Understanding Overtime Compliance in Saudi Arabia 2025

Ensuring the Legal Framework for Overtime in Saudi Arabia

Managing overtime fairly and efficiently is a key responsibility for HR professionals in the Kingdom of Saudi Arabia (KSA). With evolving Labour laws, increased regulatory oversight, and growing workforce expectations, businesses must priorities overtime compliance in Saudi Arabia to avoid legal repercussions and foster a transparent workplace culture.

This comprehensive guide explores how overtime works under Saudi Labour regulations, how to calculate it, and how HR teams can use SmartHCM to streamline compliance and payroll operations.

Understanding Overtime Under Saudi Labour Law

In Saudi Arabia, overtime refers to hours worked beyond the legal standard set by the Ministry of Human Resources and Social Development (MHRSD). As per Article 107 of the Saudi Labour Law:

• The standard work limit is 8 hours per day or 48 hours per week.
• During Ramadan, working hours are reduced to 6 hours per day or 36 hours per week for Muslim employees.
• Work beyond these thresholds qualifies as overtime and must be compensated accordingly, unless the employee falls into an exempted category (e.g., executive or field-based sales roles).

Overtime may also apply when employees work:

• On official weekends
• On public holidays
• During night hours (typically 10 PM to 6 AM)

How to Calculate Overtime Pay in Saudi Arabia

Saudi Labour Law mandates that overtime hours be compensated at 150% of the regular hourly wage, ensuring fair compensation for additional effort. Here’s the formula commonly used for overtime calculation:

Overtime Pay = Hourly Wage × 1.5 × Number of Overtime Hours

Step-by-step breakdown:

1. Hourly Wage = Monthly Salary ÷ 30 ÷ 8
2. Overtime Rate = Hourly Wage × 1.5
3. Total Overtime Compensation = Overtime Rate × Extra Hours

Example:

• Monthly Salary = SAR 6,000
• Hourly Rate = 6,000 ÷ 30 ÷ 8 = SAR 25
• Overtime Rate = SAR 25 × 1.5 = SAR 37.5
• For 10 overtime hours: SAR 37.5 × 10 = SAR 375

This formula ensures overtime compliance in Saudi Arabia by aligning payroll with local Labour regulations.

Special Cases: Weekends, Holidays, and Night Shifts

1. Weekends & Public Holidays

Employees working on Fridays, Saturdays (weekends), or public holidays are entitled to double compensation, their regular wage plus 150% overtime pay.

Example: An employee working 8 hours on a public holiday earns:

• 1 day’s wage (regular) +
• 8 hours × 150% hourly rate

2. Ramadan Working Hours

For Muslim employees, the maximum allowable hours during Ramadan are reduced to 6 daily. Any work beyond that is treated as overtime and must be paid at 1.5x the regular hourly wage.
non-Muslim employees typically maintain regular working hours unless internal HR policies dictate otherwise.

3. Night Shifts

Work performed between 10 PM and 6 AM may qualify for additional compensation under specific guidelines. This applies especially to employees outside predefined shift-based roles.

Who Is Exempt from Overtime Compensation?

Not all employees are entitled to overtime benefits under Saudi law. Common exemptions include:

• Managers and supervisors with decision-making authority
• Field-based sales professionals
• Employees on flexible or results-only work arrangements

However, employers must clearly define these roles in employment contracts and keep documentation (like organizational charts) to justify exemptions. Failing to do so may violate overtime compliance in Saudi Arabia, leading to potential legal consequences.

Legal Consequences of Non-Compliance

Failure to adhere to overtime pay laws can expose employers to:

• Financial penalties imposed by the MHRSD
• Labour court disputes initiated by employees
• Damaged employer reputation in the market
• Employee dissatisfaction and increased attrition

With over 1.8 million Labour violations detected in Saudi Arabia in 2023 alone (MHRSD source), the need for compliant and transparent HR practices is more urgent than ever.

How SmartHCM Supports Overtime Compliance in Saudi Arabia

SmartHCM is designed to help businesses across the Kingdom manage their workforce efficiently and remain compliant with Saudi Labour standards. Our robust overtime tracking and payroll modules reduce manual errors, prevent compliance breaches, and empower HR teams with automation and insights.

SmartHCM Features for Overtime Management:

• Automated Calculation: Accurately computes overtime pay using the latest rules, including Ramadan adjustments and holiday work.
• Employee Self-Service: Employees can submit overtime requests directly through their portal for managerial review.
• Shift Integration: Aligns with attendance and shift data to determine eligible overtime hours in real time.
• Visual Dashboards: HR teams can analyze overtime trends across departments and roles through graphical reports.
• Compliance Alerts: Get notified when employees exceed maximum hours or when exemptions are incorrectly applied.

By incorporating SmartHCM, organizations can ensure seamless overtime compliance in Saudi Arabia while promoting operational efficiency and employee trust.

Overtime and Part-Time Contracts

Part-time employees are also protected under Saudi Labour law. If a part-time worker exceeds the number of hours defined in their employment contract, they are entitled to overtime pay calculated using the same 150% rate.

Example: If a part-time employee is contracted for 4 hours/day but works 6, the additional 2 hours must be paid as overtime.

This ensures equitable treatment for all employees and reinforces the legal and ethical standards around overtime compliance in Saudi Arabia.

Best Practices for HR Teams in Saudi Arabia

To maintain compliance and employee satisfaction, HR departments should adopt the following:

• Maintain accurate attendance records using biometric systems or cloud-based tracking tools
• Update employment contracts to specify working hour expectations and potential exemptions
• Use automated payroll software to eliminate errors in overtime calculation
• Provide training to line managers on overtime policies and employee rights
• Review and revise HR policies annually to reflect any legal changes

FAQs About Overtime in Saudi Arabia

Final Thoughts: Why Overtime Compliance Matters

In Saudi Arabia’s fast-paced corporate world, keeping one step ahead of Labour laws is not merely legal compliance, it’s a strategic benefit. Organizations that value openness and equity in payroll procedures forge stronger employee bonds and avoid regulatory pitfalls. SmartHCM ensures employers’ compliance with overtime requirements in Saudi Arabia with accuracy, automation, and scalability, making your HR functions future-ready and perfectly compliant with MHRSD requirements.

References

• Saudi Labor Law – Ministry of Human Resources and Social Development
• Overtime Regulations – Article 107 of Saudi Labor Law
• Statistical Overview of Labor Violations 2023
• Ramadan Work Hours Clarification