Comprehensive Employer’s Guide to Ensuring Accurate Vacation Pay Calculation in Saudi Arabia

To do the vacation pay calculation in Saudi Arabia, you must consider the various aspects that determine this benefit. As with other legal issues, this one can get you in trouble if you do not follow the guidelines of the law. However, the procedure for determining vacation time and paying it is very simple on an individual basis.

In this article, we will show you what annual leave for employees is all about and what the law says about it. Likewise, we offer you a guide about the most important aspects to consider in this case.

Employer’s Guide to Accurate Vacation Pay Calculation in Saudi Arabia

vacation pay calculation in saudi arabia

Workers in Saudi Arabia have the right to take vacations or paid rest periods. However, to obtain this benefit, the employee must have at least one year of service in the company. Generally, the vacation granted consists of 15 consecutive days for each year of service. However, depending on the jurisdiction, these regulations may vary.

It is important to ensure the accurate calculation of employee vacations and thus you can avoid legal inconveniences. Additionally, some studies conducted say that workers who receive fair benefits programs stay with their employer longer. An important part is paid time off or PTO, also called vacation.

Furthermore, the best thing to offer a fair policy in this area is the leave salary calculation in KSA.

Strategies and Best Practices for Employers: Ensuring Accurate Vacation Pay Calculation in Saudi Arabia

You can do the Saudi labor law vacation pay by calculating the salary earned by the employee at the beginning of the vacation. Additionally, to determine the amount to be paid, you must divide the salary earned by the 30 days of a month. Then, you must multiply the result by the number of vacation days to which the worker will be entitled.

Below, you will see the aspects to take into account when calculating vacation pay for employees:

Accumulation of vacations and practical enjoyment

An employee who physically enjoys his vacation for a period of work is called effective vacation enjoyment. However, if the employee does not want to take them, he can agree with the employer and accumulate them. Likewise, if the employee decides so, he or she must know that he or she will be subject to legal limitations and will receive financial compensation.

Vacation settlement of the employment contract termination

When an employee does not take vacation before dismissal under an employment contract, he or she will receive compensation for the vacation not taken. In this case, the vacation pay calculation in Saudi Arabia is the same as regular vacation pay, taking into account your last salary.

Special agreements or collective agreements

There are employment contracts in which employees establish collective agreements or agreements that imply a different calculation of vacation pay. Also, before the leave salary calculation in KSA, check the employment agreements to confirm compliance.

Vacation tracking and registration

To make sure you comply with labor laws and accurately manage the vacations of your employees, keep a record. In addition, this must include the time for the vacation, the start and end date, and the remuneration granted for said rest.

Navigating the Complexities of Vacation Pay Calculation in Saudi Arabia for Employers

To make the correct calculations and Saudi labor law vacation pay, you need to have a good knowledge of the subject. Likewise, you should find out what laws govern it and how to make the calculations for each employee. All of this can become a complicated process that would cost time and effort.

Demystifying the Intricacies of Vacation Pay Calculation for Employers in Saudi Arabia

In many cases, the vacation pay calculation in Saudi Arabia could be a complicated task. However, some factors can reduce the difficulty when performing the calculations which you can see below:

Understanding Vacation Pay Calculation Challenges in Saudi Arabia

The employer will do the vacation pay calculation in Saudi Arabia with the last base salary at the beginning of the vacation period. That is, overtime, Sunday or holiday overtime, or transportation subsidy will not be included.

On the other hand, if it is a variable salary, the vacation pay calculation will be based on the average salary of the year before the vacation. Additionally, the employer in Saudi Arabia may do this calculation using the following formula:

  • Salary X number of days worked / 720

Key Strategies for Managing Vacation Pay Calculation Challenges

Below you will see the most efficient strategies for managing the vacation pay calculation in Saudi Arabia:

The communication

Although it may not seem like it, communication with your employees is a determining factor for effective vacation pay management. Thus, as an employer, keep your employees informed regarding the processes for vacation requests and payment. Additionally, employees should know what legal rights and duties they have regarding vacation leave.

Plan and coordinate vacations

To avoid affecting the operations of your company due to employee vacations, you must plan and coordinate them in advance. Additionally, set clear guidelines for your employees based on request as well as vacation approval. Likewise, you must articulate vacation leaves to make a balanced distribution and thus avoid a lack of employees in your company.

Use software and technological tools for vacation management

A good idea to facilitate the vacation pay calculation in Saudi Arabia is the use of technology. In this way, the technological tools will make calculations, detailed control, and generate reports on vacation pay per employee. Likewise, software and electronic tools can reduce errors and at the same time guarantee easy compliance with labor laws.

Best Practices for Employers in Saudi Arabia

For vacation pay in Saudi Arabia, the employer must review and accordingly update the policies and procedures for this purpose. This will ensure compliance with Saudi labor laws as well as business needs. You should also listen carefully to employees on this topic and adopt best management practices.

Paying correctly and on time not only helps keep your company compliant but also keeps your employees satisfied. This is a strategy that companies use to retain their best talent while guaranteeing their labor rights.

Comprehensive Guide to Effectively Managing Vacation Pay Calculation Challenges in Saudi Arabia for Employers

vacation pay calculation in saudi arabia

The vacation pay calculation in Saudi Arabia varies depending on company policies and pay specifications. Of course, regardless of these aspects, they should not be outside the rules established by the Saudi authorities. Below, we offer you some strategies to manage the payment of said vacations to your employees:

Review of the type of employment offered

Generally, companies offer various types of employment according to the needs and objectives of each one. In the country, there are the following types of employment:

  • In this case, employees receive a fixed payment weekly, monthly, or for a certain period regardless of the number of hours worked.
  • Full-time per hour. This type of employment consists of hourly pay in which workers work more than 32 hours per week.
  • Part-time per hour. Unlike the previous one, workers perform their duties less than 32 hours per week and receive payment per hour worked.
  • As the name indicates, this type of work is only during specific times of the year and can be salaried or paid hourly.

By understanding the type of employment your company offers, you can help you offer appropriate vacation pay. However, if your business offers multiple types of employment, you will need to perform a different calculation for each one.

Adjust vacation pay schedule

The vacation pay calculation in Saudi Arabia is through the number of days determined annually. The method in Saudi Arabia for the allocation of vacations, according to Article 109 of the Saudi Labor Law is as follows:

  • Workers with between 1 and less than 5 years in a company receive 21 days per year of service.
  • Workers with more than 5 years in a company receive 30 days for each year of service.

To make this process easier to understand, we offer the following practical example. Suppose the worker has a full year of service in the company, and has a salary of SAR 10,000 per month. In this case, the calculation would be as follows:

  • Divide the salary by the 30 days of the month and multiply it by the 21 days of vacation (10000 / 30 X 21 = SAR 7000

In addition to this, the employer must pay the transportation allowance, as defined in Article 2 of the Saudi Labor Law. Hence, you need to consider this aspect in the vacation pay calculation in Saudi Arabia.

When should the license be granted?

By the provisions of Articles 109 and 110 of the Labor Law, the employee must receive vacations in the year in which they accumulate them. Therefore, an employee can take their vacation 11 months after starting to work at the company. However, there are some things you should consider, including the following:

  • The employer can schedule the vacation of the employees with 30 days of prior notice according to the needs of the company.
  • In the same way, the employer can postpone the vacations of its workers for three months the following year. However, if the business wishes to postpone the vacation further, it must obtain written consent.
  • The employer cannot postpone the vacation of its workers for more than 1 year.

Therefore, as an employee, you must consider these aspects in the moment you receive your legal vacations.

License collection

This point refers to payment in local currency instead of leave based on the gross salary of the employees. However, Article 109 of the Labor Law does not allow the collection of leave during the service of the workers in the company. On the other hand, Article 111 of the aforementioned law allows the payment of the amount corresponding to vacation for a retiring employee.

In this case, the salary is that which includes both the basic salary and the other benefits that the employee receives.

Annual leave along with other licenses

According to the Saudi Labor Law, an employee can receive their full vacation plus extra days for 2 leaves. In this case, they are the following:

  • Annual leave plus holidays. In this case, holidays are not part of the anal holidays in Saudi Arabia. For example, if an employee takes 21 days of vacation in a month of Eid celebration, they will receive 21 days plus 4 additional days for the holiday.
  • Annual leave and sick leave. The labor law in Article 82 establishes that an employee can combine his annual vacation with sick leave.

Vacation pay calculation in Saudi Arabia automatically

For the leave salary calculation in KSA, you can use a practical method for a simple process. To do this, you can create your own spreadsheet to properly organize and manage the license calculation and payment. Although this is not essential, it will allow you to easily keep track of the leave of each employee.

This way, you can enter the information manually and get an automatic calculation, saving you time. This is important as you can get reliable information about all your employees easily. You can count on automation specialists to develop your calculator for this benefit.

A question many workers ask regarding annual leave is whether they are calendar days or work days. However, the Saudi Labor Law is not clear regarding this issue at hand. However, employers allow their employees to take vacation based on calendar days.

The Saudi labor vacation pay is an issue that employers should pay attention to. Correct calculation and efficient payment allow you to stay in compliance with labor law and retain your business talent. Therefore, use this guide to clear your doubts and do the entire process correctly and accurately.

If you want to find out more about Saudi Arabia employer of Record and other labor issues in Saudi Arabia, do not hesitate to contact us. In this way, you will obtain reliable and useful information for all your calculation processes and legal labor procedures.

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