The Nitaqat Counting Wage for Saudis Rises to 5,000 and Then 6,000 Riyals: What to Review in Your Employment Contracts and HR File

What exactly SPA announced

The directive was issued as part of a package of measures supporting citizens linked to the change in the electricity and water tariffs. The item that concerns the private sector does not impose a new wage through a provision of the Labor Law. It raises the threshold at which a Saudi employee counts as a full worker in Nitaqat. The difference matters: the threshold decides how the employee is counted in the Saudization ratio, and therefore in your establishment's band and the services available to it.

• Today: a Saudi employee paid 4,000 riyals or more counts as a full worker, one paid between 3,000 and 4,000 riyals counts as half a worker, and one paid under 3,000 riyals is not counted.
• Stage one: the full-counting threshold rises to 5,000 riyals, applying six months after the start date of the measure.
• Stage two: the threshold rises to 6,000 riyals twelve months after the first increase begins to apply.

As of writing, the announcement did not set a calendar date for the start of the measure, and we have not yet seen a detailed ministerial decision stating whether half counting remains, what its new wage bands would be if it does, or which component of the wage the program relies on. So do not build a final decision on a date you are guessing, and follow what the ministry and the Qiwa platform publish, as well as what appears in the Umm Al-Qura gazette.

The 500-riyal allowance: who it is for, and why it does not enter the employment contract

The question you will hear most from your employees is: will I get an extra 500 riyals? According to SPA, the monthly allowance of 500 riyals is added for civil and military employees on the civil service scales and operating program items, for retirees, and for family members of a deceased subscriber or retiree covered by the Social Insurance Law, and a similar monthly amount is paid to families benefiting from social security under the governing controls. The announcement does not list private-sector employees among the beneficiaries of this allowance.

The practical result for your business: the allowance is not an obligation on the private-sector employer, it is not written into the employment contract, and it is not added to payroll because of this directive. What concerns you is the Nitaqat counting threshold only. If the business decides on its own to grant a cost-of-living, housing or transport allowance, that is a commercial decision documented in a contract annex, not an application of the directive. It helps to give your employees this message clearly before wrong expectations spread.

What it means for the Nitaqat band of your small or medium business

Raising the threshold does not mean that an employee paid less must be dismissed or that the contract is void. It means the employee may not count as a full worker in the Saudization ratio once it applies. A business with five Saudi employees each paid 4,500 riyals counts them today as five full workers. Once stage one begins, none of them will count in full unless the wage rises to 5,000 riyals, and the business's Saudization ratio may drop suddenly without any change in headcount.

• Know your number today: pull the list of your Saudi employees and each one's wage as registered on the official platforms, not as it appears in an internal spreadsheet.
• Sort them into three bands: 5,000 riyals or more, between 4,000 and 5,000 riyals, and under 4,000 riyals, then repeat the exercise against the 6,000-riyal threshold.
• Work out the effect of each stage on your Saudization ratio and your expected band before you work out its effect on cost.
• Watch the professions that carry their own Saudization and wage requirements under separate decisions, since those remain subject to their own decisions alongside this general threshold.

What to review in the indefinite employment contract E-02

The employment contract is where the wage is fixed, and any increase you decide for a Saudi employee to reach the new threshold must be reflected in it clearly. The Labor Law distinguishes between the basic wage and the actual wage, which adds the allowances and increases due, so write the wage in the contract broken down by component to avoid a later dispute over what is counted and what is not.

• The basic wage and fixed allowances: state each component with its amount, and do not lump them into one vague figure.
• The increase mechanism: document any increase in a written annex signed by both parties with a defined effective date, then update the contract on Qiwa and the wage with social insurance under the applicable procedures.
• No reduction without consent: do not reshuffle wage components in a way that reduces an acquired right, and do not deduct from the wage for a reason not set out in the law without the worker's written consent.
• The end-of-service award: Article 84 of the Labor Law makes the last wage the basis for calculating the award, so every increase today raises your future liability, and you should build it into your financial planning.

If you have a new Saudi hire joining in the coming months, set the wage now on the basis of the threshold that will apply during the term of the contract, rather than signing a contract that will need amending a few months later.

An action plan for the HR file before stage one begins

1. Save the official SPA announcement in your compliance file, and follow the issue of the detailed ministerial decision and the start date of the measure.
2. Build a table of your Saudi employees and their registered wages, and sort them against the 5,000 and 6,000-riyal thresholds.
3. For each employee between the bands, decide: raise the wage before application, or accept that they will not count in full, having estimated the effect on your band.
4. Document every increase in a written annex, then update the contract on Qiwa and the wage with social insurance under the applicable procedures.
5. Update your end-of-service award estimates and your payroll budget for the next two years on the basis of both stages.
6. Inform your employees in writing of what concerns them, and make clear that the 500-riyal allowance in the announcement does not cover the private sector according to what SPA announced.

This guide is general information, not legal advice on a specific case. The templates are certified drafts and a strong starting point, and the Arabic text prevails. Before any decision that affects a large number of your employees, check the official implementing details once they are issued.

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