Saudi Employment Contract Requirements 2026

Written Contract Requirement

Under Article 51 of the Saudi Labor Law, an employment relationship must be evidenced by a written contract. Oral or handshake agreements do not satisfy the law. The contract must be in place and registered on the Qiwa platform before the employee begins work. Failure to register on time can result in fines (e.g. SAR 10,000 per contract under HRSD enforcement) and creates risk in any labor dispute, where the employer may struggle to prove agreed terms. The contract forms the basis for WPS salary reporting, GOSI, and end-of-service calculations. Start from our Saudi labor law guide, iqama transfer rules, and payroll compliance.

The 13 Mandatory Clauses (Article 51)

The employment contract must include the following elements. List them explicitly in the contract and ensure both Arabic and non-Arabic versions align.

1. Name of employer (legal name and CR number).
2. Name and details of the employee (full name, nationality, ID/Iqama number).
3. Job title and description (clear role and main duties).
4. Date of commencement of employment.
5. Place of work (city, address or "as assigned").
6. Contract type (fixed-term or open-ended) and, if fixed-term, the end date.
7. Salary (amount, currency, and payment frequency — e.g. monthly).
8. Benefits and allowances (housing, transport, or other — or state "as per company policy").
9. Working hours (e.g. 8 hours per day / 48 per week, or as per Labor Law).
10. Leave entitlements (annual leave, sick leave — or reference to the Labor Law).
11. Probation period (if any — max 90 days, extendable once to 180 days).
12. Notice period (e.g. 60 days employer / 30 days employee for open-ended).
13. Any other terms agreed by the parties that do not contradict the Labor Law (e.g. confidentiality, non-compete within legal limits — see non-compete and NDA).

Bilingual Requirement and Arabic-Prevails Rule

Contracts should be bilingual: Arabic (mandatory for enforceability in Saudi Arabia) and a language the employee understands (e.g. English). If there is any conflict between the Arabic and the other language, the Arabic version prevails in Saudi courts and before HRSD. Employers must ensure the Arabic text is accurate and complete — not a rough translation. Have the Arabic contract reviewed by a Saudi-licensed attorney before signing. Errors or omissions in the Arabic text can lead to unexpected outcomes in disputes and in ESG or notice-period calculations.

Qiwa Registration Process (Step by Step)

The contract must be registered on the HRSD Qiwa platform before the employee's first working day. Typical steps:

1. Employer logs into Qiwa with authorised credentials.
2. Create a new employment contract and enter the mandatory data (employer, employee, job title, start date, salary, contract type, probation if any, work location).
3. Upload or link the signed contract document if required by the current Qiwa workflow.
4. Submit for registration; Qiwa generates a contract reference number.
5. Ensure the employee's work permit (if expatriate) and personal data are aligned with Muqeem and Absher so Qiwa validation passes.
6. Complete registration before the employee's first day; otherwise the employer risks fines and compliance flags.

Nitaqat (Saudization) status must allow the employer to add the employee; in Yellow or Red, new expatriate contracts may be blocked. Keep a copy of the Qiwa confirmation and the signed contract for your records and for ESG and dispute purposes.

Probation Rules

Probation is optional. If used:

• Maximum 90 days; may be extended once by mutual agreement to 180 days total.
• No probation for an employee re-hired within 3 months of the end of a previous contract with the same employer.
• During probation, either party may terminate with shorter notice (often 7 days or as per contract); check the Labor Law and HRSD guidance for the exact minimum. ESG is not payable if the employer terminates during probation, provided notice is given.

The probation period must be stated in the contract and reflected in Qiwa. Any extension must be agreed in writing and updated in Qiwa.

Fixed-Term vs Open-Ended

Open-ended contract: No end date; continues until terminated with notice (60 days employer / 30 days employee). Fixed-term contract: Has a defined end date. If the parties continue the relationship after two consecutive fixed-term contracts (or after a fixed term plus renewal), the contract is often treated as converting to open-ended under the Labor Law. Plan renewals and terminations accordingly — at the end of a fixed term, either renew (and document) or terminate with proper notice and ESG. Early termination of a fixed-term by the employer without an Article 80 ground can create liability for the remainder of the term (see disciplinary procedures).

Salary Structure Best Practice

Split salary into basic salary and allowances (e.g. housing, transport). Best practice: set basic salary at approximately 60–70% of total guaranteed cash compensation. Why: ESG, notice pay, and some leave calculations are based on basic salary; a higher basic increases those costs. Allowances that are clearly identified in the contract and paid via WPS are typically excluded from the ESG base. Ensure the split is consistent in the contract, Qiwa, and WPS so that in any dispute or HRSD check the figures align. Do not state a total salary in the contract but pay a different split in WPS — that inconsistency is a common cause of disputes.

8 Common Drafting Mistakes to Avoid

1. Registering after the first working day — register on Qiwa before day one to avoid fines and compliance risk.
2. Arabic and English (or other language) not aligned — have Arabic reviewed by a Saudi lawyer; in conflict, Arabic prevails.
3. Omitting a mandatory clause — include all 13 Article 51 elements; missing items can invalidate or weaken the contract.
4. Basic salary too high relative to total pay — use a 60–70% basic / 30–40% allowances structure where possible to manage ESG and notice cost.
5. Probation over 90 days without written extension — max 90 days unless extended once by agreement to 180 days, in writing and in Qiwa.
6. Unlawful non-compete or confidentiality — keep non-compete within Article 83 (e.g. max 2 years, defined scope); see non-compete and NDA.
7. Contract and WPS showing different salary figures — keep contract, Qiwa, and WPS in sync to avoid disputes and HRSD flags.
8. Vague job title or place of work — use a clear job title and a defined work location (or "as assigned" with a stated default) so that role and location are provable.

Frequently Asked Questions