Best Employment Benefits & Executive Compensation Lawyers in Al Falah

About Employment Benefits & Executive Compensation Law in Al Falah, Saudi Arabia

Employment benefits and executive compensation in Al Falah are governed by national Saudi law. Al Falah is a neighborhood of Riyadh, so employers and employees there follow the Saudi Labor Law and its implementing regulations, the Social Insurance Law, health insurance rules, data protection requirements, and in some cases the Capital Market Authority rules. Day to day enforcement is handled by the Ministry of Human Resources and Social Development and the Labor Courts of the Ministry of Justice.

For most private sector roles, the law sets minimum entitlements such as paid leave, end of service benefits, timely salary payment through the Wage Protection System, mandatory health insurance, and social insurance contributions. Executive pay packages commonly include basic salary, allowances, bonuses, long term incentives, and contractually agreed severance. For listed companies, additional governance, disclosure, and shareholder approval requirements apply to remuneration and share incentive plans. There is no personal income tax on employment income in Saudi Arabia, but employers must comply with social insurance and other regulatory contributions, and employees receiving equity from foreign parents should consider foreign tax rules in their home jurisdictions.

This guide is general information, not legal advice. Laws and rates change. Consult a qualified Saudi employment lawyer before acting.

Why You May Need a Lawyer

You may need legal help when negotiating or documenting an executive offer, including base pay, allowances, bonuses, equity awards, relocation, school fees, housing, transport, and severance. A lawyer can align the package with Saudi Labor Law, Companies Law, and any Capital Market Authority requirements, and reduce later disputes.

Legal support is important if you are setting up or updating company compensation policies, designing short term or long term incentive plans, or implementing an employee share plan in a Saudi or foreign parent company. Listed companies need careful compliance with shareholder approvals and disclosure. Private companies also need to draft clear plan rules, vesting, forfeiture, and clawback provisions that work under Saudi law.

Common disputes include unpaid bonuses, commission disputes, calculation of end of service benefits, termination and notice issues, noncompete or nonsolicitation enforcement, classification of managers for overtime, and claims about unequal pay or discrimination. Counsel can also help with GOSI classification and rates, Wage Protection System problems, health insurance issues, and data privacy compliance for HR files under the Personal Data Protection Law.

Executives on expatriate assignments often need advice on sponsorship and work permits, intra group secondments, side letters, garden leave, change of control protections, and cross border equity awards. Employers facing audits or inspections related to Saudization quotas, payroll, or health insurance should obtain advice early to avoid penalties.

Local Laws Overview

Employment contracts and language. Employment contracts should be in Arabic. Bilingual contracts are common, but the Arabic usually prevails in case of conflict. Clearly define compensation components, eligibility for bonuses, treatment of equity awards, notice, probation, business protection clauses, and the governing policies.

Wages and salary payment. Salaries must be paid on time through the Wage Protection System using Saudi bank channels. Persistent violations can trigger fines and restrictions on new visas. There is no universal minimum wage for all private sector workers, but for Saudization program purposes a Saudi national must earn at least 4,000 SAR per month to count as one full Saudi employee.

Mandatory benefits. Employers must provide cooperative health insurance for employees and eligible dependents through the Council of Health Insurance. Employers must register employees with the General Organization for Social Insurance. For Saudi employees, typical GOSI contributions include employer pension 9 percent, employee pension 9 percent, unemployment SANED employer 1 percent and employee 1 percent, and an occupational hazards premium generally 2 percent paid by the employer. Non Saudi employees are usually covered by the occupational hazards premium. Contribution bases and rates are set by GOSI and may change, and wage caps apply.

Working time, overtime, and managers. Standard limits are 8 hours per day or 48 per week, with reduced hours for Muslim employees during Ramadan. Overtime is generally paid at 150 percent of the hourly wage, including certain allowances. Senior managerial employees who have authority to manage and represent the employer can be excluded from working time limits, but titles alone are not conclusive and misclassification risks exist.

Leave entitlements. Minimum paid annual leave is 21 days per year, increasing to 30 days after 5 years of service with the same employer. Paid public holidays include Eid al Fitr, Eid al Adha, and Saudi National Day. Maternity leave is 10 weeks with pay level depending on length of service. Paternity leave is available for a short period. Sick leave over a year is typically 30 days full pay, 60 days at three quarters pay, then 30 days unpaid, subject to medical proof.

End of service benefits. On termination, employees are entitled to a statutory gratuity based on the last wage, which generally includes basic salary plus fixed regular allowances. The typical formula is half a month of wage for each of the first 5 years and one month for each additional year. Resignation may reduce the amount for shorter service, while termination by the employer for reasons other than gross misconduct usually preserves the full entitlement. Contractual severance can be added but not below the statutory minimum.

Termination and notice. For indefinite contracts, the standard notice period is 60 days for monthly paid employees and 30 days for others, unless a longer period is agreed. Fixed term contracts end on expiry unless renewed. Unlawful termination can lead to compensation in addition to end of service benefits. Employers should follow due process, document performance or misconduct issues, and respect final settlement timelines.

Business protection clauses. Noncompete and nonsolicit clauses are enforceable if necessary to protect legitimate interests and are reasonable in scope, geography, and activities. The implementing rules limit post termination noncompetes to a maximum of two years. Confidentiality and intellectual property clauses should be included. Works created in the course of employment are commonly assigned to the employer by contract and under applicable IP law.

Equity and executive pay governance. For listed companies, the Capital Market Authority Corporate Governance Regulations require a remuneration policy, disclosure of compensation of senior executives in the annual report, and sometimes shareholder approval for remuneration and employee share plans. Employee share schemes for listed issuers are subject to specific CMA instructions. Private joint stock and limited liability companies must comply with the Companies Law when granting options or restricted shares, including authorization in constitutional documents, proper valuation, and buy back rules where applicable. Cross border awards should be aligned with foreign securities laws and any currency control requirements.

Data protection and HR records. The Personal Data Protection Law applies to employee data. Employers must have a lawful basis to process HR data, provide notices, apply retention limits, protect transfers outside the Kingdom, and implement security controls. Compensation and performance data should be handled under documented policies.

Local administration and dispute resolution. Employment disputes in Al Falah are first routed through the Ministry of Human Resources and Social Development friendly settlement process. If unresolved, they go to the Labor Court under the Ministry of Justice. Strict time limits apply to filing claims, so act promptly.

Frequently Asked Questions

Is there personal income tax on salary or bonuses in Saudi Arabia

No. Saudi Arabia does not levy personal income tax on employment income. Employers must still comply with social insurance contributions and other statutory payments. If you receive equity or cash incentives from a foreign entity, you may have tax obligations in another country and should obtain specialist advice.

How are end of service benefits calculated for executives

ESB is based on the last wage, which typically includes basic salary plus fixed, regular allowances. The standard formula is half a month wage for each of the first 5 years of service and one month for each additional year. For example, with 7 full years of service and a last monthly wage of 50,000 SAR, the ESB would be 2.5 months for the first 5 years plus 2 months for years 6 and 7, totaling 4.5 months or 225,000 SAR. Resignation and certain termination reasons can affect the amount under the Labor Law.

Do noncompete clauses apply to senior executives

They can, if they protect legitimate business interests and are limited in time, place, and scope. Saudi rules cap post termination noncompetes at two years. Overbroad or punitive restrictions are unlikely to be enforced. Clear definitions of restricted business and clients improve enforceability.

Can an employer refuse to pay a discretionary bonus

If the bonus is truly discretionary and the policy says the employer may decide each year, there may be no entitlement. If the bonus is contractual or calculated under a clear scheme and performance criteria are met, nonpayment can be disputed. The treatment on termination, including prorating and forfeiture, should be set out in the contract or policy.

Are executives entitled to overtime

Managers with genuine authority to manage and represent the employer may fall outside working time rules and overtime. However, job titles do not decide the issue. If an employee is not truly a senior manager and works beyond legal limits, overtime at 150 percent may be due. Properly drafted contracts and accurate job descriptions help reduce risk.

Can salary be paid in foreign currency or offshore

Salaries must be paid through the Wage Protection System to a Saudi bank account, generally in Saudi Riyals. Some allowances or expatriate benefits can be arranged separately by agreement, but the core wage must comply with WPS and payroll rules.

What benefits are mandatory for private sector employees

Key mandatory benefits include timely wage payment through WPS, enrollment in social insurance, cooperative health insurance, paid annual leave and public holidays, sick leave, maternity or paternity leave as applicable, and end of service benefits. Additional executive perks are contractual and not mandated by law.

How are employee share plans handled in Saudi Arabia

Listed companies must comply with Capital Market Authority rules, adopt a remuneration policy, seek shareholder approval where required, and follow disclosure obligations. Private companies must structure plans under the Companies Law, with proper approvals and documentation. Awards should address vesting, good and bad leaver treatment, change of control, and settlement mechanics, and consider foreign securities laws if a non Saudi parent is involved.

What is the process to resolve a compensation dispute in Al Falah

File a complaint with the Ministry of Human Resources and Social Development for friendly settlement. If not resolved within the statutory period, the case is referred to the Labor Court. Prepare your contract, pay slips, WPS records, bonus plan documents, performance records, and correspondence. There are short limitation periods, often 12 months for certain claims, so act quickly.

Can an employee agree to waive statutory entitlements

No. Contractual terms cannot reduce or waive statutory minimum rights such as end of service benefits, paid leave, or social insurance coverage. Parties may agree to provide additional benefits that exceed the minimum standards.

Additional Resources

Ministry of Human Resources and Social Development.

General Organization for Social Insurance.

Council of Health Insurance.

Capital Market Authority.

Ministry of Commerce.

Ministry of Justice Labor Courts and the Najiz judicial services platform.

Zakat, Tax and Customs Authority.

General Directorate of Passports.

Next Steps

Document your situation. Gather contracts, offer letters, addenda, equity grant notices, policies, plan rules, pay slips, WPS statements, GOSI registration, and correspondence. For disputes, assemble a timeline and evidence of performance goals or board approvals for bonuses.

Estimate your statutory entitlements. Calculate potential end of service benefits, notice pay, unused leave encashment, and any accrued bonuses or commissions. Check how the last wage is defined in your contract and policies.

Act promptly. Deadlines for filing employment claims are short. Initiate the friendly settlement process with the Ministry of Human Resources and Social Development if a dispute arises, and be prepared to proceed to the Labor Court if necessary.

Engage a local lawyer. Choose counsel experienced in Saudi executive compensation, equity plans, and labor disputes in Riyadh. Ask for a review of your documents, a strategy for negotiation or litigation, and an assessment of regulatory risks around GOSI, WPS, health insurance, and data protection.

For employers, align governance. Update remuneration policies, board committee charters, employment contract templates, and share plan rules to meet current law, including noncompete limits, PDPL compliance, and Capital Market Authority requirements for listed issuers. Train HR and payroll on WPS, GOSI, and leave entitlements.

For employees and executives, negotiate carefully. Clarify bonus criteria, vesting and treatment of equity on termination or change of control, relocation benefits, tax support if relevant, and enforceable post termination restrictions. Seek written agreements rather than relying on verbal promises.

This guide is for information only and does not replace tailored legal advice for your specific facts.