Housing and Transport Allowance and the Obligations of Both Parties in the Saudi Employment Contract

Three Articles of the Saudi Labor Law set out what each party is bound by in the employment contract outside the wage itself: Article 61 on the employer’s obligations, Article 60 on the limits of changing the agreed work, and Article 65 on the worker’s obligations.

Royal Decree M/44, in force since 19 February 2025, added two items to Article 61 that bear directly on the allowances clause in the contract: housing and transport. This is the change that templates prepared before 2025 do not carry.

1. Housing and transport: items 5 and 6 of Article 61

Article 61 lays down that the employer shall:

• Item 5: provide his workers with suitable housing, or an appropriate cash allowance in lieu of it paid with the wage.
• Item 6: provide appropriate means of transport from the workers’ place of residence to the place of work, or an appropriate cash allowance in lieu of it paid with the wage.

Three elements sit in each item: the in-kind obligation (housing or transport), the cash alternative to it, and that this alternative be paid with the wage. The third element is frequently dropped when the Article is reproduced, and it is the one that ties the allowance to the payroll cycle rather than to a separate disbursement.

As for who holds the choice between the in-kind obligation and the cash allowance, and the standard of “suitable” and appropriate, these are matters to be referred to the statutory text and the competent authority.

2. What M/44 changed here

Items 5 and 6 were added by M/44. Article 61 before the amendment was confined to three items:

• Not putting the worker to forced labour, not withholding his wage without a judicial ruling, and treating him decently
• Enabling the worker to exercise the rights the Law grants him
• Facilitating the work of the competent authorities in official inspection

The amendment also added item 4 on non-discrimination.

The effect of that on documents is direct: housing and transport today fall within the allowances clause of any contract written now. A template prepared before 2025 will not include them, not because it was drafted wrongly, but because they were not in the Article when it was drafted.

This makes the allowances clause one of the first things to review in any existing contract template.

3. Changing the agreed work: Article 60

Article 60 lays down that the worker may not be assigned work that differs materially from the agreed work without his written consent.

The standard in the text is a material difference, not mere difference. And the consent required is written, not implied and not inferred from the worker’s performance of the new work.

The exception, with two constraints

The Article excepts from that a case of necessity arising from exceptional circumstances, and within the limits of a period not exceeding 30 days in the year.

The two constraints come together: that there be a necessity arising from exceptional circumstances, and that the period not exceed 30 days in the year. The second constraint is annual, not per incident.

An example of counting the annual balance

Assumed inputs (the example’s own figures, not a statutory rule): an employee was assigned different work on three occasions during the year, 12 days then 10 days then 9 days.

What the text says: the exception is within the limits of a period not exceeding 30 days in the year.

Applying it: each assignment on its own is under the thirty days. But the constraint in the text is annual, not per incident, and the total is 31 days. The limit laid down is therefore measured against the total days of the year, not against the longest assignment in it.

This is the same paradox that appears in every annual constraint: every decision on its own can be within the limit while their total is outside it. And that only becomes visible to whoever keeps a running total for each employee.

As for the effect of exceeding this limit, and what counts as a material difference, and what counts as a necessity arising from exceptional circumstances, these are matters to be referred to the statutory text and the competent authority.

4. The worker’s obligations: Article 65

Article 65 lays down that, in addition to the duties provided for in the Law, its regulations and the decisions issued in implementation of it, the worker shall:

1. Perform the work in accordance with the rules of the profession and in accordance with the employer’s instructions, where those instructions do not contravene the contract, the Law or public morals, and where carrying them out exposes no one to danger.
2. Take sufficient care of the machinery, tools, supplies and raw materials owned by the employer and placed at his disposal or in his custody, and return to the employer the unconsumed materials.
3. Observe good conduct and morals during the work.
4. Provide every aid and assistance without stipulating additional pay for it in cases of disasters and hazards threatening the safety of the workplace or of the persons working in it.
5. Undergo the medical examinations the employer wishes to carry out on him before joining the work or during it, in order to verify that he is free of occupational or communicable diseases.
6. Keep the technical, commercial and industrial secrets of the materials he produces or contributes to producing directly or indirectly, and all the professional secrets relating to the work or the establishment.

5. The two constraints that are frequently dropped

Among the six items, two constraints in particular are frequently deleted when the Article is carried over into a contract or a regulation:

The first: the instructions constraint in item 1. The obligation is not to carry out instructions absolutely, but is conditioned on their not contravening the contract, the Law or public morals, and on carrying them out exposing no one to danger. A contract that carries over item 1 without this constraint broadens the obligation beyond what is in the Article.

The second: “without stipulating additional pay for it” in item 4. This phrase is part of the obligation, not a comment on it, and its scope in the text is confined to cases of disasters and hazards threatening the safety of the workplace or of the persons working in it.

Every item in the Article comes with the limits stated in the text.

To that is added a constraint in item 2 that passes unnoticed: the care required attaches to what is owned by the employer and placed at the worker’s disposal or in his custody. Custody is therefore an element in the description of the obligation as it appears in the text.

Note too that item 5 places the medical examinations before joining the work or during it, and that their purpose in the text is specified: verifying that the worker is free of occupational or communicable diseases. The stated purpose is part of the text, not a gloss on it.

6. What the text does not address

• Who chooses between providing housing or transport and the cash allowance. The particular case is to be referred to the statutory text and the competent authority.
• The standard of “suitable housing” and the appropriate allowance and their amounts. No figure may be stated, and reference on that is to the statutory text and the competent authority.
• What counts as a material difference in the work assigned. The particular case is to be referred to the statutory text and the competent authority.
• The effect of exceeding the 30-day period or of assigning work without written consent. The particular case is to be referred to the statutory text and the competent authority.

7. What your system should record

• The allowances clause in every contract, whether it includes housing and transport, and in what form: in kind or as a cash allowance.
• That the cash allowance is paid with the wage, that is, within the payroll cycle and not outside it.
• Written consents to any material change in the work, and their dates.
• Days of assignment to different work in cases of necessity, with an annual total for each employee, because the constraint is annual.
• The items handed to the employee in the way of machinery, tools and materials, because item 2 attaches the obligation to what is in his custody.
• The medical examinations carried out and their dates.
• The date the contract template was last reviewed, because anything before 19 February 2025 does not carry the housing and transport items.

8. A checklist for the contract template

• Does the allowances clause include housing and transport?
• If it is a cash allowance: does it state that it is paid with the wage?
• Does the template require written consent to a material change in the work?
• Does it state the limit of 30 days in the year in a case of necessity?
• If Article 65 has been carried over: did item 1 arrive with the instructions constraint in full?
• And did item 4 arrive with the phrase “without stipulating additional pay for it” and with its confinement to disasters and hazards?
• Has the template itself been reviewed after 19 February 2025?

9. Why this turns into a problem

The allowances clause and the worker’s obligations clause are among the contract’s fixed clauses: they are written once and the wording is copied from contract to contract for years. That fixity is the problem when the text changes underneath them: Article 61 acquired two new items in 2025, and a template not reviewed since that date still carries a shorter list.

The difference between an establishment that noticed and one that did not is not in the diligence of either, but in the existence of a recorded answer to two questions: when was the contract template last reviewed? And which contracts in force today were issued from the old version of it?

The 30-day constraint is the same: it is an annual balance for each employee, and exceeding it becomes visible only to whoever gathers the scattered days across the year into a single figure.

This is where it pays to have an employee’s facts in a single file. That is what Qoyod HR provides: a single employee file holding the contract, the documents and their expiry dates with an alert before them, an attendance record for each employee, and their leave, salary and end-of-service entitlements. End-of-service, overtime and leave-balance calculations are built into the system. It is a standalone HR system with its own subscription, and the link with Qoyod accounting is available now.

For the dates of wage payment and the final settlement, see the dates of wage payment and the final settlement.

For more guides and templates, browse the HR Resource Centre.

Frequently asked questions

Are the housing allowance and the transport allowance obligatory in the employment contract?

Article 61, in its items 5 and 6, lays down that the employer shall provide suitable housing and appropriate means of transport from the workers’ place of residence to the place of work, or an appropriate cash allowance in lieu of each of them paid with the wage. These two items were added by Decree M/44, in force since 19 February 2025.

Is the housing allowance paid separately from the salary?

The text of items 5 and 6 of Article 61 is that the cash allowance is paid with the wage. As for disbursement arrangements in a particular case, those are referred to the statutory text and the competent authority.

May the employee be assigned work different from what was agreed?

Article 60 lays down that the worker may not be assigned work that differs materially from the agreed work without his written consent, except in a case of necessity arising from exceptional circumstances, and by no more than 30 days in the year.

Is the 30-day constraint per incident or for the whole year?

The constraint in Article 60 is annual in its text: a period not exceeding 30 days in the year. As for applying it to scattered assignments in a particular case, that is a matter to be referred to the statutory text and the competent authority.

What are the worker’s obligations under the Saudi Labor Law?

Article 65 enumerates six obligations: performing the work in accordance with the rules of the profession and the employer’s instructions, taking care of the machinery, tools and materials and returning the unconsumed ones, good conduct and morals during the work, providing aid in cases of disasters and hazards, undergoing the medical examinations, and keeping the technical, commercial, industrial and professional secrets.

Is the worker bound to carry out any instruction from the employer?

The first item of Article 65 is conditioned in its text: the obligation to follow the employer’s instructions where they do not contravene the contract, the Law or public morals, and where carrying them out exposes no one to danger. The constraint is part of the item, not an exception to it.

Statutory references

This guide is based on the Saudi Labor Law: Article 60 (the limits of changing the agreed work), Article 61 (the employer’s obligations, among them housing and transport), and Article 65 (the worker’s obligations).

As to the effect of the amendments made by Royal Decree M/44 of 1446 AH, in force since 19 February 2025: Article 61 was amended by it, and the addition of items 5 and 6 to it is the subject of the first and second sections of this guide. As for Articles 60 and 65, this guide has not established an explicit amendment for them, so it is not sound to assert that they were amended or were not, and reference on that point is to the updated statutory text.

This guide is a regulatory explanation, not legal advice. In an existing dispute or a particular case, the statutory text and the competent authority remain the reference.