiqui Law Firm in Jeddah and Riyadh reviews leave policies and represents both sides in leave disputes.