Saudi Arabia’s labour market has been undergoing significant regulatory change as the KSA continues to modernise its employment framework and support the objectives of Saudi Vision 2030.

For employers, these changes are not limited to employment contracts or leave entitlements. They increasingly affect recruitment, workforce planning, Saudization, payroll, and HR compliance.

The latest reforms are particularly important for companies considering business setup in Saudi Arabia. They need to understand the employment framework alongside incorporation, licensing, and tax requirements.

For existing employers, 2026 is also a year in which several sector-specific Saudization requirements are taking effect or being actively enforced. Here are the key developments businesses should understand.

Key Amendments to the Saudi Labour Law (2025–2026)

Saudi Arabia introduced a substantial set of Labour Law amendments that became effective on 19 February 2025. According to the Ministry of Human Resources and Social Development, the reforms amended 38 articles, removed 7 articles, and added 2 new articles.

The changes addressed areas including contractual relationships, leave, resignation, employee grievances, recruitment-related violations, and qualification requirements. The amendments form part of a broader effort to improve the Saudi labour market and create a clearer framework for the workforce.

For businesses, this means that companies should review their employment contracts, HR manuals, and current procedures against the latest reforms and ensure proper compliance.

Mandatory Updates for Saudi Employment Contracts

Employment contracts remain one of the most important compliance documents for employers in Saudi Arabia. The current framework places greater emphasis on properly documented contractual relationships.

Businesses should ensure that employment contracts accurately reflect the employee’s position, compensation, benefits, and termination provisions. The digitalisation of employment procedures also makes accurate documentation increasingly important.

Qiwa Contract Authentication & Enforceability Rules

One of the more important developments is the introduction of an enforceable employment contract model through Qiwa. The Ministry of Human Resources and Social Development, working with the Ministry of Justice, has established a system under which qualifying documented employment contracts can acquire enforceable status.

The current implementation is being introduced in phases covering new contracts and updated contractual terms, fixed-term contracts when renewed or extended, and indefinite contracts.

Under the process, an employment contract is submitted through Qiwa and reviewed by the employee. Once both parties approve the contract, it can acquire enforceable status through technical integration with the Ministry of Justice, subject to the applicable requirements.

New Resignation Rules Under Saudi Labor Law

The Labour Law amendments also introduced a clearer statutory framework for resignation. Under Article 79 (Bis), a resignation request is considered accepted if 30 days pass after submission without an employer response.

An employer may postpone acceptance for up to 60 days where the interests of the business require it, provided the required written explanation is given before the initial 30-day period expires.

The employee may also withdraw the resignation within seven days of submitting it, unless the employer has already accepted it. The employment relationship continues during the resignation period, and both parties remain responsible for their contractual obligations.

Updated Leave Entitlements in Saudi Arabia

Employee leave is another area where employers need to ensure that internal HR policies reflect the current Labour Law. The amended framework includes changes to certain leave entitlements.

For example, employees are entitled to three days of paid leave in the event of the death of a brother or sister. Other existing statutory leave entitlements include five days for marriage and for the death of a spouse, parent or child, as well as three days of paid leave following the birth of a child.

Employers should update HR handbooks, leave management systems, and payroll processes to ensure that these entitlements are applied consistently.

Maternity Leave Under the Saudi Labor Law (Article 151)

Maternity leave is another important area for employers to understand. Under Article 151, a working woman is entitled to 12 weeks of maternity leave with full pay.

Six weeks must be taken after childbirth, while the remaining six weeks can be distributed as permitted under the law, beginning from up to four weeks before the expected delivery date.

There are also additional provisions covering certain cases involving a sick or disabled child. For employers, maternity rights should be incorporated into workforce planning rather than handled only when an employee submits a leave request.

Saudization Requirements & Nitaqat Quotas for 2026

One of the most significant considerations for employers in 2026 is the expansion of profession-specific Saudization requirements. The KSA has introduced localisation requirements across several professional categories.

These requirements can apply depending on the professions involved, the number of employees in the relevant roles, and other conditions set out in the applicable procedural guides.

Businesses should therefore avoid treating Saudization as a single percentage applied uniformly across their entire organisation. The requirements can differ significantly by profession.

1. Engineering

A 30% Saudization requirement for covered engineering professions began on 30 June 2026. The decision applies to establishments employing five or more workers in the covered engineering professions and covers 46 engineering occupations.

2. Procurement

Procurement professions are subject to a 70% Saudization requirement from 31 May 2026. The requirement applies to establishments employing three or more workers in the covered professions and covers 12 procurement-related occupations.

3. Marketing and Sales

The Saudization rate for covered marketing and sales professions increased to 60%, with implementation beginning on 19 April 2026. The requirements apply to establishments with three or more workers in the targeted professions.

4. Dentistry

A 55% localisation requirement for covered dental professions entered its second phase on 27 January 2026. It applies to private-sector establishments employing three or more workers in the relevant dental specialties.

HR Compliance for Business Setup in Saudi Arabia

For companies considering Saudi business setup, localisation should be assessed before the first employment offer is issued. Workforce planning must be implemented from day one. A better approach is to assess:

• The company’s licensed activities.
• The professions likely to be used.
• The number of employees expected in each profession.
• Applicable Saudization percentages.
• Salary requirements where relevant.
• Professional accreditation requirements.
• Recruitment and training plans.
• Qiwa and other employment-related registrations.

HR Compliance Checklist for Saudi Employers

Employers can use the following checklist as a starting point:

• Review all employment contracts against the current Labour Law.
• Confirm that contracts are properly documented through the applicable digital systems.
• Update leave policies and HR manuals.
• Check maternity and other statutory leave provisions.
• Identify all professions subject to specific Saudization requirements.
• Review salary requirements attached to localisation decisions.
• Reconcile Qiwa, payroll and social insurance records.
• Maintain documentation supporting Saudization calculations.
• Conduct periodic labour-law compliance reviews.

 Future-Proofing Your Saudi Workforce Strategy

The direction of Saudi labour regulation is helping employers operate in a more structured and increasingly digital employment environment. The 2025 Labour Law reforms established significant changes to contractual relationships, resignation procedures, leave, and training.

In 2026, the continued expansion of profession-specific Saudization requirements is adding another layer of workforce planning for employers. At the same time, digital employment contracts and their potential enforceability are making accurate documentation more important.

For companies planning Saudi business setup, employment compliance should be considered from the beginning.