Local Employment Contract Template for Saudi Arabia

When you hire employees in Saudi Arabia, you need a Local Employment Contract that complies with Saudi Labor Law and protects both your business and your workers. This legally binding document establishes the foundation of your employment relationship and ensures you meet the Kingdom's specific regulatory requirements.

When do you need this document?

You must execute a Local Employment Contract whenever you hire any employee in Saudi Arabia, whether they are Saudi nationals or expatriate workers. The contract is mandatory before an employee begins work and becomes essential when establishing permanent or temporary employment relationships. You'll need this document when hiring for full-time positions, part-time roles, or fixed-term contracts. The agreement is also required when converting existing employment arrangements to comply with updated Saudi labor regulations or when transferring employees between company locations within the Kingdom.

Key legal considerations

Your employment contract must include specific mandatory clauses under Saudi Labor Law, including clear job descriptions, salary details, working hours, and probation periods that cannot exceed 90 days for most positions. You must specify end of service benefit calculations, annual leave entitlements of at least 21 days, and sick leave provisions. The contract should address confidentiality obligations, non-compete restrictions where legally permissible, and termination procedures including required notice periods. Social insurance registration through GOSI and compliance with the Wage Protection System are mandatory requirements that must be reflected in your contract terms.

Legal requirements in Saudi Arabia

Saudi Labor Law mandates that employment contracts be written in Arabic or include an Arabic translation for legal enforceability. Your contract must comply with maximum working hour limits of 48 hours per week and address overtime compensation requirements. You must include provisions for statutory holidays, prayer time allowances for Muslim employees, and gender-specific workplace protections. The agreement must reflect Saudization quota requirements under the Nitaqat program if applicable to your business. Contracts for expatriate employees must align with visa sponsorship obligations and specify repatriation arrangements. Additionally, you must ensure salary payments comply with WPS regulations and include mandatory benefits such as housing allowances or transportation as required by Saudi labor standards.