Employee and Labor Relations in Saudi Arabia in Compliance with Saudi Labor Law Vision 2030

Organizations operating in Saudi Arabia face a difficult challenge for employee and labor relations: aligning their processes, policies and culture to the 2030 Vision of the Saudi Labor Law, which governs employee and labor relations, while staying compliant and respecting Sharia principles. If you’re an HR leader still figuring out how to adapt and implement these updates, this article is the right place to start. 

Saudi Arabia’s Evolving Labor Market 

The last update to the Saudi Labor Law in 2023 supports the strategy to diversify its economy beyond oil, have a more inclusive labor market, protect employees and enforce the law with strict measures. This changes employer obligations and creates new cultural and legal expectations that companies must meet.  

Among the transformation goals for this plan are: 

• Reduce unemployment among Saudis following the Nitaqat policy.

• Increase female workforce participation.

• Grow private sector employment through Saudization.

• Modernize labor laws to attract global talent and improve working conditions.

Legal Framework and Cultural Considerations for Employee and Labor Relations in Saudi Arabia 

To understand how the latest changes to Saudi Labor Law translate into employee and labor relations, HR leaders must first comprehend the legal and cultural aspects that drive change. 

• Guarantee Arabic-language written contracts and register digitally all contracts via Qiwa with the possibility of indefinite contracts for Saudi nationals and fixed-term, part-time, seasonal or remote work mostly for foreign workers. Provide monthly digital pay slips, pay overtime at 150% of base salary and pay penalties for over five days of late wage payment. 

• Manage working hours, leave and termination with precision. The standard for working hours is eight hours a day or 48 hours per week, with a reduction to six six-hour workdays for Muslim employees during Ramadan. Maternity leave has been extended to 12 weeks, while paternity and bereavement leave are now included with three days. For termination, companies must follow the mandatory structured notice periods, provide documented reasons and consider the 180-day probation extension to avoid the arbitrary dismissals that can be legally challenged and reversed. 

• Follow workplace culture influenced by Islamic values and hierarchical norms. Processes, procedures and policies must follow the top-down decision-making and should provide paths to avoid direct confrontation. While reforms increased female participation with equal pay laws, workplace dynamics are still influenced by gender roles. Employees’ protection from harassment and unsafe conditions, including discrimination of any type, is essential. Finally, companies must respect religious practices like prayer times and Ramadan and reserve Friday for religious observance with a Sunday to Thursday workweek. 

While this may look like a checklist to follow, the strategic role of HR in supporting Vision 2030 goals is a cultural and operational transformation that must carefully consider employer obligations and best practices. In other words, HR leaders are responsible for employee and labor relations compliance. 

HR Challenges for Saudi Companies 

HR leaders are tasked with onboarding, retaining and training Saudi talent who expect flexibility and growth to replace expatriates. Companies that don’t meet Saudization quotas under the Nitaqat program will face fines or operational restrictions. Balancing these numbers without losing productivity is a challenge for Saudization compliance. 

Companies must create inclusive working conditions among women, youth and diverse teams, providing career advancement opportunities or risk penalties and reputational damage for an incident occurrence. HR teams are constantly investing in strategic hiring, career development and better compensation packages, representing a constant challenge. 

Many companies still struggle to adopt digital transformation and rely on manual processes that slow down operations while risking compliance. The trend is clear: Saudi companies are expected to adopt employee and labor relations systems that grow with them. 

Employee engagement and well-being are clear requirements for companies in Saudi Arabia to provide safe work environments, proactively preventing harassment and discrimination and implementing Employee Assistance Programs (EAP) to support employees’ mental health while protecting their privacy and sensitive information. 

However, the biggest challenges for HR leaders in Saudi Arabia are managing rapid organizational change while ensuring systems and practices align with the goals of Vision 2030 and comply with the Saudi Labor Law. 

Sodales – The System for Employee and Labor Relations Compliance 

While most employers still manage all these requirements with fragmented tools and inconsistent data, operational efficiency and compliance are at risk. 

But there’s a better way that not only helps organizations stay compliant but also increases productivity and efficiency. With Sodales, your team regains time freeing them from manual reporting to focus on strategy, which positively impacts operational efficiency.  

With Sodales, your organization gets: 

1. Compliance automation through pre-built workflows that align with the Saudi Labor Law. These workflows support digital contract management, track leaves such as maternity leave and manage termination procedures with defined notice periods. Automated triggers initiate workflows and send notifications to the relevant stakeholders, ensuring each step is documented and monitored, in accordance with Saudi Labor Law. This helps organizations stay compliant and reduces the risk of legal violations. 
2. Workforce Localization & Saudization: With Sodales’ Union Job Bidding, organizations enable transparent job bidding which can help meet Saudization quotas by tracking hiring practices and promoting fair employment for Saudi nationals. 
3. Occupational Health & Safety Medical Services (OHS): Support employee well-being with integrated OHS medical management tools like clinical services, randomized and scheduled testing and employees’ secure login access to monitor their health and treatment plans. 
4. Support employees’ well-being. Sodales’ EAP Case Management facilitates the full counselling process with high confidentiality, enabling organizations to proactively identify high-risk areas, measure resilience and integrate with Sodales employee and labor relations. 
5. Provide a culture of safety and trust while managing workplace harassment and violence cases with Workplace Violence Incident Prevention. The Saudi Labor Law has zero tolerance for harassment; this feature enables organizations to resolve conflicts in compliance with legal and regulatory alignment. 
6. Create inclusive working conditions through Sodales’ Accommodation Case Management. Whether you get a religious, medical or ergonomic accommodation request, you can track and manage each one separately throughout the employee lifecycle, from recruitment to return-to-work, ensuring regulatory alignment across jurisdictions. 
7. In high-risk industries, manage workplace incidents and disability claims in a unified platform that ensures compliance with Saudi Labor Law. With Sodales’ Integrated Incident and Disability Management, organizations have access to tools to track, document, and resolve such cases efficiently, from short-term disabilities to long-term and near-misses, helping maintain legal compliance and support employee wellbeing. 
8. Access digital integration to the systems your organization already manages. Sodales integrates with platforms like SAP, Workday, Dayforce, and more, enabling seamless digital operations, facilitating digital transformation in organizations. 
9. Multilingual interface. Sodales is a multilingual interface that supports diverse workforces, essential for companies balancing expatriate and local talent. 

Moreover, Sodales empowers organizations to enhance productivity and decision-making with different AI features, such as: 

• AI-generated summary to get access to real-time, instant audit-ready summaries with one click. 

• AI CBA-Lookup, which empowers HR leaders to quickly find policy information across large collective bargaining agreements, multiple contracts and other types of agreements, finding details in seconds. 

• AI Streamlined Case Intake & Investigation enables your team to quickly create an incident case by answering guided questions led by the agentic AI, even offline, on your phone. 

• AI Investigation Recommendation that quickly identifies potential root causes and suggests next steps based on the incident description, past historical data, and your organization’s workflow; you remain in power to accept or reject the suggestions. 

• Return-to-Work Program Assistance streamlines accommodation cases by offering context specific recommendations based on case history, medical suggestions and incident details. 

In a fast-evolving labor market shaped by the latest changes to the Saudi Labor Law, organizations must embrace innovation to ensure compliance and improve operations. 

Sodales is not only a platform, but also a strategic partner that empowers organizations to align their operations to the Saudi Labor Law, empowering HR leaders to manage change and enhance employee well-being, while increasing productivity. 

With more than five million users globally and trusted by internationally recognized brands in highly regulated and high-risk markets like oil and gas, utilities and mining; public sector, manufacturing and retail; construction, operations and engineering; transportation and healthcare, at Sodales, we are helping organizations manage compliance, employee and labor relations and workplace safety. 

Book a demo today and learn how Sodales can help your organization to align your employee and labor relations with Saudi Labor Law.