New Labour Law Penalties in Saudi Arabia: A Guide for Employers Using EOR Services

Saudi Arabia has updated its labour law violations and penalties framework to provide clearer rules and stronger enforcement for employers. These changes affect how businesses hire, manage, and treat their workforce, and they introduce significant financial penalties for non‑compliance.

For companies using an Employer of Record (EOR) such as Tarmack, staying compliant with labour regulations is essential to avoid fines, legal challenges, and operational disruptions when hiring in the Kingdom.

Why the Changes Matter

The Ministry of Human Resources and Social Development (MHRSD) has revised the Schedule of Violations and Penalties to make labour law enforcement clearer and more transparent. The updated regulations define specific violations and assign clear financial penalties, helping both employers and inspectors understand expectations and consequences.

These changes are part of Saudi Arabia’s broader efforts to modernise the labour market, protect workers’ rights, and encourage fair and lawful business practices.

Key Penalties Employers Should Know

Under the updated labour law penalties, employers may face fines for a range of violations. Some of the most important ones include:

Licensing and Recruitment Violations

• Engaging in recruitment, outsourcing, or labour services without an official ministry licence can result in a fine of between SR200,000 and SR250,000.
• Employing Saudi nationals without the required licence can also lead to a fine of SR200,000.

Work Permit and Worker Mobility

• Allowing an employee to leave their employer and work for another company without proper approval can result in fines between SR10,000 and SR20,000 for the employer.

Worker Rights and Maternity Provisions

• Failing to comply with maternity leave rules is considered a serious violation. Each affected employee can trigger a fine of SR1,000.

Childcare Requirements

• Employers with 50 or more female employees who have at least 10 children under six years old must provide childcare or nursery facilities. Failure to do so can lead to a fine of SR3,000.

Workplace Practices and Safety

• Not forming a committee to investigate workplace misconduct or not completing investigations within required timeframes can lead to fines of SR1,000 to SR3,000.
• Failing to meet internal or external environmental requirements can result in a SR500 fine.

These penalties provide clarity on what constitutes non‑compliance and emphasise employer responsibility for workplace practices and worker welfare.

Understanding the Penalty Framework

The updated penalties categorise violations into serious and minor breaches, with fines that vary based on the nature of the violation and, in some cases, the size of the establishment. Large employers with more employees may face higher fines for certain breaches.

The purpose of these updates is to:

• Reduce ambiguity in how penalties are applied
• Enhance consistency in enforcement across sectors
• Encourage proactive compliance by employers
• Strengthen worker protections and workplace standards

How These Changes Affect Employers Using an EOR

For companies using an EOR like Tarmack, these penalty updates underscore the importance of:

• Accurate HR and compliance data: Ensuring work permits, licences, and employee records are correct and up‑to‑date.
• Strong internal policies: Establishing proper workplace procedures, misconduct investigation processes, and reporting mechanisms.
• Worker welfare compliance: Meeting requirements for maternity leave, childcare, safety standards, and other rights.
• Licensed operations: Making sure any recruitment or labour services work is fully licensed and documented.

An experienced EOR partner helps manage these areas on behalf of employers, reducing the risk of fines and ensuring that employment practices meet Saudi legal requirements.

Practical Steps to Avoid Labour Law Fines

To minimise compliance risk, employers should:

• Regularly audit HR policies, contracts, and work permits.
• Use the official digital platforms to record and verify employment documentation.
• Educate internal teams and local partners on legal obligations and company‑approved procedures.
• Ensure all recruitment, outsourcing, and worker mobility activities are lawful and licensed.
• Provide required worker benefits and rights in accordance with Saudi labour law.

Final Thoughts

The updated labour law penalties reflect Saudi Arabia’s commitment to strengthening labour standards while fostering a fair and efficient business environment. Employers who ignore these rules risk substantial financial penalties and operational obstacles.

Working with a trusted Saudi Arabia Employer of Record can ensure that hiring, HR processes, and workplace policies are compliant with current regulations so your team operates smoothly and lawfully. Get in Touch.