40% Pay Cut for Private Sector per MOL

Ministry of Labor & Social Development in Saudi Arabia have agreed to make some changes in the Labor Laws during this pandemic situation where the Private Business owners are bearing salaries and wages of private sector employees.

MOL has issued guidance to private business owners which will allows them to reduce workings hours for the employees and also to reduce (pay-cut) 40% maximum salaries for a period of six months.

40% Pay Cut for Private Sector

• Employees does not have any right to object of the Salary does not exceed 40% reduction.
• After six months of period the company even have a choice to pay full wages back to the employee or terminating the contract.
• This law will also allows business owners the right to approve the timings of their employees’ annual leave depending on work conditions.
• Wages during annual leave will be paid at the rate before any reduction.

But there are three conditions before terminating a contract.

The three conditions set to terminate contracts as the following: The passing of six months since a salary cut has come into effect, the reduction of pay, annual leave and exceptional leave have all been spent and if a company proves that it is facing financial difficulties given the economic circumstances as a result of the COVID-19 pandemic.