Welcome to the Saudi Arabia focus edition of Law Update.
One of the key markets in the Middle East and North Africa (MENA) that continues to lead from the front is the Kingdom of Saudi Arabia (KSA). As the largest country in the Middle East and the 18th largest economy in the world, the progress KSA continues to make is underpinned by its Vision 2030 that envisions developing the country as an investment powerhouse and hub that ultimately connects Asia, Europe, and Africa. Given Saudi Arabia’s significance to the regional economy, our team of experts have prepared a range of pertinent articles that provide insights into new laws, regulations, and the legal landscape in the Kingdom.
This edition will provide you with an up-to-date guide on matters such as; the framework issued by the Saudi Central Bank on IT governance, the anti-corruption landscape under Vision 2030; we also provide practical tips for dispute avoidance. This is only a snapshot; there are many more articles within the KSA focus section for you to read, which we hope you will find valuable and enjoyable.Read the edition
Mustafa Muayad - Associate - Corporate / Mergers and Acquisitions
This law shall replace the old labour law No. 71 of 1987. The New Labour Law took a long time to be issued as the draft of the law went through many amendments and was under discussion from 2005 to 2010 with international, local and governmental entities before its submission to the State Council. The issuance of the New Labour Law was necessary, due to the significant changes that occurred over the last thirty years and the transformation of the Iraqi economy from Socialism to an open economy, especially with the entrance of working expats to Iraq.
Scope of New Labour Law
The New Labour Law applies to all employees in Iraq (i.e. including Iraqis and foreigners) except public sector employees who have been hired according to the Civil Service Law and all security forces.
Observations on the New Labour Law
In terms of its content, the New Labour Law appears to be more detailed than its predecessor. It aims, as described by the Iraqi Parliament, to address the old law’s shortcomings and align Iraq’s labour regulations with international labour principles ratified by Iraq.
The New Labour Law differentiates jobs depending on the circumstances and duties that the employees are conducting, bearing in mind that the New Labour Law includes more than 170 Articles, which include a number of new terms and additions. These Articles have been set out after consulting with the labour society, labour unions, businessmen and the Ministry of Labour and Social Security. The most significant attribute is that New Labour Law ratified all the international standards and conventions regarding labour which were not ratified by the previous law and which had been left pending. The New Labour Law is equitable to employers and employees and is comparable to the labour laws of developed countries.
The New Labour Law’s most important advantages are as follows:
As regards to regulating the contractual relationship between the employer and the employee, the New Labour Law is organising such relations thoroughly by stating the requirements of the employment agreements, the rights of both parties and the mechanism of settling any disputes with the committees which are responsible in this regard. In addition, the New Labour Law clearly specifies the conditions of abrogating and terminating the employment agreement in order to cover all the possible circumstances that might occur during the validity of the agreement. It also determines in a specific way the amount of compensation related to the employment agreement as a result of breach, abrogation, dismissal and termination, which allows both parties to be aware of the implications of their actions in the course of the employment agreement. Further, the New Labour Law establishes one or more labour courts in each governorate which shall govern all the disputes that might arise from employment agreements. Thus, the New Labour Law is distinct from the old law and covers thoroughly all labour aspects. The following are the formations that the New Labour Law stipulated:
This court shall have jurisdiction over civil and penal actions, matters and disputes referred to in the New Labour Law, the Pension and Social Security Law for Workers and temporary decisions involving actions within the jurisdiction of the Labour Courts.
Termination of Employment Contract
Similarly to the previous Labour Law, the New Labour Law continues to restrict the termination of the employment contract, and sets limitations regarding how the employment relationship can be terminated. However, the New Labour Law provides further details in such a case including dividing the termination instances to general ones, acts by the employer, or acts by the employee.
An important note to be mentioned here is that the New Labour Law emphasises the legal concept of mutual agreement between the employer and the employee in order to terminate the employment contract, and the same cannot be done by the employer (for his part) by only addressing a notice to the employee, unless this to be done according to one of the specific cases listed in the New Labour Law.
Force majeure and the death of the employee are two new cases that have been added to the general termination instances, both to be applied according to particular conditions clarified in the New Labour Law. These are in addition to the other general instances such as:
As mentioned earlier, the employer may terminate the employment contract, for his part, in the following exclusive cases, subject to having given to the employee at least 30 days’ advance written notice before the termination date. If such notice is not given, the employee shall be entitled to compensation amounting to his salary for the notice period. Such cases are:
The employee may terminate the employment contract, for his part, and with no need to send a notification, in the following case: