Permanent Employment Contract Template for Saudi Arabia

A Permanent Employment Contract is a legally binding agreement that establishes an indefinite-term employment relationship between an employer and employee in Saudi Arabia. This document serves as the cornerstone of your employment relationship, setting out all terms and conditions while ensuring compliance with Saudi Arabia's comprehensive labor regulations.

When do you need this document?

You need a Permanent Employment Contract when hiring employees for long-term, indefinite positions in Saudi Arabia. This includes full-time roles where you want to establish a stable employment relationship without a predetermined end date. The contract is essential when bringing on permanent staff members, whether they are Saudi nationals or expatriate workers with proper work authorization. You'll also need this document when converting temporary or contract workers to permanent status, or when establishing employment relationships that comply with Saudization (Nitaqat) program requirements.

Key legal considerations

Your contract must include several mandatory elements under Saudi Labor Law. The probationary period cannot exceed 180 days, and you must clearly define working hours, which typically cannot exceed 8 hours per day or 48 hours per week. Annual leave entitlements must comply with Saudi regulations, providing at least 21 days for employees with 1-5 years of service. The contract should specify notice periods for termination, social insurance registration requirements, and end-of-service gratuity calculations. You must also address salary payment through the Wage Protection System (WPS), ensuring electronic transfers and timely payments. Include provisions for confidentiality, non-compete clauses within legal limits, and dispute resolution mechanisms that comply with Saudi labor courts.

Legal requirements in Saudi Arabia

Saudi Labor Law (Royal Decree No. M/51) mandates specific contract provisions and employment standards. You must register employees with the General Organization for Social Insurance (GOSI) and comply with Saudization quotas under the Nitaqat program. The contract must specify job classifications that align with Saudi occupational standards and include provisions for religious observances and prayer times. Working hours during Ramadan are reduced, and you must provide appropriate workplace conditions that respect Islamic values. Female employees have additional protections regarding working hours and workplace environments. The contract must also address visa sponsorship responsibilities for expatriate employees, including transfer of sponsorship procedures and exit re-entry visa provisions. Termination procedures must follow Saudi Labor Law requirements, including proper notice periods, end-of-service calculations, and final settlement timelines.