Saudi Arabia Introduces Sweeping Labour Law Updates to Strengthen Market Stability
Saudi Arabia has announced comprehensive revisions to its Labour Law enforcement framework, introducing strict penalties for employers who hire foreign workers without proper permits. The move, declared by Minister of Human Resources and Social Development Ahmed Al-Rajhi, took effect immediately on February 25, 2026. This initiative aims to bolster worker protections and ensure greater stability across the nation's labour market.
Reclassified Violation Categories for Enhanced Clarity
The amendments reclassify violations into specific categories to provide clearer guidelines for businesses and workers. These categories include:
- General violations
- Violations related to mine and quarry operations
- Maritime labour contract regulation
- Operation and maintenance activities
- Recruitment services for human resources and recruitment companies
- Recruitment offices
- Domestic workers regulation
- Advertising controls for supporting labour services
- Unauthorised recruitment of Saudis
Key Requirements and Penalties for Employers
Under the new rules, Saudi nationals must constitute at least 75% of the workforce. However, the Minister may temporarily reduce this percentage in cases of a lack of qualified Saudi candidates or technical and educational limitations. The revised schedule classifies employing a child under 15 years old as a serious offence, with fines reaching SR2,000 for establishments with 50 or more workers.
Employers found retaining a worker's passport or residency permit face a fine of SR3,000 per worker. Companies failing to comply with regulations for employing juveniles may incur fines of SR15,000 per violation. Additionally, establishments with 50 or more women and at least 10 children under six must provide nursery or childcare facilities, with non-compliance resulting in an SR3,000 penalty. Failure to grant statutory maternity leave carries a fine of SR1,000 per employee.
Mandatory Administrative Compliance Measures
Failing to electronically document employment contracts will lead to fines of SR1,000 per worker. Employers must also display working hours, rest periods, and shift schedules clearly at the workplace. They are required to report vacancies within 15 days, update hiring outcomes for Saudi candidates within seven days, and submit annual workforce data during the month of Muharram. Establishments must update company data within 10 days of any change.
Heavy Fines for Unauthorised Hiring and Disability Inclusion
Individuals engaging in employment or recruitment of Saudi nationals or foreign workers without proper authorisation face fines of SR200,000 for the first offence, increasing to SR220,000 for the second and SR250,000 for the third. Companies with 25 or more workers must ensure that at least 4% of their workforce comprises professionally qualified persons with disabilities. The ministry emphasised that disability cannot be a reason for refusal of employment or promotion, and wage discrimination based on disability is prohibited.
Efforts to Improve Labour Market Stability and Transparency
The ministry has invited interested parties to review the amendments on its website, noting that the updated schedule of violations and penalties is effective immediately. It also highlighted that public and stakeholder feedback was previously sought through the Istitlaa Public Consultation Platform. According to the ministry, these changes aim to enhance the attractiveness and flexibility of the work environment, promote labour market growth, and improve the overall efficiency and sustainability of establishments.
