Overtime Calculation in KSA
HLB KSA Payroll Team
When an employee works more hours than normal, those extra hours are considered overtime, and the payment made for the extra hours worked is referred to as overtime payment.
In this article, we are trying to answer some of the frequently asked questions related to overtime in KSA.
- What is the maximum number of working hours in KSA?
Articles 98, 99, and 100 of Saudi labour law state the following about working hours and exceptions: Article 98 states that “a worker may not actually work for more than eight hours a day if the employer uses the daily work criterion, or more than forty-eight hours a week if he uses the weekly criterion. During the month of Ramadan, the actual working hours for Muslims are limited to a maximum of six hours per day or thirty-six hours per week.” Article 99 states that “the number of working hours provided for in Article (98) of this Law may be raised to nine hours a day for certain categories of workers or in certain industries or jobs where the worker does not work continuously. It may likewise be reduced to seven hours a day for certain categories of workers or in certain hazardous or harmful industries or jobs. The categories of workers, industries, and jobs referred to shall be determined pursuant to a decision by the Minister”Article 100 states that “in firms where work is done in shifts, an employer may, with the Ministry’s approval, increase the number of working hours to more than eight hours a day or forty-eight hours a week, provided that the average working hours in three weeks’ time shall not be more or less than eight hours a day or forty-eight hours a week.”
- What are the types of overtime in KSA?
KSA Labour law does not specify any type of overtime. Thus, all types of overtime. i.e. daytime, nighttime, weekends, and holiday overtime, are all recognized under one payment rate, i.e., 150%. Overtime hours will be calculated for all working hours performed during holidays and Eid.
- How is overtime calculated in KSA?
As per Article 107, the employer shall pay the worker for overtime working hours an amount equal to the hourly wage plus 50% of his basic wage.
- What does the law state about the daily rest periods?
Article 101 states that “Working hours and rest periods during the day shall be scheduled so that no worker shall work for more than five consecutive hours without a break of no less than thirty minutes each during the total working hours for rest, prayer, and meals, provided that a worker shall not remain at the workplace for more than eleven hours a day.”It is important to note that the designated period of rest should not be included in the actual working hours.
- What does labor law state about weekly rest days?
Article 104 states that Friday is the official rest day for all employees, except in cases where proper notification is made by a competent labor office. The employer may replace this day for some of his workers with any other day of the week. The weekly rest day will not be repaid in cash.The weekly rest day shall be at full pay and shall not be less than twenty-four consecutive hours.
- What are the exceptions made to overtime payment in KSA?
According to Article 106, overtime payments are exempted in the following cases:
- Annual inventory activities, preparation of budgets, liquidation, closing of accounts and preparation for discount and seasonal sales, provided that the number of days worked per year does not exceed thirty.
- If the work is intended to prevent a hazardous accident, remedy its impact, or avoid an imminent loss of perishable materials.
- If the work is intended to meet unusual work pressure.
- Eids, other seasons, occasions and seasonal activities specified pursuant to a decision by the Minister.
In these cases, actual working hours must not exceed ten hours per day or sixty hours per week. The maximum overtime hours allowed per year will be determined by the minister.
- Which categories of employees are exempted from overtime payment?
According to Article 108 of Labor Law, overtime shall not apply to the following cases:
- Persons occupying high positions of authority in management and policy, if such positions grant the occupants authority over workers.
- Preparatory or supplemental works which must be completed before or after commencement of work.
- Work that is intermittent by
- Guards and janitors, excluding civil security
- What is the formula to calculate overtime in KSA?
Basic Wage / Standard monthly hours* Overtime hours* 1.5
Please see the below example for a better understanding.
OT Hours: 40
Standard monthly working hours: 240
Basic wage: 5,000/-
OT= (5,000/240 *40 * 1.5) = 1,250
*Note- There are no defined standard monthly hours in Labor law, so we considered 240 hours as standard monthly working hours for our calculation.
In certain circumstances, many professions necessitate that an employee work over a period of time. Working hours differ considerably based on the profession of the individual, but they must be monitored. Every employee has the right to understand how much overtime he or she can work and how much he or she will be compensated once the task is done, according to labour laws. Employee management is an intricate part of all firms as they expand slowly and steadily. It is critical for businesses to keep track of and document employee working hours as it contributes to the invoicing and payroll process.
The process of payroll is a little complicated and time-consuming; hence it is always recommended to outsource your company’s payroll function. Outsourcing payroll will ensure the assistance of a team of trained payroll professionals and it frees up the time of the organization, helping them focus on other projects that add value to their business. One should be extra vigilant while selecting their payroll provider, as payroll data is highly sensitive, and one should opt for a provider that can ensure high levels of data security.
As a leading payroll outsourcing company, HLB HAMT can help solve your payroll complexities through customized strategies. We take care of our clients’ entire payroll cycle that includes preparation of payroll reports, processing salary payment with WPS compliance, accrual management including Gratuity, pension funds, an online portal for accessing payslips, and many more. Our leadership team spends the necessary hours in every project, ensuring our clients get refined consulting services to take your business forward.
To know more about our payroll process, Click here.
To know more about our KSA payroll process, Click here.
Whilst every effort has been made to ensure the accuracy of this information, HLB HAMT will not accept any liability arising out of errors or omissions. Please note that this blog is not all-inclusive. Our guidance is designed only to give general information on the issues/topics covered. It is subjected to change and not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.
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