Employment contract: what to read first

An employment contract is unlike other commercial agreements because labour protection law sits over the top of it, setting a floor. Anything below that floor has no effect, however clearly both sides agreed and signed. The contract therefore does two jobs: it settles what the law leaves open, and it makes what the law already provides explicit enough that nobody argues about it later.

The most common misconception is the one-year contract: the assumption that it simply expires and no severance is owed. It does not work that way. The exception that removes severance is narrow and covers only certain kinds of work. Where the work is part of the ordinary business of the employer, severance remains payable no matter what term the document states.

What should you read first in an employment contract?

• Position, scope of duties and place of work. Relocating the workplace later affects the employee's rights, so it should be clearly stated.
• Remuneration: which payments are wages and which are benefits. The wage figure drives overtime, severance and statutory contributions alike. A sum paid every month without condition is generally treated as wages.
• The probation period. The law grants no severance exemption for probationers: an employee dismissed after 120 days of service is entitled to severance.
• Whether the contract is for a fixed term, and if so whether the work genuinely falls within the statutory exception.
• Normal working hours, holidays and overtime, which requires the employee's consent on each occasion.
• Any restraint on working for a competitor after leaving. It must be limited in time, in territory and in the kind of work; otherwise the court will enforce it only so far as is reasonable.
• Ownership of what the employee creates during the employment, both copyright works and inventions. Left unsaid, it becomes a dispute when the employee resigns.
• The work rules the contract refers to. They must be attached or clearly identified, because they form part of the terms.
• Deductions from wages and fines, which are permitted only in the cases the law allows.

What does the wording actually mean?

• "This contract runs for one year and ends on expiry with no severance payable" does not work where the work is part of the ordinary business, which is most of the time.
• "The employee consents to deductions from wages to make good any loss". Consent given in advance does not permit deductions at will; they are allowed only in the cases the law provides.
• "The salary is inclusive of overtime". Rolling it up does not discharge the duty to pay overtime actually worked.
• "The company may change the position, duties and remuneration as it sees fit". A change to the employee's disadvantage needs the employee's consent.
• "The employee shall not work in the same field anywhere in the Kingdom indefinitely". A restraint without limits is enforced only so far as it is not excessive.
• "The employee waives all claims against the employer". A waiver of rights given by labour protection law has no effect.

Which terms should you refuse?

• Terms below the statutory floor. They are void anyway, but they mislead both sides into a dispute that need not have happened.
• A security deposit for the work, or holding the employee's identity documents, which is permitted only for certain kinds of work.
• A non-compete with no time limit, no territory and no compensation.
• Signing an undated resignation letter on the first day.
• Making the employee liable for every loss, without distinguishing wilful acts, negligence and the ordinary risks of the job.

What does the law give you if the contract is silent?

• Any agreement giving the employee less than labour protection law provides is unenforceable, even where the employee signed it.
• The minimum wage in force for that locality.
• At least one weekly holiday; at least thirteen traditional holidays a year including National Labour Day; and at least six working days of annual leave after one year of service.
• Sick leave as long as actually sick, paid for up to thirty working days a year, and at least three working days of paid personal leave a year.
• Maternity leave of up to one hundred and twenty days including antenatal appointments, with sixty days paid by the employer. The entitlement was raised from ninety-eight and forty-five days on 7 December 2025.
• Overtime requires the employee's consent and is paid at not less than one and a half times the hourly wage on a working day.
• An employer with ten or more employees must issue work rules and publish them to staff.
• On dismissal, severance is payable by length of service unless one of the statutory exceptions applies, and the employer must state the ground at the time of dismissal.

Checklist: what to confirm before you sign

• Check that the start date, position, place of work and wage are all stated.
• Go through every payment and agree whether it is wages or a benefit.
• Ask for the work rules and read them with the contract; they form part of the terms.
• For a fixed-term contract, check whether the work really falls within the statutory exception.
• Check that any non-compete has a stated period, territory and scope.
• Settle who owns what the employee will create during the employment.
• Employers: keep proof that the contract and the work rules were given to the employee.
• Initial every page and keep a counterpart each.

This is the general position, not advice on your contract, and it is not a template to use on your own. What suits depends on the business and the role. Send the draft contract and the work rules for review.