New Employment Contract Template for Saudi Arabia

A New Employment Contract is a legally binding agreement that establishes the terms and conditions of employment between an employer and employee in Saudi Arabia. Under Saudi Labor Law (Royal Decree No. M/51), all employment relationships must be documented through written contracts that comply with specific mandatory requirements and protect both parties' rights.

When do you need this document?

You need a New Employment Contract whenever hiring any employee in Saudi Arabia, regardless of their nationality or position level. This includes hiring Saudi nationals to meet Saudization quotas under Nitaqat regulations, recruiting expatriate workers with valid work permits, onboarding temporary or fixed-term employees for specific projects, and establishing employment relationships for part-time or full-time positions. The contract is also required when converting informal work arrangements into formal employment or when rehiring former employees under new terms.

Key legal considerations

Your employment contract must include several mandatory elements to ensure legal compliance. The probationary period cannot exceed 180 days and must be clearly specified in the contract terms. Working hours, overtime compensation, and rest periods must align with Saudi Labor Law limits, typically not exceeding 8 hours per day or 48 hours per week. Annual leave entitlements, sick leave provisions, and public holiday arrangements must be detailed according to legal minimums. Termination procedures, notice periods, and end-of-service benefits must comply with statutory requirements. For expatriate employees, the contract must reference visa sponsorship obligations and specify repatriation arrangements upon contract termination.

Legal requirements in Saudi Arabia

Saudi Arabia mandates specific contract provisions that you must include to ensure legal validity. All employees must be registered with GOSI (General Organization for Social Insurance) within 30 days of employment commencement. Salary payments must comply with the Wage Protection System (WPS), requiring electronic transfers and detailed documentation. The contract must specify the employee's job classification according to Saudi Classification of Economic Activities (ISIC4). For companies subject to Saudization requirements, contracts must demonstrate compliance with minimum Saudi-to-expatriate employee ratios. Recent labor law reforms require contracts to include flexible working arrangements where applicable and specify remote work policies. Additionally, contracts must be written in Arabic or include certified Arabic translations, and both parties must sign the agreement before work commencement to ensure legal enforceability.