Article 52 of the Labor Law requires every employment contract to follow a unified template set by the Ministry, including basic data (both parties' names, wage and allowances, job type and location, start date, contract term). But complying with the unified template doesn't mean all contracts are identical; the details within this framework (confidentiality clauses, non-compete, evaluation mechanisms, early termination terms) are what actually determine the balance of power between the parties later.
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A non-Saudi employee's contract must be written and fixed-term (Article 37), and if it doesn't state a term, it's considered valid for one year from the actual start date. A Saudi's contract may be fixed-term or indefinite, and automatically converts from fixed to indefinite (Article 55) in two cases: both parties continuing to perform the contract after its term ends without a renewal agreement, or the contract being renewed three consecutive times, or its original term plus renewals reaching four years, whichever comes first.
The probation period is capped at 180 days under the latest amendments, during which either party may end the contract without compensation, but it can never be extended beyond this limit even with both parties' agreement. Drafting a probation clause exceeding this limit renders the clause void even if the employee signed it.
Non-compete clauses after the contract ends need precise limits on duration, geographic scope, and the type of prohibited activity; excessive clauses can be entirely invalidated by the labor court in a dispute, while a carefully drafted clause within reasonable limits remains genuinely enforceable.
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