THE SAUDI INITIATIVE FOR MITIGATING COVID-19 IMPACT: ARTICLE 41

An update, Article (41), has been added to the Executive Regulations of Labor Law as part of the numerous initiatives which the Saudi government has announced to provide business continuity in response to COVID-19. The update provides legal options for employees and employers to provide flexibility in employment contracts as preventative measures against redundancy or company closure.

Agreements can include a reduction in working hours and salary, utilization of annual vacation balance and using exceptional leave mechanism. These options can only be exercised if there is mutual agreement between both the employee and the employer.

These options can be exercised within six months of the beginning of the Saudi government announcement of precautionary measures.

Benefits for Employees

Maintaining employee contract and the benefits that are provided with the contract to ensure the employee has job security during COVID-19. The employee also has the option to maintain their contract or alter it in agreement with the employer, in implementing the options mentioned above.

Benefits for Employers

The employer has several options that can be agreed upon with employees at the time of the implementation and can benefit with maintaining continuity of the business and easing payroll expense pressures.

Entrepreneurs can benefit from the temporary access of expat workers through the Ajeer portal.

Compliance is essential for any employers wishing to avail this regulatory initiative and taking legal advice is advised before making any decisions.