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Saudi Arabia Tightens Labor Enforcement

06 Apr 2026 • 3 min read

Anna Fischer

Construction Content Writer

Saudi Arabia has introduced major changes to its labor enforcement framework, increasing compliance obligations and potential liabilities for employers across the Kingdom. For construction companies, the update is especially important because the sector relies heavily on large workforces, subcontracting, temporary labor, and strict project timelines.

The Ministry of Human Resources and Social Development (MHRSD) announced that a revised schedule of Labor Law violations and penalties took effect on February 25, 2026, following a ministerial decision issued by Eng. Ahmed bin Sulaiman Al Rajhi.

The revised schedule is part of broader amendments to the Labor Law and its Executive Regulations, aimed at strengthening worker protections, improving labor market stability, and reinforcing regulatory oversight.

Under the updated framework, violations are now more clearly categorized by activity, including general violations and sector-specific breaches in areas such as mining, maritime employment, recruitment, domestic labor advertising, agriculture, and unlicensed employment or outsourcing activities.

Temporary Contracts Face Full Labor Law After 90 Days

One of the most significant changes concerns temporary and casual work arrangements. When such contracts exceed 90 days, and the worker has entered Saudi Arabia on a work visa with employment-based residency, the relationship will automatically fall under the full scope of the Labor Law, regardless of the contract’s title.

Labor courts will also have jurisdiction over disputes involving temporary, seasonal, and casual workers. For non-Saudi employees, contracts must remain fixed-term in all cases, including after renewal.

The ministry has introduced a unified model for workplace regulations. Employers with fewer than 50 workers may adopt the standard template without amendment, while larger employers must submit customized regulations electronically for approval. Any internal policy inconsistent with the Labor Law, Executive Regulations, or ministerial decisions will be deemed invalid.

Recordkeeping and Reporting Duties Expand

Employer reporting and recordkeeping obligations have also expanded. Establishments must maintain key employment records, including wage, attendance, deduction, medical, and training records, and must clearly display working hours, rest periods, and shift schedules.

Employers are also required to report vacancies, update hiring outcomes for Saudi candidates, submit annual workforce data, and report changes to company information within the specified deadlines.

The reforms also reinforce Saudization requirements. As a general rule, Saudi nationals must account for at least 75% of the workforce, although the framework allows limited exceptions.

Compliance will continue to be monitored through programs such as Nitaqat, and violations may result in service restrictions, recruitment suspensions, or visa blocks. Certain positions, including HR managers, receptionists, cashiers, PROs, and private security guards, remain restricted to Saudi nationals.

Worker Transfers and Document Retention Rules

The revised rules also strengthen worker protections. Non-Saudi employees may be permitted to transfer to another employer without consent in the following cases:

Prolonged non-payment of wages
Employer absence
Judicial disputes
Commercial concealment reports
Other public interest considerations

Employers that fail to pay wages for three consecutive months may face worker transfer approvals without consent, subject to the applicable statutory conditions.

The ministry also reiterated that employers may not retain a worker’s documents:

In implementation of Article (20) of the Labor Law: The employer may not retain the passport, residence permit (Iqama), or medical insurance card of a non-Saudi worker without the worker’s consent

The Ministry of Human Resources and Social Development

In addition, companies with 25 or more employees must ensure that at least 4% of their workforce consists of qualified persons with disabilities, where the nature of the work permits. Employers must provide reasonable accommodations and must not discriminate in hiring, promotion, or wages based on disability.

Disability may not be a reason for refusal of employment or promotion. Wage discrimination on the basis of disability is prohibited

The Ministry of Human Resources and Social Development

All applications related to recruitment, worker transfers, profession changes, reporting, and workplace regulation approvals must now be processed through the ministry’s electronic platform. The ministry also retains broad enforcement powers, including inspections, fines, service suspensions, visa restrictions, and referrals for criminal prosecution in serious cases.

The revised schedule clearly indicates that labor compliance in Saudi Arabia now represents a materially higher operational, regulatory, and financial risks for employers, requiring immediate review of internal policies, reporting processes, and employment practices.

What This Means for Construction Companies

For construction companies, the new rules raise compliance risk in several areas. Temporary labor that stays beyond 90 days may trigger full Labor Law obligations. Expanded recordkeeping requirements will also be harder to manage on projects with large site teams, shift work, and subcontracted labor.

The wage payment rules add another pressure point. If wages remain unpaid for three consecutive months, workers may be allowed to transfer without employer consent. In construction, that creates a direct risk to labor continuity on active projects.

Saudization rules and role restrictions may also require some firms to review staffing structures. Overall, the changes make labor compliance a project-level issue for construction companies, with direct impact on workforce planning, payroll control, and site operations.

Anna Fischer

Construction Content Writer

Anna has a background in IT companies and has written numerous articles on technology topics. Now, building up her expertise in construction and legal regulations, Anna expands the horizons of our blog and delights her readers with insightful articles.

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