Advance Payment of Annual Leave Pay

What advance payment of annual leave pay is

Advance payment of annual leave pay (أجر الإجازة السنوية المدفوع مقدمًا) is the rule that a worker’s pay for the period of annual leave is paid in advance. Its basis is paragraph 1 of Article 109 of the Saudi Labor Law (نظام العمل). Article 37 of the model work regulation (النموذج الموحّد للائحة تنظيم العمل) adds the words «عند القيام بها» (when taking it).

The payment is not a loan or an advance on salary. It is the pay for the leave, with its payment date brought forward. Article 118 of the Labor Law deals with the case in which that pay is recovered after it has been paid, and it is discussed below.

What paragraph 1 of Article 109 of the Labor Law provides

Paragraph 1 of Article 109 of the Labor Law reads, in Arabic:

يستحق العامل عن كل عام إجازة سنوية لا تقل مدتها عن واحد وعشرين يوماً، تزاد إلى مدة لا تقل عن ثلاثين يوماً إذا أمضى العامل في خدمة صاحب العمل خمس سنوات متصلة، وتكون الإجازة بأجر يدفع مقدماً.

The English rendering is ours, not an official translation. For each year the worker is entitled to annual leave of not less than 21 days, increased to not less than 30 days once the worker has completed five continuous years in the service of the employer, and the leave is with pay that is paid in advance.

Paragraph 2 of Article 109 of the Labor Law adds that the worker must take the leave in the year in which it falls due, may not waive it, and may not receive a cash allowance in place of it during service. The employer may fix the dates of leave according to the needs of the work, or grant it in turns, and must notify the worker of the date in good time, which may not be less than thirty days.

The text says that the pay is paid in advance (مقدمًا), but it names no point in time against which the advance is measured. The Article states the rule and leaves the timing unspecified.

What Article 37 of the model work regulation adds

Article 37 of the model work regulation, which is Annex 1 of the Implementing Regulation (اللائحة التنفيذية), provides that the establishment pays the worker the wage for the period of annual leave in advance, «عند القيام بها» (when taking it). In our interpretation, the added words refer to the time at which the leave is taken. They are referred to below as the Annex 1 wording. The model states no number of days before the leave.

The model work regulation is not an Article of the Labor Law. It binds an establishment to the extent that the establishment has adopted it in its work organisation regulation (لائحة تنظيم العمل), which is why Article 37 is cited together with its instrument. Article 37 of the Labor Law is a different provision, concerning the contracts of non Saudi workers, and so is Article 37 of the Implementing Regulation, which has been repealed. The Article discussed here belongs to the model alone. Article 33 of the model work regulation sets annual leave at not less than 21 days, increased to not less than 30 after five continuous years.

What is paid

What is paid is the worker’s wage for the period of annual leave (أجره عن مدة الإجازة السنوية). In the sources we reviewed, we found no text that gives a formula for converting days of leave into an amount, and none that says whether periodic allowances enter the base for leave pay, in whole or in part. Article 2 of the Labor Law does define the wage (الأجر) as the actual wage (الأجر الفعلي), and the month as thirty days unless the employment contract or the work organisation regulation provides otherwise.

Whom the rule covers

Article 109 of the Labor Law applies to those to whom the Labor Law applies, so it does not reach the categories that paragraph 1 of Article 7 of the Labor Law excludes. Part time workers are a special case. Article 27 of the Implementing Regulation subjects them to the provisions of the Labor Law on leave, and the part time model contract in Annex 5 of the Implementing Regulation refers to Article 109 in its annual leave clause. That clause classifies the duration as a mandatory term of not less than 21 days where service is under five years, and not less than 30 days where it exceeds five years.

For casual, seasonal and temporary workers, Article 6 of the Labor Law lists what applies to them. Annual leave is not in the list, and the Article adds what the Minister decides. In the sources we reviewed, we found no text that says whether Article 109 of the Labor Law applies to those workers, so we do not say either way.

An example: a leave of 21 days

Take a worker whose actual wage is SAR 6,000 a month and who is entitled to 21 days of leave starting on 10 September. The establishment pays salaries on the 27th of each month. The figures are invented to illustrate the arithmetic, and the formula is arithmetic on the definitions in Article 2 of the Labor Law, not a rule found in the text.

• The daily wage. A month is thirty days, so a day’s wage is 6,000 ÷ 30 = SAR 200.
• The leave pay. 21 × 200 = SAR 4,200. For a leave of 30 days it would be 30 × 200 = SAR 6,000.
• The payment date. Under the Annex 1 wording, the pay is due when the leave is taken, so around 10 September, and not on the 27th, which is the salary date.
• The notice. The worker must be notified of the leave date at least 30 days ahead, that is, on 11 August or earlier, because 11 August to 10 September is thirty days.

The effect on cash is clear when several workers are away at the same time. If ten workers each take 21 days of leave in one month, each on SAR 6,000, the Annex 1 wording has the establishment paying each of them when the leave is taken. The total is 10 × 4,200 = SAR 42,000. A cash forecast built on the monthly salary date alone leaves that sum out.

When exactly the pay is due

In the sources we reviewed, we found no text that fixes the number of days before the leave by which the pay must be paid. Article 37 of the model work regulation says «عند القيام بها» (when taking it), and paragraph 1 of Article 109 of the Labor Law says in advance, and we say no more than that.

Several timing questions remain open in the same sources. We found no text on whether the pay for each part of a split leave is paid when each part is taken or for the whole leave at once, none on what happens to pay already paid if the worker is called back before the leave ends, and none on what happens to it if the worker resigns during the leave. Article 90 of the Labor Law requires wages to be paid into workers’ accounts through the approved banks, and we found no text that says whether leave pay must be paid the same way when the leave is taken.

Provisions connected with the rule

• No cash allowance during service. Paragraph 2 of Article 109 of the Labor Law bars a cash allowance in place of leave during service. The pay in advance is therefore the pay for leave that the worker takes, not an allowance in place of it.
• Deferral. Article 110 of the Labor Law allows a worker, with the employer’s consent, to defer the leave or some of its days to the following year. The employer may defer it, after the end of the year in which it falls due, for no more than ninety days where the conditions of work require. Anything beyond that needs the worker’s written consent and cannot run past the end of the following year. We found no text that says when the pay for a deferred leave is to be paid.
• On termination. Article 111 of the Labor Law entitles a worker whose employment ends before the leave is used to pay for the leave days due, and to leave pay for parts of the year in proportion to the time worked in them. The settlement is covered under settlement of entitlements.
• Working for another employer during leave. Article 118 of the Labor Law provides that a worker may not work for another employer while on any of the leaves provided in the chapter on leave. If the employer proves a breach, it may deprive the worker of pay for the period of leave or recover what it had already paid of that pay. The Article therefore envisages pay that has already been paid and is then recovered, and the burden of proof under it is on the employer.

Penalty rows that bear on leave pay

The Schedule of Violations and Penalties (Ministerial Decision No. 112377) contains two rows that bear on the subject. One concerns not paying wages and entitlements in the official currency of the country on their due dates and into the workers’ approved accounts, or withholding all or part of a wage without a judicial basis. Its fine is SAR 300 per worker in all three size categories. The other reads «عدم التزام المنشأة بالإجازات المقررة نظاماً للعاملين» (the establishment’s failure to comply with the leave prescribed by law for workers). In the sources we reviewed, we found no text that says whether late payment of annual leave pay falls within either row.

What differs from advance payment of annual leave pay

• The annual leave balance. It is the number of days due, their carry over and their settlement. Advance payment of leave pay concerns instead the date on which the pay for those days is paid.
• The salary payment date. It is the schedule on which the monthly wage is paid, and it is covered under wage payment dates. The Annex 1 wording ties the timing of leave pay to the taking of the leave, not to the monthly salary date.
• Unpaid leave. It is leave taken with the employer’s consent without pay, and it is covered under unpaid leave. No advance payment arises in it.
• Holiday leave. Under Article 24 of the Implementing Regulation, annual leave is extended by the days of the Eids and occasions that fall within it, and those days are covered under public holiday leave.
• A salary advance. It is a sum paid and then recovered from later wages. Leave pay paid in advance is wages already due, and Article 118 of the Labor Law deals with the case of recovering it.

What to record

These are practical recommendations, not conditions found in the Articles cited:

• The date of payment. The date on which leave pay is paid and the date on which the leave starts can be recorded, so that it is visible whether payment was made when the leave was taken.
• Written notice. The worker can be told the date of the leave in writing at least thirty days ahead.
• The basis of calculation. The establishment’s regulation can set out the method of working out a day’s wage that the establishment has adopted, so that it is not decided afresh at each leave.
• Separation on the statement. Leave pay can appear on the wage statement as a separate item and not merged into the month’s salary.

Provisions relied on for advance payment of annual leave pay

The provisions relied on are those of the Saudi Labor Law as published by the Ministry of Human Resources and Social Development: Article 109 (annual leave and its pay in advance, both paragraphs), Article 110 (deferral), Article 111 (pay on termination), Article 118 (work for another employer during leave), Article 2 (the actual wage and the month), Article 6 (casual, seasonal and temporary workers), Article 7 (the excluded categories), Article 90 (the payment of wages) and Article 37 (non Saudi contracts, named only to separate it from the model). From the Implementing Regulation, in the edition published by the same Ministry in April 2025: Article 24 (the extension of annual leave by holidays), Article 27 (part time workers), Article 37 (repealed, named only to separate it from the model) and Annex 5 (the part time model contract). From Annex 1, the model work regulation: Article 33 (the length of annual leave) and Article 37 (the payment of leave pay). Also relied on: the Schedule of Violations and Penalties (Ministerial Decision No. 112377). The consolidated text of the Labor Law published by the Ministry carries no amendment footnote on Articles 109, 110, 111 or 118.

This is an explanation of the concept and of the statutory provisions cited, not legal advice.