Other BriefingsSaudi Arabia Revises Labor Law Penalties to Strengthen Workplace Compliance
Saudi Arabia proposed updated labor law amendments, including penalties to address workplace violations and enhance occupational safety standards.
The Ministry of Human Resources and Social Development (MHRSD) in Saudi Arabia has issued a proposal to revise penalties for a range of violations under the Labor Law. The new structure reflects amendments to 38 articles, removal of seven provisions, and addition of two new regulations, all designed to clarify employer obligations and streamline enforcement.
The draft list of penalties was published on the Istithlaa public consultation platform, with inputs sought from stakeholders, employers, and workers.
Overview of the updated fine structure
The revised penalties under the proposal are categorized based on the severity of violations and the nature of the offense. Below is a summary of serious violations, which attract higher fines:
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Overview of the Updated Fine Structure |
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| Violation | Proposed fine (SAR) | Proposed fine (US$) | Explanation |
| Recruiting or outsourcing without a license | 200,000–250,000 | 53,325– 66,656 | This fine applies to any establishment that provides labor recruitment or outsourcing services without a valid license from the Ministry. |
| Employing Saudis without license | 200,000 | 53,325 | Companies hiring Saudi citizens must obtain the required labor license; failure to do so is penalized. |
| Hiring expats without work permit | 10,000 per worker | 2666.2 per worker | Employers must ensure that all expatriate workers have valid work permits before commencing employment. |
| Employing expats in restricted roles | 2,000–8,000 | 533.2– 2,133 | Certain roles are restricted to Saudi nationals, and employing foreigners in these jobs violates nationalization policies. |
| Allowing employees to work for third parties | 10,000–20,000 | 2666.2-5,332.5 | Employers are prohibited from assigning their employees to work for another company without formal authorization. |
| Employee found working for another employer | 5,000 | 1,333.1 | Workers must remain employed only by their registered employer and may not work for third parties. |
| Failure to follow occupational safety protocols | 1,500–5,000 | 400–1,333.1 | This fine applies to companies that neglect workplace safety requirements, including providing protective equipment. |
| Employing workers in harsh weather without safety measures | 1,000 | 266.6 | Employers must comply with labor laws regulating work during extreme weather conditions, especially during summer. |
| Shifting employer costs to employees | 1,000–3,000 | 266.6–800
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Employers are not permitted to pass costs such as recruitment fees or medical exam charges onto their workers. |
| Withholding wages or entitlements | 300 per worker | 80 per worker | Employers must pay all dues, including salaries and overtime, on time; each case of delay is penalized individually. |
| Workplace discrimination | 1,000–3,000 | 266.6–800
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Discriminatory practices based on gender, nationality, or disability are punishable under labor law. |
| Failing to investigate behavioral complaints | 1,000–3,000 | 266.6–800
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Employers must initiate investigations into reported misconduct or harassment within a defined timeline. |
| Hiring children under 15 | 1,000–2,000 | 266.6–533.2 | It is illegal to employ individuals below the minimum working age of 15 under Saudi labor laws. |
| Withholding passports or IDs | 1,000 | 266.6 | Employers must not confiscate personal documents like passports or national IDs from their employees. |
| Obstructing labor inspections | 3,000–5,000 | 800–1,333.1
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This penalty applies to companies that deny labor inspectors access or fail to provide necessary records during inspections. |
| Violating recruitment advertising rules | 1,000–3,000 | 266.6–800
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Employers must comply with regulations for advertising job vacancies and conducting fair recruitment processes. |
| Denying maternity benefits | 1,000 | 266.6 | Women are entitled to maternity leave and related benefits, and failure to provide these rights is penalized. |
| Failing to accommodate people with disabilities | 500 | 133.3 | Employers are required to ensure physical accessibility and reasonable accommodation in the workplace. |
Non-serious violations and corresponding fines
MHRSD has also outlined lower-tier violations which, while not hazardous, still impact employment equity and contract compliance. These include:
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Non-Serious Violations and Fines |
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| Violation | Proposed fine (SAR) | Proposed fine (US$) | Explanation |
| Denial of weekly rest or overtime pay | 1,000–3,000 | 266.6–800
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Employers must provide the legally mandated weekly rest period and overtime compensation for eligible employees. |
| Failure to issue service certificate at contract end | 1,000–3,000 | 266.6–800
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Employees have the right to a service certificate at the end of their employment, and companies must comply. |
| No health insurance for employees or family | 300–1,000 | 80–266.6
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Providing health insurance for employees and their eligible dependents is a legal requirement in Saudi Arabia. |
| Non-disclosure or false data in state-linked contracts | 300–1,000 | 80–266.6 | Entities doing business with the government must submit accurate employment data; otherwise, they face penalties. |
| Employing Saudi men in women-only roles | 1,000 | 266.6 | Some roles are legally reserved for women; assigning men to these positions breaches regulatory rules. |
Tiered compliance expectations based on company size
The proposed penalty system introduces differentiation based on establishment size, categorized as follows:
- Small companies: 20 or fewer employees;
- Medium companies: 21–49 employees; and
- Large companies: 50 or more employees.
Penalty values and enforcement timelines may vary by category to ensure proportionality. This tiered framework supports fairness in compliance costs, acknowledging the varying operational capacities of different firms.
Legal alignment with Saudi labor strategy
The updated penalties reinforce Saudi Arabia’s broader labor reform initiatives under Vision 2030, which seek to boost employment standards, increase Saudization (Nitaqat program), and ensure equal access to jobs across demographic segments. The clarification of violations and the numeric fine ranges aim to reduce discretion in inspections and enforcement, fostering consistency across the Kingdom.
The revised fines also ensure alignment with obligations under international labor conventions and domestic safety laws. This includes mandates under Saudi Arabia’s occupational safety and health code, anti-discrimination provisions, and protections for vulnerable worker groups, including women, minors, and people with disabilities.
Compliance implications for businesses
The revised penalty framework introduced by Saudi Arabia’s MHRSD necessitates a more rigorous approach to internal compliance among private sector employers. Businesses operating in the Kingdom must prioritize comprehensive human resource audits, ensure the accuracy of employment contracts, and maintain well-documented HR policies that align with the updated labor regulations.
A core aspect of compliance involves verifying that all expatriate workers hold valid and current work permits, as employment without proper authorization can now attract substantial penalties. Employers must ensure that all labor relationships are formally registered in accordance with legal requirements, thereby safeguarding both parties’ rights and enabling clear accountability.
To remain compliant, companies are also required to offer statutory protections such as maternity leave, health insurance coverage, and timely wage disbursements. Violations in these areas now carry clearly defined financial consequences. Moreover, the law discourages practices such as proxy hiring, where one entity employs a worker who actually serves another, or misclassification of contractual roles to avoid obligations like Saudization quotas or social security contributions.
Equally important is the establishment of robust grievance redressal mechanisms. Employers must ensure that internal procedures are in place for employees to report and resolve workplace misconduct or disputes, particularly concerning discrimination, harassment, or unsafe conditions.
(US$1 = SAR 3.75)
Read more: Saudi Arabia Business Licenses Types: A 2025 Guide for Foreign Investors
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