In this guide, we clarify the most critical points — and how to avoid common mistakes before they escalate into problems. First: Leave Balances — Where Do Errors Occur? According to Saudi Labor Law (Article 109): • An employee is entitled to an annual leave of no less than 21 days • And it increases to 30 days after completing 5 years However, the real challenge lies in: • Manually tracking balances • Forgetting to update data • Errors in carrying over leave Is it permissible to carry over leave? Yes, but: • With the employer's approval • And within specific regulations Any error at this point could lead to systemic issues.
Second: End-of-Service Benefits — The Precise Equation End-of-service benefits depend on: • Half a month's wage for each of the first five years • A full month's wage for each subsequent year Important note: The calculation method varies depending on the reason for termination of the employment relationship: • Resignation ≠ Contract termination • And each case has different details that affect the value of the benefit This is where most errors occur, potentially leading to labor disputes.
Third: Actual Wage — A Point Many Overlook One of the most common mistakes: Calculating the benefit based on the basic salary only While the law stipulates that the calculation should be based on: The actual wage (Basic salary + recurring allowances) Ignoring this point could lead to: • Deficiencies in employee entitlements • Or unexpected financial liabilities for the establishment The Solution: Smart Management Instead of Manual Processes Relying on traditional methods is no longer sufficient in a constantly evolving work environment.
The solution is: A digital system that automates operations and ensures accuracy of calculations How does Olu system help you comply with labor law? At Olu, the system is designed to be compliant with labor laws in the Kingdom, providing an accurate and easy HR management experience. Accuracy in calculations • Automatic calculation of leave balances • Calculation of end-of-service benefits with all their details Continuous updates • Any amendment to regulations is applied directly within the system Risk reduction • Clear reports • Proactive alerts • Reduced likelihood of errors and disputes The Result: More Efficient Management… and Decisions Based on Accurate Data Conclusion Compliance with Saudi Labor Law is no longer an option… but a necessity to ensure the stability of your establishment and avoid risks.
And the most important question: Do you rely on traditional methods… or on a smart system that ensures accuracy and compliance? Start Now With Olu system, you can manage your human resources with confidence, and ensure all your operations comply with labor laws — easily and without complexity