Saudi Arabia reduces penalties for employers’ labour law violations

2 min read

Saudi Arabia has significantly reduced fines levied on employers for various contract violations, including wage theft, failure to provide a weekly day off, and passport confiscation. The Minister of Human Resources and Social Development (MHRSD) issued a ministerial decision - Opens in new tab on 10 December 2023, amending the schedule of penalties of the labour law and its executive regulations.

The Saudi government has gradually lowered fines and penalties for employers violating labour laws in recent years. In 2019, penalties were imposed on businesses regardless of their size. A subsequent amendment in 2021 introduced size-based disparities, with smaller companies incurring significantly lower penalties. In the latest amendment to the law, fines have been slashed by up to 80% while expanding the size categories eligible for lower penalties.

Violations are now classified as 'serious' or 'not serious.' The amendment does not stipulate the criteria for this classification or whether additional penalties are imposed for 'serious' violations.

Saudi courts received around 100,200 labour cases in 2023 - Opens in new tab. These figures represent only the cases that reached the court after the failure to reach an amicable settlement within a 21-day period. Many cases in Saudi Arabia are settled amicably rather than in court, which means the total number of registered labour disputes is likely much higher.

The classification also presents some contradictions. For instance, while confiscating passports is labelled a 'serious' violation, the new decision actually reduces the fines for this offence to SAR 1000 (US$ 266) per violation, a significant decrease from the SAR 5000 (US$ 1,333) specified in the previous regulations.

The reduced fines coincide with the Saudi government's substantial investment in its private sector and large-scale infrastructure projects in recent years.

In its press release, the MHRSD stated - Opens in new tab that adjusting fines according to the scale of businesses is intended to “support the stability of businesses and ensure their growth.” The rights of workers employed by these smaller businesses appear to be collateral damage in pursuit of business stability.

Saudi Arabia is already grappling with inadequate regulatory and redress mechanisms, especially concerning the rights of migrant workers. The recent amendment might further encourage employers from not adhering to labour regulations, exacerbating an already challenging situation.

Penalty Tables Saudi Arabia - Opens in new tab Infogram - Opens in new tab

Have you had a similar experience?

Please reach out, we would love to hear from you relating to your experience on this topic.
Your anonymity is important to us and all personal information will remain private.

Saudi Arabia reduces penalties for employers’ labour law violations

Have you had a similar experience?

Op-ed: Kuwait's backtracking on 'pay-for-amnesty' policy fails to protect rights of migrants