Continuous Contract Of Employment Template for Saudi Arabia

A Continuous Contract of Employment is a legally binding document that establishes an ongoing employment relationship between an employer and employee in Saudi Arabia. Unlike fixed-term contracts, this agreement has no predetermined end date and continues until terminated by either party according to the procedures outlined in Saudi Labor Law. You'll need this document to formalize indefinite employment arrangements while ensuring full compliance with local regulations.

When do you need this document?

You need a Continuous Contract of Employment when hiring employees for permanent positions in Saudi Arabia. This includes situations where you're establishing new employment relationships, converting existing fixed-term contracts to permanent arrangements, or ensuring your current employment documentation meets updated legal requirements. The document is particularly crucial for private sector companies subject to Saudization quotas and businesses operating under the Wage Protection System. You'll also require this contract when hiring both Saudi nationals and expatriate workers, as the employment terms must comply with different visa and residency requirements for each category of employee.

Key legal considerations

Your contract must clearly define the employment relationship, including job responsibilities, working hours, compensation structure, and termination procedures. Under Saudi Labor Law, you must specify the employee's position, workplace location, and reporting relationships. The agreement should address probationary periods, which cannot exceed 90 days for most positions, and outline performance evaluation criteria. Social insurance contributions are mandatory for all employees, and your contract must reference compliance with these obligations. You should also include provisions for annual leave entitlements, sick leave policies, and end-of-service benefits calculations. Termination clauses must align with Royal Decree No. M/51 requirements, including notice periods and severance payment obligations.

Legal requirements in Saudi Arabia

Saudi Labor Law requires all employment contracts to be written in Arabic, though bilingual versions are acceptable for expatriate employees. Your contract must comply with maximum working hour limits of 48 hours per week during Ramadan and regular periods. The Wage Protection System mandates electronic salary payments through approved banks, which must be referenced in your employment terms. For companies subject to Nitaqat regulations, you must maintain minimum Saudi employee quotas and demonstrate compliance through your hiring practices. The contract should specify the applicable social insurance coverage under the Social Insurance Law, including workplace injury protection and pension contributions. Additionally, you must ensure all employment terms meet or exceed minimum wage requirements and include mandatory benefits such as housing allowances for certain employee categories.