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3532505 - Saudi Labor Law 2024 changes

Symptom

The purpose of this KBA is to guide you with possible solutions to adapt SAP HCM products with the latest labor law changes that was effective in August 2024.

The changes are related to the following topics:

1. Contract Renewal (Article37): The unlimited contract for non-Saudi employees has max validity of one year and renewable for another year if not terminated.

2. Employment Fees (Article 40): The employer is now responsible for covering fines related to Iqama or work visa processing only if they are directly responsible for the delay. This means employer have the right to deduct such fines from the employee if he was the one responsible for the delay.

3. Probation Period (Article 53): The maximum probation period has been set to 180 days, excluding any mutually agreed periods.

4. Sanctions (Article 72): Employee must receive letter for applied sanction. If absent or refusing, letter must be sent via mail. He can also file a grievance within 30 days.

5. Contract Termination (Article 74): A new termination reason has been added “The issuance of a final court decision related to bankruptcy proceedings under the Bankruptcy Law”. In such case the employer is not obligated to give a notice period to the employee nor required to pay any contract-breaking penalties due to the legal nature of these cases. However, the employer is still obligated to pay the end-of-service gratuity, regardless of the manner in which it is ultimately paid to the employee.

6. Notice Period (Article 75): Employees must provide 30 days’ notice, while employers must provide 60 days’ notice in case of unlimited contract termination. A penalty/compensation should be paid out in case mandatory notice period is not provided in full.

7. Resignation (Article 79 Duplicate): A resignation request is considered accepted if the employer does not respond within 30 days. In case of valid business needs, the employer can, before the end of the 30-day grace period, respond to delay the acceptance of the resignation for a maximum of 60 days, starting from the date of the employer’s response. During this 60-day delay, the employee continues working as usual. Once the 60-day delay ends, the resignation is considered accepted, and only then can the notice period begin.

8. Overtime Compensation (Article 107): Time-off in lieu of overtime pay is now an option for compensating employees.

9. Compassionate Leave (Article 113): Compassionate leave now includes cases of the death of a brother or sister.

10. Maternity Leave (Article 151): Maternity leave has been increased from 10 to 12 weeks.


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Environment

HR & Time

o SAP SuccessFactors Employee Central

o SAP SuccessFactors Employee Central Time-Off

Payroll

o SAP ERP HCM

o HCM for SAP S/4HANA

o HCM for SAP S/4HANA Cloud Private Edition

o SAP SuccessFactors Employee Central Payroll

Keywords

KBA , PY-SA , Kingdom of Saudi Arabia , PY-SA-PS , Public Sector , Problem

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