KSA: Remuneration Cuts but Only in the Public Sector

Analysis

On 25 Dhi Al-Hijjah 1437 (Hijra calendar), the Council of Ministers passed Saudi Arabia Ministerial Decision No. 551/1437 and Saudi Arabia Ministerial Decision No.552/1438 which became effective on 30 Dhi Al-Hijjah 1437 and 1 Muharram 1438 respectively. The Decision has been widely published and implements a number of significant changes to remuneration structures in the civil service. It does not apply to the private sector and the Ministry of Labour recently moved to clarify to private sector employers that remuneration could not be reduced unilaterally.

Saudi Arabia Ministerial Decision No. 551/1437

Saudi Arabia Ministerial Decision No. 551/1437 broadly provides for the following:

• Elimination of annual increases in the Islamic new year on renewal, extension or continuance of contracts;

• Overtime rates to be cut to 25% of basic salary if performed on a normal working day and 50% of basic salary if performed on a public holiday;

• Travel allowances not to be paid during periods of annual leave;