Imagine a workplace where rights and obligations are clearly defined, and everyone enjoys stability and mutual trust. This is exactly what employment contracts and internal work regulations provide in Saudi Arabia. They are not merely routine paperwork; they are a binding framework that protects the rights of both employees and employers.
Under Saudi Arabia’s modern labor system, these documents have become a strategic tool for preventing disputes, enhancing transparency, and building a healthy organizational culture. Whether you are an employer seeking productivity or an employee looking for a secure and fair work environment, a clear and well-structured relationship is the foundation of sustainable success.
So how can you protect your rights as an employer while safeguarding the rights of your workforce? The answer lies in two essential documents:
- The employment contract
- The internal work regulations
In this article, we speak directly to you—whether you are a business owner, an HR manager, or an employee seeking to better understand your rights, to explain how professionally drafted contracts and work regulations protect both the employer and the employee, and create a balanced, compliant, and productive working relationship.
First: The Difference Between the Employment Contract and the Internal Work Regulations
The Employment Contract
It is the official legal document between you and a specific employee. It governs that individual’s personal terms of employment, such as position, salary, duties, and benefits.
The Internal Work Regulations
The work regulations are the company’s constitution. They apply to everyone within the organization and set the unified rules that govern workplace conduct, procedures, rights, and obligations. Together, the contract and the regulations form a legal shield that prevents disputes and ensures a stable, well-organized working environment.
To illustrate the difference, imagine you are running a sports club.
The employment contract is like the agreement between you and a particular coach, defining their role, salary, and individual terms.
The work regulations, on the other hand, are the club’s general rules that apply to all coaches and players alike, training schedules, codes of conduct, and the system of rewards and disciplinary measures.
Internal work regulations give you a unified standard that applies to everyone equally, eliminating feelings of unfairness or discrimination, and serving as the primary reference whenever a dispute arises.
Second – Contract Drafting
The details that must be clarified in well-drafted employment contracts include:
The employee’s name, the company name, address, job description, and salary.
What are the simplest steps for drafting a contract?
- Collect the employee’s and employer’s data (name, position, salary)
- Define the term: fixed or unlimited
- Add working hours, leave, and termination clauses
- Review with a lawyer and sign – this is how contracts protect you
Information that protects rights within the contract:
When drafting employment contracts, remember that a fair contract is like a successful agreement: it serves the interests of all parties who sign it. It should include:
- Full information about you and the employee: full name, ID, and address
- Accurate job description: what exactly will the employee do, and what are their responsibilities?
- Salary and benefits details: how much will be paid, when, and what allowances and leave are included?
- Contract term and probation period: is the contract for one year, two years, and what is the probation period?
- Contract termination grounds: when can either party terminate the contract, and what are the procedures?
When contracts are drafted with this level of precision, the employer’s right to receive the agreed work is protected, while the employee is guaranteed their full labor rights.
Employer Rights
- Employer rights allow you to require up to 8 working hours per day, with paid overtime.
- Employer rights include the ability to terminate an employee who is absent without a valid excuse, provided a fair end-of-service benefit is paid.
- Employer rights are protected through payment of wages via bank transfer, with deductions not exceeding 50%.
- The fourth employer right is transferring the employee within the establishment with their consent.
For more information, you can read our article on contract drafting as an effective legal tool for structuring business relationships and defining obligations.
- Employee rights begin with receiving wages on time, with an additional 50% paid for overtime hours.
- Employee rights guarantee 21 days of annual leave after one year of service, in addition to sick leave.
- Employee rights include health and social insurance, whether the employee is Saudi or a resident.
Important note: If you are unfairly dismissed, you are entitled to full compensation.
Ready-made contract templates
Ready-made templates may not suit the specific nature of your business and may not comply with the latest Saudi regulations. Every company has its own circumstances that require customized contract drafting.
Risks avoided by properly drafted contracts and regulations
These risks include:
- Costly legal disputes
- Regulatory fines for non-compliance
- Loss of talent and skilled employees
- Reduced productivity due to an unstable work environment
Clear and well-structured contract drafting helps you avoid legal risks associated with contracts and improves the overall work environment.
Legal consultation in contract drafting
Consult a specialist when you:
- Establish a new company
- Hire employees in leadership positions
- Change key company policies
- Face a potential labor dispute
- Review your documents periodically (at least once a year)
9. Types of contract drafting that suit both parties
- Drafting fixed-term contracts for short projects (less than 90 days without registration).
- Drafting open-ended contracts for permanent positions, which are more secure.
- Drafting part-time contracts for greater flexibility.
If a dispute arises between the employer and the employee, where should I go?
Go to the Labor Dispute Settlement Authority within 12 months and submit your complaint with the required documents. Both employer and employee rights are protected there. Start with an amicable settlement first, then the Authority will hear both sides and issue a prompt decision, without lengthy court procedures.
Conclusion…
Now that you understand how properly drafted contracts and work regulations transform your labor relationship into a strong, predictable partnership, are you ready to apply them? Start today by reviewing your existing contracts or drafting new ones that protect both employer and employee rights. Professional stability begins with one legally grounded step.
Contact Sada law
Frequently Asked Questions
1. What is a Saudi employment contract and what are its main elements?
An employment contract is a written agreement between the employer and the employee that defines the job, salary, duration, and rights, and it must follow the unified model issued by the Ministry of Human Resources.
2. What types of employment contracts exist in Saudi Arabia?
They include fixed-term contracts (for short tasks), open-ended contracts (permanent), temporary contracts (less than 90 days), and part-time contracts for Saudis only.
3. How are valid employment contracts drafted?
Start with the parties’ details, job description, salary, and working hours, then sign electronically through the Qiwa platform after review by a lawyer.
4. What are the main employer rights?
They include requiring compliance with working hours (8 hours per day), termination in case of breach, and transferring the employee with consent, with wages paid through bank transfer.
5. What are the employee’s main contractual rights?
The right to timely wages, 21 days of annual leave, 50% overtime pay, health insurance, and compensation for unfair dismissal.
6. How are labor disputes resolved?
File a claim with the Labor Dispute Settlement Authority within 12 months, begin with an amicable settlement, then receive a binding decision.
7. Can a fixed-term contract be renewed?
Yes, with the consent of both parties. Extensions count toward employee rights but must not exceed legal limits.
8. What is the penalty for not having formal contracts?
Fines of up to SAR 100,000, mandatory compensation, and possible closure of the establishment.
