Employment Contract Drafting in Saudi Arabia 2026: Mandatory Clauses and Costly Mistakes | Nova Legal

What Is an Employment Contract, and Why Does Its Drafting Matter?

An employment contract is an agreement under which the employee performs work under the employer's management and supervision in return for a wage. The Saudi Labor Law requires the contract to be in writing, in two copies with one kept by each party, and documented as the Implementing Regulations specify, which today happens electronically through the Qiwa platform.

Arabic is the official language for contracts and records. A translation into another language may be attached, but the Arabic text prevails in case of any discrepancy. Many companies that hire foreign staff overlook this point and rely on the English version alone.

Good drafting does not mean a long contract. It means a clear contract: every obligation is defined by number, duration and party, and every right of the employer is written out explicitly. Whatever is not written in the contract, the judge refers back to the law, and the law in most cases leans toward protecting the employee as the weaker party.

Mandatory Clauses in a Saudi Employment Contract

A contract documented on Qiwa requires a minimum set of data, but a well-drafted contract adds details that prevent disputes later. No contract should be missing these clauses:

• Party details: the business name, commercial registration number and address, and the employee's name, nationality and ID or iqama number.
• Job title and duties: a title that matches Qiwa, with a general description of duties that allows related assignments without counting as a material change.
• Basic wage and allowances: the amount in riyals, the payment method and date, and the housing and transport allowances or their provision in kind, an obligation the recent amendments confirmed.
• Contract type and term: fixed-term or indefinite, and the start date.
• Probation period: it must be stated explicitly, otherwise the employer cannot rely on it.
• Place and hours of work: the city or branch, daily and weekly hours, and rest days.
• Leave: annual leave, public holidays, and how leave is requested.
• Termination mechanism: the notice period, cases of termination without end-of-service award, and how the end-of-service award is calculated.

Any clause that gives the employee less than the minimum set by the law is void, even if the employee signed it, and the legal provision applies instead. Smart drafting therefore works within the limits of the law, not against it.

Types of Employment Contracts: Fixed-Term, Indefinite, and Non-Saudi Contracts

Choosing the contract type is a financial decision before it is a legal one, because it determines what the business pays when the relationship ends:

Contracts for Non-Saudi Employees

A non-Saudi employee's contract must be written and fixed-term. If it does not state a term, the duration of the work permit is treated as the contract term. Linking the contract term to the iqama and work permit, and stating who bears renewal fees and the return ticket, are clauses that settle recurring disputes.

Temporary and Seasonal Work Contracts

Casual or seasonal work lasting no more than 90 days has a different form, and not every rule of a standard contract applies to it. Using a standard contract for temporary work, or the reverse, is a mistake that costs the business rights it never budgeted for.

Protective Clauses Employers Overlook When Drafting Employment Contracts

Mandatory clauses make the contract valid, but protective clauses are what safeguard the business in a dispute. These are the ones most often missing from ready-made templates:

Probation Period

After the amendments, the maximum probation period is 180 days, and it must be stated explicitly in the contract. It cannot be repeated with the same employer except in specific cases, such as a change of profession or six months having passed since the previous relationship ended, and only by written agreement. Both parties may end the contract during probation, and this right cannot be limited to one party.

Non-Compete Clause

If the employee has access to the business's clients or trade secrets, the parties may agree that the employee will not compete after the contract ends. The clause is only valid if it is written and specific as to duration (not exceeding two years), place and type of work, and limited to what is needed to protect a legitimate interest. A blanket clause such as "will not work for any competitor" rarely holds up in court.

Confidentiality and Intellectual Property

In technology and consulting companies, the contract should state that software, designs or content the employee produces during employment belong to the business, with a confidentiality obligation that continues after the relationship ends. Without this clause, ownership of the work becomes a real dispute.

Remote Work and Change of Workplace

If the nature of the job allows remote work or transfers between branches, say so in the contract. Moving an employee to another city without consent may be treated as a material change to the contract.

Commissions and Incentives

State clearly whether commission is part of the wage or a discretionary incentive tied to targets. Mixing the two changes how the end-of-service award is calculated and may oblige the business to pay amounts it did not expect.

What Did the Labor Law Amendments Change in Your Contracts?

If your contract templates were written before 2025, review these points in particular, because the amendments addressed or confirmed them:

• Probation: a maximum of 180 days, with limits on repeating it.
• Notice in indefinite contracts: at least 30 days from the employee and at least 60 days from the employer.
• Resignation: now has its own rules, including treating a resignation as accepted if the employer does not respond within 30 days, and the employee's right to withdraw it within 7 days unless it was accepted earlier.
• Housing and transport: the employer must provide them or pay a cash allowance instead.
• Maternity leave: 12 weeks, of which 6 weeks after delivery are mandatory.
• Compensating overtime with leave: permitted with the employee's consent.

For a broader look at the amendments from the angle of rights and obligations, read our article on Labor Law amendments and employer and employee rights.

Steps to Document an Employment Contract on Qiwa

An undocumented contract exposes the business to violations and weakens its position in any dispute. Documentation is done from the business account on the Qiwa platform:

1. Log in with the employer or authorized user account and select the establishment.
2. Open the "Contract Management" service and create a new contract.
3. Enter the employee's details; basic data appears automatically from the ID or iqama number.
4. Enter the contract details: job title, wage, allowances, type, term, probation period and working hours.
5. Add the additional clauses your lawyer drafted, such as non-compete and confidentiality, in the additional terms field.
6. Send the contract to the employee to accept, reject or request changes from their Qiwa account. A contract not approved within the set period is cancelled automatically.

Practical note: the Qiwa data must match the signed paper contract or annex. A mismatch in wage or job title between the two is one of the most common grounds employees rely on to claim differences before the labor court.

Common Employment Contract Drafting Mistakes, and When You Need a Lawyer

From the labor disputes that reach the courts, these mistakes keep recurring in the contracts of small and medium businesses:

• Copying an employment contract template from the internet without adapting it to the business or to the recent amendments.
• Leaving out the probation period, then ending the contract in the third month on the basis that the employee was "on probation".
• A blanket non-compete clause with no duration or geographic scope, which falls at the first dispute.
• Renewing a fixed-term contract for years without considering how repeated renewal affects its classification.
• Writing an all-inclusive wage without separating basic pay and allowances, so the end-of-service award is calculated on a higher base.

Because each of these mistakes can turn into a case, reviewing the contract before signing costs far less than defending it after a dispute:

• To draft a new contract or update your current templates in line with the amendments, request our employment contract drafting service.
• If you need a complete framework including internal work regulations and HR policies, see our labor and personnel systems service.
• If a dispute has already started, read our guide to litigation procedures before the labor courts, or request attendance at a labor court hearing.
• To understand how termination affects both parties' rights, read our article on unfair dismissal and end-of-service awards.

Frequently Asked Questions

Must an employment contract in Saudi Arabia be written in Arabic?

Yes. Arabic is the official language for employment contracts under the law. A translation into another language may be attached, but the Arabic text prevails if the two versions differ.

What is the maximum probation period in a Saudi employment contract?

180 days after the 2025 amendments, and it must be stated explicitly in the contract. It cannot be repeated with the same employer except in specific cases and by written agreement.

What is the notice period for ending an indefinite employment contract?

At least 30 days if the employee ends the contract and at least 60 days if the employer does, and the notice must be in writing.

Is a non-compete clause in an employment contract valid?

Yes, on conditions: it must be written, limited to a duration not exceeding two years, limited by place and type of work, and intended to protect a legitimate interest of the employer. A blanket clause is usually not enforced.

Is documenting the employment contract on Qiwa mandatory?

Yes. The law requires employment contracts to be documented as the regulations specify, which is done electronically on Qiwa, and the contract is sent to the employee for approval from their account.

Conclusion: Employment Contract Drafting Is an Investment, Not a Formality

Getting employment contract drafting right means knowing from day one what you will pay at termination, what rights you hold over probation, confidentiality and non-compete, and that your contract complies with the Labor Law amendments and is documented on Qiwa with the same data.

The Nova Legal team in Riyadh drafts employment contracts and reviews existing templates for small, medium and large businesses through our employment contract drafting service and our labor and personnel systems service. You can start with an in-office legal consultation to assess your current contracts. Address: Al Sahaba Road, Al-Ishbiliyah District, Riyadh – Building 2/2 Al Hamra City, Second Floor, Office 202.

Official Sources and References

• Bureau of Experts at the Council of Ministers – Labor Law and its amendments
• Ministry of Human Resources and Social Development
• Qiwa platform – employment contract management and documentation
• Al Eqtisadiah – details of the Labor Law amendments effective February 2025