Compensatory Leave Request Form (Saudi Labor Law)

Imagine you worked on Eid day to close the inventory cycle, or stayed extra hours at the branch to finish the year-end stock count. You are now entitled to a paid day off in exchange for that day, or to an extra 50% on your wages. This is compensatory leave: a statutory right protected under the Saudi Labor Law that many employees overlook and some employers misunderstand.

In this guide we unpack the concept end to end: what compensatory leave means under the Saudi Labor Law, when it is granted, how it differs from overtime, what the alternative financial entitlements are under Article 107, how to calculate it across realistic Saudi scenarios, who is eligible to request it, how long the request stays valid, and what elements a compensatory leave request form must contain to be legally accepted. We then show how Qoyod’s accounting ledger manages these leaves and entitlements automatically without errors.

What is compensatory leave?

Compensatory leave is a paid day off granted to an employee in exchange for working on an official holiday, a weekly rest day, Eid days, or hours that exceeded the statutory daily limit. It is not a gift from the employer, it is a statutory obligation on the company whenever its conditions are met.

The core idea: the Saudi Labor Law guarantees every employee a weekly rest and paid official holidays. When the employee is required to work on these days at the employer’s request, they must be compensated either with a substitute paid day off (compensatory leave) or with an enhanced cash payment (overtime pay).

The common mistake is to confuse this leave with annual leave, or to assume the employee “volunteered” to work on their rest day and therefore deserves nothing. Both are errors that cost the company fines at labor offices and cost the employee basic financial rights.

Legal framework under the Saudi Labor Law

Compensatory leave is not a courtesy, it is a statutory obligation. Its legal basis sits across several articles of the Saudi Labor Law issued by the Ministry of Human Resources and Social Development (MHRSD):

• Article 104: Every worker is entitled to a weekly rest day on full pay, and it may not be replaced with cash or merged with another leave except within specific limits.
• Article 106: The worker is entitled to leave on full pay during the official holidays and occasions designated by the Council of Ministers.
• Article 107: If work conditions require employing the worker on an Eid or weekly rest day, they must be compensated with a substitute day, or paid the day’s wage plus 50% of the basic wage.
• Article 108: Overtime hours are paid at the regular hourly wage plus 50% of the basic wage.

Together these articles establish the “right to compensatory leave” as the first option for an employee who worked on their rest day. If it is not used within the statutory period, the entitlement automatically converts into a cash payment under Article 107.

When is compensatory leave granted?

The conditions for compensatory leave are met in three core cases that every HR department and employee must distinguish:

1) Working on an official holiday

Eid Al-Fitr, Eid Al-Adha, National Day, Founding Day, and any official holiday declared by the Council of Ministers are paid leave days. If the company requires the employee to work during them for operational reasons (hotels, hospitals, large retail stores, continuous-production factories), the employee is entitled to:

• A paid substitute day off, or
• The day’s wage plus 50% of the basic wage.

The choice belongs to the employee in principle, but in practice it is usually defined in the employment contract or in the company’s approved internal regulations.

2) Working on the weekly rest day

The weekly rest day in the Kingdom is Friday, and it may be changed to another day by mutual agreement. If the employee works on their weekly rest day, they are entitled to the same compensation: a substitute day, or the wage plus 50%. The difference here is that the company is not allowed to schedule the employee on more than two consecutive rest days in a month except in exceptional cases.

3) Accumulated overtime hours

Some companies agree with employees to convert overtime hours into compensatory leave instead of paying cash. This is permitted if the employee agrees in writing and it is stated in the work regulations or the contract. Every 8 overtime hours are typically counted as one compensatory leave day.

The difference between compensatory leave and overtime

This confusion is very common and leads to payroll accounting errors. The core difference:

• Overtime: Hours that exceed the statutory daily limit (8 hours typically, or 6 hours during Ramadan for Muslim employees), always compensated in cash at the hourly wage plus 50%, under Article 108.
• Compensatory leave: Compensation for a full day of weekly rest or official holiday, granted as a substitute day or as the day’s wage plus 50%, under Article 107.

The practical difference: overtime is measured in hours, compensatory leave is measured in days. The first does not grant a substitute rest day, the second grants either rest or cash by agreement. Failing to distinguish between them in the payroll management system leads to incorrect calculations that affect both the salary and the company’s obligations toward the labor office.

Alternative financial entitlements under Article 107

If the employee chooses (or if work conditions impose) cash compensation instead of a substitute day, the calculation under Article 107 works as follows:

• The full day’s wage (basic salary divided by 30, or by actual working days in the month depending on the company’s regulations).
• Plus 50% of the basic wage for the same day.
• So the worker receives 150% of a regular working day’s wage.

A simple example: an employee with a monthly salary of SAR 9,000. The daily wage is SAR 300. If they work on Eid and do not take a substitute day, they are entitled to 300 + 150 = SAR 450 for that day. Some companies calculate on a 30-day basis, others on actual working days (22 to 26 days), and the gap can be significant over a year.

Calculation method by scenario

Let us take three scenarios with realistic Saudi figures, assuming an employee with a basic monthly salary of SAR 12,000:

Scenario 1: A full Eid day

• Daily wage = 12,000 / 30 = SAR 400.
• Cash compensation = 400 + (400 x 50%) = SAR 600.
• Or a paid compensatory leave day.

Scenario 2: 5 overtime hours on a regular day

• Hourly wage = 400 / 8 = SAR 50.
• Overtime hourly wage = 50 + (50 x 50%) = SAR 75.
• Total for 5 hours = 75 x 5 = SAR 375 (overtime, no compensatory leave granted).

Scenario 3: Working on Friday (weekly rest)

• Option 1: A substitute rest day during the following week (paid).
• Option 2: Day’s wage plus 50% = SAR 600 in cash.
• The choice is usually settled in the company’s approved regulations.

Who is eligible to request compensatory leave?

Every employee subject to the Saudi Labor Law working under an approved Saudi employment contract, regardless of nationality or contract type (fixed-term or indefinite), is entitled to compensatory leave whenever its conditions are met. This includes:

• Full-time private-sector employees.
• Part-time employees, on a pro-rated basis for the days they actually worked on holidays or weekly rest.
• Subcontractor workers, if they are registered with social insurance under the company’s sponsorship.
• Employees during the probation period, since the Labor Law does not exclude probation from weekly rest and official holiday rights.

Typical exceptions: maritime workers, whose conditions fall under a separate regime, and senior management, with whom different arrangements may be agreed in writing. Even in these cases, the exception must be documented in the contract.

Validity period of the compensatory leave request

The validity period is something many employees overlook, which leads to losing the right if it is not claimed in time. The applicable standards:

• Company internal policy: Most companies require the compensatory leave request to be submitted within 30 to 90 days of the worked day. After that, the entitlement automatically converts into cash paid with the salary.
• Labor Law: The Saudi Labor Law does not set an explicit maximum validity period, but Article 222 states that labor claims lapse after 12 months from the end of the employment relationship. Any unexercised right within a year may legally expire.
• Accumulated balances: Some companies allow compensatory leave balances to accumulate until the end of the fiscal year, then settle them in cash or write them off. The company’s regulations should define this clearly.

Practical recommendation: submit the request within one to two weeks of the entitlement date, and document it in writing or electronically through the payroll management system so you have a dated record.

Elements of an official compensatory leave request

For your request to be legally and administratively accepted, it must contain the following elements:

1) Request header

• Full company name and logo.
• Submission date (Hijri and Gregorian).
• The party to whom the request is addressed (direct manager, HR department).

2) Employee information

• Full four-part name.
• Employee ID number.
• Job title and department.
• Start of service date.

3) Requested leave details

• Basis of entitlement (work on an official holiday, weekly rest day, or accumulated overtime).
• The date or dates worked, with a reference (shift number, work order, assignment email).
• Number of substitute days requested, or the cash compensation option.
• Proposed leave start and end dates.

4) Acknowledgments and signatures

• Employee acknowledgment that the information is accurate.
• Employee signature and date.
• Direct manager approval box with signature.
• HR department approval box.
• Payroll confirmation box that the entitlement is recorded and calculated.

Practical examples with Saudi figures

To make this concrete, here are three common cases in the Saudi private sector:

Example 1: A retail salesperson

Sarah works at a fashion store on a salary of SAR 6,500. She worked on National Day (September 23) for 9 hours. Her right:

• Option 1: A full paid compensatory leave day during the following week.
• Option 2: 6,500 / 30 = SAR 217 plus 50% = SAR 325.5 added to that month’s salary.
• Plus one overtime hour (the 9th hour): 217 / 8 = 27.1 plus 50% = SAR 40.7.

Example 2: A hotel supervisor

Ahmed works as a front office supervisor at a hotel on a salary of SAR 9,000. He worked 4 consecutive Fridays during the season. His right:

• 4 substitute compensatory leave days, or
• (SAR 300 x 1.5) x 4 = SAR 1,800 in cash compensation.

Example 3: A production line operator

Khalid works at a factory on a salary of SAR 5,800. He accumulated 24 overtime hours that he agreed to convert into leave with his company. Every 8 hours equals one day. His right:

• 3 paid compensatory leave days, or
• (5,800 / 30 / 8) x 1.5 x 24 = SAR 870 in cash compensation.

How Qoyod helps you manage leaves and payroll

Managing compensatory leaves manually on Excel typically ends in errors that cost the company thousands of riyals every year and damage its relationship with employees. The an integrated HR and payroll tool synced with Qoyod solves this problem end to end:

• Automatic compensatory leave tracking: Attendance is linked to leave balances, and overtime hours are converted into days automatically based on the company regulations configured in the system.
• Cash calculation under Article 107: The system automatically applies the 50% rate to the basic wage and adds it as a separate line on the payslip.
• Digital request documentation: Compensatory leave requests are submitted and approved electronically, stored with digital signatures from the manager and HR, protecting the company in any later dispute.
• Monthly reports for management: Reports on total overtime hours, compensatory leaves granted, cash compensation paid, and accumulated balances per employee.
• Integration with accounting: The journal entries for payroll and compensation expenses are generated automatically in the accounting system, with no data duplication and no gaps.
• Compliance with the Saudi Labor Law: The system is pre-configured for the relevant articles (104, 106, 107, 108), and any update to the labor regulations is reflected immediately.

You can also benefit from the Qoyod library of free administrative templates to make informed financial decisions.

Common mistakes in calculating and granting compensatory leave

Many companies lose significant amounts or face labor disputes because of recurring mistakes in managing compensatory leave. Here are the most prominent and how to avoid them:

1) Calculating the daily wage on the basis of working days instead of 30 days

Some companies calculate the daily wage by dividing the salary by the actual working days (22 to 26) instead of 30. The gap can reach 30% of the cash compensation value. The correct practice under the Saudi Labor Law is to divide by 30, unless the company’s regulations approved by MHRSD explicitly state otherwise.

2) Ignoring fixed allowances when calculating the wage

The basic wage used in compensatory leave calculations sometimes includes the fixed allowances (housing, transport) paid monthly on a regular basis. Ignoring them reduces the employee’s entitlement. The wage used is the one stated in the employment contract and in the social insurance subscription, unless the contract states otherwise.

3) Not documenting the work assignment on the rest day in writing

A verbal instruction to work on Eid or the weekly rest day weakens the company’s position in any later dispute. The assignment must be made in writing through the employee management system or by an official email specifying the date, hours, operational reason, and the agreed compensation (substitute day or cash).

4) Merging compensatory leave into the annual leave balance

Merging the two balances is a common error that leads to incorrect end-of-service benefit (EOSB) and leave settlement calculations. Compensatory leave is a separate balance and must appear as an independent line on the leave statement and in the EOSB calculator.

5) Forfeiting the right without notifying the employee

Forfeiting the compensatory leave balance at fiscal year-end without prior notice to the employee is a violation. The employee must be notified in writing well in advance (at least 30 days) to exercise their option: use the leave or convert it to cash.

Checklist before submitting the request

Before sending your compensatory leave request, make sure you have completed this checklist to avoid rejection or delay:

• Attach a copy of the attendance record for the day or days being compensated.
• Attach the written work assignment for that day (official email, work order, message from the manager).
• Clearly specify the option: substitute rest day (with the proposed date) or cash compensation.
• Make sure the request is signed by the employee and the direct manager before forwarding to HR.
• Keep a paper or electronic copy with the employee, dated at submission.
• Follow up on the approval within 7 to 14 business days of submission.

If the response is delayed beyond a reasonable period, escalate the matter in writing to senior management with proof of the initial submission date. Documentation is the first guard of your labor rights.

Frequently asked questions

Can an employee refuse to work on an official holiday?

Yes in principle, since the official holiday is a statutory right. However, in continuous-operation sectors (hotels, hospitals, transport, retail), the company is permitted to assign the employee to work in exchange for the statutory compensation. An outright refusal may be considered a breach of contract if the company’s regulations include holiday rotations and the employee signed off on them.

Can compensatory leave be converted to cash after it has been granted?

Yes. If the employee does not use the compensatory leave within the period stated in the company regulations (typically 90 days), it automatically converts into cash compensation under Article 107 (day’s wage plus 50%) and is paid with the salary.

What is the difference between compensatory leave and emergency leave?

Compensatory leave compensates for work on a rest day or holiday. Emergency leave (5 days per year per company regulations) is granted for urgent circumstances (bereavement, accident, health emergency) and does not require prior work.

Is compensatory leave counted within the annual leave balance?

No. Compensatory leave is a fully independent right from the annual leave (21 days). It is not deducted from your balance and is not affected by it.

What should I do if the company refuses to grant my due compensatory leave?

File a formal complaint with HR first, attaching the entitlement documents (the assignment to work on the holiday, the attendance record, any official email). If unresolved, file a complaint through the Musaned platform or with the competent labor office, which adjudicates the dispute within 21 days.

Can an employee on probation request compensatory leave?

Yes. The Saudi Labor Law does not exclude the probation period from weekly rest and official holiday rights. Any work on an official holiday or rest day during probation entitles the employee to full statutory compensation.