Overtime pay is a key part of employment rules in Saudi Arabia, mainly for companies that have many workers or long operating hours. Article 107 of the Saudi Labor Law defines how overtime must be calculated, the rights of workers, and the obligations placed on employers.
This regulatory framework is designed to ensure fairness, prevent exploitation, and maintain healthy working conditions in a fast-growing economic environment. Companies operating in the Kingdom must therefore understand how overtime rules work in order to remain legally compliant and avoid penalties or labor disputes.
What Does Article 107 of the Saudi Labor Law Actually Regulate?
Article 107 governs all aspects of overtime work, including the conditions under which it is permitted, the rate of compensation, and the limits placed on employers.
Under the regulation, overtime refers to any working hours that exceed the standard 8 hours a day or 48 hours a week, except during the holy month of Ramadan when different rules apply for Muslim workers.
How Is Overtime Pay Calculated Under Article 107 in Saudi Arabia?
Under Article 107, any hour worked beyond normal working hours must be paid at:
- 125% of the worker’s hourly wage,
which includes the base salary plus allowances, or
- 150% of the hourly wage for work performed on official holidays or weekly rest days.
This enhanced rate reflects both compensation for time and the premium required to work beyond normal limits.
Companies must calculate overtime based on the full contractual salary, not the basic wage alone — a mistake that often results in legal claims.
What Does Article 107 Require of Companies?
Under Article 107, employers must:
- Get worker approval when needed.
- Mark down overtime hours correctly.
- Figure overtime pay using the legal rates.
- Factor allowances into the pay calculation.
- Pay overtime as soon as possible.
Employers must also ensure that overtime is not used as a substitute for proper workforce planning. Failure to meet these obligations can result in administrative fines and possible labor claims.
What Rights Do Workers Have When Performing Overtime in Saudi Arabia?
Workers have the right to receive timely and correct overtime compensation, to be informed of the need for overtime in advance (unless in emergency situations), and to request records of their working hours.
Saudi Labor Law also protects workers from retaliation if they raise concerns about improper compensation or workload. Employers cannot dismiss or threaten an employee for asserting these rights.
At AHYSP Law Firm, we help workers understand their entitlements and enforce their rights when employers fail to comply.
How Can Companies Ensure Compliance With Overtime Regulations in KSA?
Compliance requires more than paying overtime. Companies must implement internal mechanisms that guarantee transparency and accountability.
Effective compliance strategies include:
- Adopting an automated time-tracking system;
- Training HR departments on updated Labor Law requirements;
- Establishing clear approval procedures for overtime;
- Conducting periodic internal audits;
- Maintaining written policies aligned with Article 107.
These preventive steps significantly reduce the risk of labor disputes and penalties.
What Are the Most Common Violations of Article 107 in Saudi Arabia?
Typical violations observed in the Saudi market include:
- Paying overtime based only on the basic salary;
- Misreporting or underreporting work hours;
- Forcing overtime without proper justification;
- Delaying payment of overtime wages;
- Denying compensation for work on rest days or holidays.
Such violations expose employers to financial penalties, claims before the Labor Courts, and reputational risks. Many businesses face disputes because of inconsistent HR records or informal scheduling practices.
What Legal Remedies Are Available for Unpaid Overtime in Saudi Arabia?
When a company fails to compensate employees correctly, workers may file a complaint with:
- The Ministry of Human Resources and Social Development (MHRSD);
- The Labor Dispute Settlement Committees;
- The Labor Courts.
Claims for unpaid overtime can result in full back pay, compensatory damages, and administrative penalties on the employer.
In many cases, disputes arise simply because of documentation errors or incorrect calculations — issues that can be resolved efficiently with legal intervention.
How Can HR Departments Build Internal Policies to Avoid Article 107 Violations?
To stay out of legal trouble, HR needs to make clear internal rules that follow Saudi Labor Law. These rules should include:
These policies should cover:
- Overtime approval workflows;
- Thresholds for maximum overtime hours;
- Compensation calculation formulas;
- Mandatory rest periods;
- Documentation and record-keeping rules.
Good HR rules not only keep you in line with the law but also make the workplace more fair and open. AHYSP Law Firm assists companies in drafting legally sound internal regulations.
Can Companies Require Overtime During Emergencies or Peak Periods?
It’s a question that comes up a lot.
Saudi labor laws say employers can ask for overtime only in a few special situations. This could be to stop accidents, deal with pressing work issues, or handle unexpected dangers. But even if it’s an emergency, workers still need to be paid overtime at the correct rate.
Just because a company is having a busy time, that doesn’t count as an emergency. That means employers need to get their employees to agree to work extra hours, or they need to have overtime rules written into employment contracts beforehand.
Can a Worker Refuse Overtime in Saudi Arabia?
In general, workers may refuse overtime unless:
- The employment contract stipulates otherwise;
- The nature of the job requires emergency availability;
- The company faces a legally defined urgent circumstance.
Outside these situations, employers cannot impose overtime without consent. Refusal to work beyond regular hours cannot be used as grounds for disciplinary action or termination.
In conclusion, Article 107 in the Saudi Labor Law is key for safeguarding employees. It makes sure overtime is voluntary, well-recorded, and rightly paid. Employers should know this rule well to keep away from issues, fines, and harm to their image. For workers, Article 107 makes sure they’re paid fairly and have clear work terms.
With good legal advice, companies can build solid HR systems, steer clear of breaches, and stay compliant. AHYSP Law Firm helps both employers and employees understand Article 107, settle disagreements, and put policies in line with Saudi labor rules.
Key Takeaways
- Article 107 Saudi Labor Law regulates overtime, requiring employers to pay 125% for extra hours and 150% on holidays.
- Employers must get worker approval, track hours correctly, and pay overtime promptly to comply with Article 107.
- Employees have rights, including timely compensation and protection from retaliation for reporting issues related to overtime.
- Common violations include underpaying based on basic salary, misreporting hours, and delaying overtime payment.
- HR departments should establish clear policies for overtime approval and documentation to avoid violations of Article 107 Saudi Labor Law.
