With the Kingdom of Saudi Arabia's increasing globalization and the growing job opportunities across various sectors, it has become essential for every employer and employee to understand the different types of employment contracts regulated by the Saudi Labor Law. Choosing the right contract type not only determines the duration of employment but also impacts rights, obligations, and termination procedures.

Therefore, this article will discuss all types of employment contracts in Saudi Arabia in detail, enabling you to understand the differences between them and identify the type best suited to your job as an employee or your needs as an employer.

Definition of an Employment Contract

Article 50 of the Saudi Labor Law defines an employment contract as a contract between two parties: the employer and the employee. This contract obligates the employee to work under the employer's management in exchange for an agreed-upon wage.

This contract is drafted according to a standardized template developed by the Ministry of Human Resources and Social Development. It includes essential information such as the employer's name, workplace, employee's name or address, type of work, start date, agreed-upon wage, and the employment period if it is for a fixed term. All of these factors contribute to regulating the relationship between the employer and the employee.

Both the employer and the employee can add any specific terms or conditions, provided they do not violate any of the regulations, decisions, or provisions of the Labor Law. After the contract is finalized, two copies are made: one for the employer and one for the employee to guarantee their rights.

Types of Employment Contracts in Saudi Arabia

Employment contracts in the Saudi labor system vary according to the nature and characteristics of the work, whether it is for a fixed term or an indefinite term, whether the work is remote or on-site, whether it is related to a specific task and ends, or is permanent. These are some of the factors that determine the contract. The following are the most common types of employment contracts in Saudi Arabia:

(1) Fixed-Term Employment Contract

As its name suggests, this is a contract tied to the completion of work within a specific timeframe. The contract ends upon the expiration of its agreed-upon term between the employer and the employee. All regulations and decisions pertaining to employment contracts stipulated by the labor law apply to it.

Both parties can renew the contract and continue the work. It is worth noting that a fixed-term contract in Saudi Arabia can be converted into an indefinite contract if work continues after the contract expires, if the agreed-upon term, including renewals, exceeds four years, or if the contract is renewed three consecutive times.

(2) Indefinite-Term Employment Contract

An indefinite-term employment contract is a contract not bound by a specific timeframe. Both the employer and the employee are bound by all the terms and conditions stipulated therein, just like any other contract. Both parties have the right to terminate the contract at any time, provided there are legitimate reasons for doing so.

If either party wishes to terminate the contract, they must notify the other party in advance, within the notice period specified in the contract. This notice period must be at least 60 days if the employee's salary is paid monthly, and at least 30 days if the salary is paid daily or in any other non-monthly manner.

If either party terminates the contract without providing the other party with the required notice period, they will be obligated to pay a financial penalty as stipulated by the applicable regulations.

(3) Specific Task Contract

A specific task contract is similar to a fixed-term employment contract in that it includes a clause specifying the termination date. In a fixed-term contract, the work ends upon the expiration of the specified period, while in a specific task contract, the contract ends upon completion of the task.

In this contract, the task and its details are clearly defined and documented, along with an approximate timeframe for completion. The contract concludes upon the completion of the work in its entirety, including all its descriptions and details.

(4) Seasonal Work Contract

A seasonal work contract is for work performed seasonally, such as during the Hajj season. Foreign workers are brought in to perform various tasks during this period using a seasonal work visa, which allows them entry into the Kingdom for a temporary period—the duration of the work season.

It is worth noting that holders of this type of visa are not permitted to perform Hajj, as it is issued solely for seasonal work. Furthermore, it is not renewable, as the stay cannot exceed the legally permitted duration, and it cannot be converted into a permanent work visa. (5) Temporary Employment Contract

A temporary employment contract in Saudi Arabia is a type of short-term, predetermined contract used by employers when they need a worker to complete a specific task within a period not exceeding ninety days.

For example, a contracting company might need additional temporary workers for a specific project. The work may end upon project completion or the expiration of the agreed-upon timeframe, but in both cases, the contract duration must not exceed 90 days.

The Kingdom provides a temporary work visa, which is issued for single or multiple entries, for a period not exceeding one year, and for specific work outside the scope of Hajj-related work. Hajj-related work falls under the category of seasonal work contracts.

(6) Part-Time Employment Contract

A part-time employment contract is used when an employee is not fully dedicated to the employer, meaning their working hours are less than half the company's daily working hours. Part-time work may mean a few hours per day or for some days of the week. The duration of the work is specified in the contract, and it can be renewed for a period agreed upon by both the employee and the employer. Part-time employees retain all the rights to vacations, official holidays, and other provisions stipulated by the Labor Law for full-time employees. They also have the right to be notified before their employment contract is terminated by their employer. If the contract is terminated without prior notice, the employee is entitled to a penalty as specified in the contract.

It is worth noting that Saudi employees working part-time at any company are counted towards the Saudization quotas approved by the Nitaqat program (a program to incentivize establishments to Saudize jobs) and are registered with the General Organization for Social Insurance as part-time workers.

(7) Remote Work Contract

With the spread and expansion of remote work culture worldwide, this type of work has gained popularity and attention in Saudi Arabia. It offers employees greater flexibility and freedom in choosing their work location, without being tied to the company's physical premises.

The remote work contract specifies the location from which the employee will work, the required daily working hours, and the start and end times. It also outlines the salary and all rights stipulated by labor law regarding remote work.

The contract also stipulates the employee's obligation to be present at the workplace when necessary. The employer will provide the necessary equipment for the employee to perform their work. If the employee uses their own equipment, they are required to adhere to the employer's cybersecurity protocols and remote communication policies.

(8) Training Contract

Training is no less important than work. Many companies require trainees to perform certain work-related tasks. The training contract obligates the employer to train and equip an individual with all the necessary skills to perform a specific job. The training period, type of job, and the financial compensation the trainee will receive upon completion are clearly defined within the contract.

The training contract includes the trainee's rights regarding annual leave and official holidays, daily rest periods, weekly rest days, occupational safety and health regulations, work-related injuries and their conditions, and all provisions related to the employment system.

The training contract also stipulates that the employer has the right to terminate the training and qualification contract if it is proven that the trainee is unable to complete the training effectively. The trainee also has the right to terminate the training contract if they do not benefit from the training program. The party terminating the contract is obligated to notify the other party of their intention to discontinue training at least one week in advance.

If the training program is completed to its end; The employer has the right to require the trainee to work for them for a period equal to the duration of the training. If the trainee refuses, they must reimburse the employer for all training costs incurred throughout the program.

(9) Employment Contract for Non-Saudi Employees

The employment contract for a Saudi employee is the same as for a foreign employee, meaning it includes all provisions and is subject to the regulations of the Labor Law. However, the difference is that the employment contract for a non-Saudi employee must be for a fixed term. If the contract does not specify a term, the work permit serves as the employment period. Foreigners are not permitted to work in Saudi Arabia without a valid work permit issued by the Ministry of Human Resources and Social Development.

(10) Flexible Employment Contract

A flexible employment contract is very similar to a part-time contract, but the difference is that it is only for Saudi employees, and the daily working hours must be less than half the company's regular daily working hours.

For the contract to be valid, it must be for a fixed term, specifying the working hours, the agreed-upon wage, and the times the employee is required to be present. The employee has the right to accept or refuse work assignments at any time without facing any repercussions. Finally, employment contracts are a guarantee of the rights of both the employer and the employee. Without them, neither party can secure their rights or claim them from the other. They formally and legally regulate the relationship, obligating each party to fulfill their duties towards the other as agreed.

If you wish to draft a legally sound employment contract that guarantees your rights, don't hesitate to contact us at Mohammed Alkhliwi Office. We will help you begin your professional journey with complete professionalism.

Disclaimer: The above content does not constitute legal advice, and the author of this article assumes no legal responsibility. For legal advice, please contact us.