Saudi Overtime System 2026: Overtime Calculation and Employee Rights
18 minutes ago
Are you looking for a clear way to calculate overtime in Saudi Arabia? Do you want to understand employee rights when working additional hours outside regular working hours?
The Saudi Overtime System is an important topic for employees, employers, and HR professionals because overtime is directly connected to salaries, employee entitlements, attendance records, and compliance with Saudi Labor Law.
Saudi Labor Law establishes the compensation due for overtime and explains the circumstances in which working hours are considered additional hours, including hours exceeding the applicable weekly standard and working hours performed on holidays and public holidays.
This guide covers overtime calculation in Saudi Arabia, Article 107 of the Saudi Labor Law, how to calculate overtime pay, work on rest days and holidays, overtime during Ramadan, the annual overtime limit, compensatory leave, and the key rights of employees and responsibilities of employers.
- Understand the key provisions of the Saudi Overtime System.
- Learn how overtime pay is calculated.
- Understand the difference between basic salary and actual wage when calculating overtime.
- Learn the rules governing overtime on holidays and public holidays.
- Understand the role of HR in recording and managing overtime.
Does your company need to organize and calculate overtime hours for its employees?
What Is the Saudi Overtime System?
Overtime in Saudi Arabia refers to additional working hours performed by an employee outside the working hours applicable under the working-hour standard used by the establishment.
The purpose of regulating overtime is to establish employee rights and employer obligations when employees are required to work beyond their normal working hours.
Overtime management is not only about the number of additional hours. It also involves accurately recording the hours, calculating the compensation due, and including the amount in the payroll process.
Basic Working Hours and Their Relationship to Overtime
To understand overtime calculation, it is first necessary to understand the basic working hours used as the applicable standard.
Daily and Weekly Working Hours
- As a general rule, actual working hours should not exceed 8 hours per day when the daily standard applies.
- When the weekly standard applies, actual working hours should not exceed 48 hours per week.
- During Ramadan, actual working hours for Muslim employees are reduced to 6 hours per day or 36 hours per week.
- Specific cases and exceptions may allow different working-hour arrangements under the law.
When Do Hours Become Overtime?
- When working hours exceed the applicable standard in the relevant case.
- When the weekly standard is exceeded if the establishment uses a weekly working-hour standard.
- When employees perform working hours on holidays and public holidays.
- When additional hours are otherwise due under the provisions of Saudi Labor Law.
What Is Article 107 of the Saudi Labor Law?
Article 107 of the Saudi Labor Law is the primary provision governing compensation for overtime hours.
The article provides that an employer must pay an employee for overtime an additional wage equal to the hourly wage plus 50% of the employee’s basic hourly wage.
The article also provides that when an establishment operates under a weekly working-hour standard, hours exceeding that standard are considered overtime. Working hours performed on holidays and public holidays are also considered additional working hours.
The article also allows paid compensatory leave to be granted instead of overtime pay, provided that the employee agrees and the applicable requirements are followed.
How Is Overtime Calculated in Saudi Arabia?
Overtime calculation in Saudi Arabia is one of the most important points for employees and HR professionals to understand because an error in determining the hourly wage can affect the employee’s total entitlement.
According to the current guidance, overtime pay is calculated based on the actual hourly wage + 50% of the basic hourly wage.
The actual wage may include the basic wage and amounts that qualify as part of the wage under the applicable law, employment contract, and work regulations, while the additional 50% is calculated based on the basic hourly wage.
Overtime Calculation Formula
To understand the calculation in practice, consider an example similar to the calculation method used in official guidance.
Practical Example of Overtime Calculation
Suppose an employee’s monthly compensation consists of:
- Basic wage: SAR 4,000.
- Actual wage: SAR 6,000.
- Overtime hours: 3 hours.
Assuming the hourly rate is calculated based on 30 days and 8 hours per day, the actual hourly wage is:
The basic hourly wage is:
Therefore, the overtime hourly rate is:
For 3 additional hours:
If you want to understand payroll calculations, allowances, deductions, and other salary components in greater detail, you can explore employee payroll calculation and how different payroll elements are organized.
Is Overtime Calculated Based on the Basic Salary or the Full Salary?
One of the most common questions is: Is overtime calculated based on the basic salary or the total salary?
The answer requires distinguishing between the actual hourly wage and the basic hourly wage. Under Article 107, overtime compensation consists of the hourly wage plus 50% of the basic hourly wage.
| Element | Role in Overtime Calculation |
|---|---|
| Basic Wage | Used to calculate the additional 50%. |
| Actual Wage | Used as the basis for determining the actual hourly wage, according to the applicable case. |
| Allowances and Benefits | The nature of each allowance or benefit should be reviewed to determine whether it forms part of the wage under the applicable law, contract, and regulations. |
| Number of Overtime Hours | Determines the total compensation due for additional work. |
Overtime on Rest Days, Holidays, and Public Holidays
One of the important aspects of the Saudi Overtime System is working during rest days, holidays, and public holidays.
All working hours performed on holidays and public holidays are treated as additional working hours under Article 107. They should therefore be included when reviewing overtime hours and employee entitlements.
Working on a Day Off
If an employee performs working hours during a day off, the hours worked should be reviewed and the applicable overtime provisions should be applied according to the circumstances.
Working on Public Holidays
Working hours performed by an employee during public holidays are treated as overtime under Saudi Labor Law.
Overtime During Ramadan in Saudi Arabia
Working hours are regulated differently during Ramadan for Muslim employees. Actual working hours are reduced to 6 hours per day or 36 hours per week.
Therefore, when calculating overtime during Ramadan, the employer should first identify the working-hour standard applicable to the employee, then determine the actual hours worked and identify the hours exceeding the applicable standard.
What Is the Maximum Number of Overtime Hours in Saudi Arabia?
Annual overtime hours generally may not exceed 720 hours. The number of hours may be increased with the employee’s agreement in accordance with the applicable rules.
| Item | Rule |
|---|---|
| Annual Overtime Limit | 720 hours per year. |
| Increasing the Number of Hours | The number may be increased with the employee’s agreement in accordance with the applicable rules. |
| Work on Holidays and Public Holidays | Considered additional working hours. |
| Overtime Compensation | Actual hourly wage + 50% of the basic hourly wage. |
Can Overtime Be Compensated With Leave?
Yes. Saudi Labor Law allows an employer to provide the employee with paid compensatory leave instead of the compensation due for overtime, provided that the employee agrees and the applicable requirements are followed.
The executive regulations and current guidance also provide that compensatory leave should not be less than one and a half hours of paid leave for every overtime hour, subject to the rules governing when the leave can be used and its annual limits.
Financial Compensation
The employee receives the compensation due for overtime hours according to the applicable calculation method.
Compensatory Leave
Financial overtime compensation may be replaced with paid compensatory leave with the employee’s agreement and in accordance with the applicable rules.
Employee Rights Regarding Overtime
Understanding employee overtime rights helps maintain clarity between employees and employers, especially when overtime hours occur regularly.
- Receiving the compensation due for overtime hours.
- Understanding how the overtime hourly rate is calculated.
- Having overtime hours accurately recorded.
- Knowing which hours qualify as overtime.
- Agreeing to compensatory leave when it is offered as an alternative to overtime pay.
- Reviewing attendance records and payroll statements.
Employer Responsibilities in Overtime Management
An employer’s responsibility is not limited to calculating overtime pay. The company also needs to organize the recording and review of working hours and connect overtime data with payroll.
Recording Working Hours
Record attendance, departure times, and overtime hours in a clear and reviewable manner.
Reviewing Entitlements
Review overtime hours before adding them to payroll to ensure that the underlying data is accurate.
Documenting Overtime Assignments
Organize overtime assignments and document them as part of HR procedures.
Connecting Attendance With Payroll
Connecting attendance records with payroll processes helps reduce overtime calculation errors.
The Role of HR in Overtime Management
HR plays an important role in applying the Saudi Overtime System because overtime management is connected to attendance, payroll, leave, and employee records.
Employee affairs services can help organize several of these processes as part of an integrated employee management cycle.
Attendance Monitoring
Record employee attendance and departure times and review overtime hours.
Payroll Management
Add overtime entitlements to payroll after reviewing and approving the recorded hours.
Hours Analysis
Identify departments and employees who regularly record overtime hours.
Compliance
Organize HR procedures in a way that helps the company apply Saudi Labor Law requirements.
Managing Overtime Within Payroll
Overtime should be a clear part of the payroll preparation process, starting with recording the hours and ending with approval of the resulting entitlement.
Companies looking for a more organized payroll process can benefit from a payroll management system to organize salary and entitlement data more accurately.
Professional payroll management also helps review wages, allowances, entitlements, and additional payments before payroll is approved.
Overtime and Employee Wage Protection
Overtime is directly connected to employee entitlements. Therefore, overtime amounts included in payroll data should be recorded clearly and accurately.
You can learn more about the Wage Protection System in Saudi Arabia and how companies can organize payroll data and comply with wage protection requirements.
How Can a Company Organize Overtime Hours?
A company can establish a clear overtime management cycle through the following steps:
-
Identify Basic Working Hours
Determine the daily and weekly working hours applicable to each employee category.
-
Record Attendance and Departure
Use a clear mechanism to record actual working hours and employee entry and exit times.
-
Identify Overtime Hours
Review hours exceeding the applicable standard and identify the overtime hours.
-
Calculate Entitlements
Calculate overtime using the actual hourly wage plus 50% of the basic hourly wage.
-
Review Payroll
Review overtime hours and amounts before approving the payroll.
-
Maintain Records
Keep attendance records, overtime assignments, additional working hours, and entitlement records.
Examples of Overtime Situations in Saudi Arabia
| Situation | Does It Qualify as Overtime? | Explanation |
|---|---|---|
| Working after scheduled working hours | May qualify | Determined based on actual working hours and the applicable standard. |
| Exceeding the weekly standard | Yes | If the establishment uses a weekly standard, hours exceeding that standard are additional working hours. |
| Working on holidays | Yes | Working hours performed on holidays are treated as additional working hours. |
| Working on public holidays | Yes | Working hours performed on public holidays are treated as additional working hours. |
| Working during Ramadan | Depends on the circumstances | The applicable Ramadan working-hour standard must first be identified. |
Common Overtime Calculation Errors
There are several mistakes that can affect the accuracy of overtime calculation in Saudi Arabia, including:
- Calculating overtime using only the basic salary without distinguishing between the actual wage and basic hourly wage.
- Failing to accurately record overtime hours.
- Failing to include work performed on holidays and public holidays as additional working hours.
- Entering overtime hours manually without reviewing attendance and departure records.
- Failing to review accumulated overtime hours throughout the year.
- Failing to document overtime assignments.
Difference Between Regular Working Hours and Overtime
| Comparison | Regular Working Hours | Overtime |
|---|---|---|
| Time | Within the scheduled working hours | Exceeds the applicable standard, depending on the circumstances |
| Pay | Regular wage | Hourly wage + 50% of the basic hourly wage |
| Holidays and Public Holidays | According to the work schedule | Working hours performed during them are treated as additional hours |
| Documentation | Included in regular attendance records | Requires identification and review of additional working hours |
Overtime and Employment Contracts
Employment contract information and working-hour arrangements should be clear to both the employee and the company, particularly regarding working hours, schedules, and entitlements.
You can learn more about employee contract attestation in Saudi Arabia and the procedures related to documenting the contractual relationship between employees and employers.
What Happens When There Is an Overtime Dispute?
Disputes may arise between an employee and an employer regarding the number of overtime hours, the amount of compensation, or how the hours were recorded.
For this reason, companies should maintain clear attendance records, overtime assignments, and payroll statements. Employees should also retain evidence supporting the hours they actually worked.
If broader issues arise concerning the end of the contractual relationship and final entitlements, you can refer to our guide on employment contract termination in Saudi Arabia for related rules and procedures.
Does your company need more accurate payroll, attendance, and overtime management?
Frequently Asked Questions About the Saudi Overtime System
What is the Saudi Overtime System?
It is the framework governing additional working hours performed by employees outside their scheduled working hours and establishing the compensation and rules applicable to those hours.
How is overtime calculated in Saudi Arabia?
The overtime hourly rate is calculated based on the actual hourly wage plus 50% of the basic hourly wage.
Is overtime calculated based on the basic salary?
The hourly rate is determined based on the actual wage, as applicable, and 50% of the basic hourly wage is then added according to Article 107.
Is working on a day off considered overtime?
Yes. Working hours performed on holidays and public holidays are treated as additional working hours under Saudi Labor Law.
How many overtime hours are allowed in Saudi Arabia?
The basic annual limit for overtime is 720 hours, and the number may be increased with the employee’s agreement in accordance with the applicable rules.
Can overtime be compensated with leave?
Yes. An employee may receive paid compensatory leave instead of overtime pay with the employee’s agreement and in accordance with the applicable legal requirements.
Is overtime during Ramadan calculated differently?
Actual working hours for Muslim employees are reduced during Ramadan to 6 hours per day or 36 hours per week. Therefore, the applicable working-hour standard should be identified before calculating overtime.
What are an employee’s overtime rights?
Key employee rights include receiving the compensation due for overtime under the law, understanding how overtime hours and compensation are calculated, and documenting actual working hours.
How can a company organize overtime?
A company can organize overtime through clear attendance and departure procedures, documented overtime hours, review of overtime before payroll approval, and integration of attendance data with payroll.
Organize Overtime and Payroll Management With HR360
If you are looking for a more accurate way to organize the Saudi Overtime System and manage working hours, payroll, and employee entitlements, the HR360 team can help organize your HR processes according to your company’s needs.
From payroll and attendance management to employee affairs and entitlement management, professional HR solutions can help reduce errors and improve employee management.