Employee or Independent Contractor? The Subordination Test Decides

Many people providing services in Saudi Arabia work under contracts titled "contracting agreement," "consulting services agreement," or "cooperation agreement," while their day-to-day reality looks no different from any employee: fixed hours, direct supervision, daily instructions from the "client." The important question: does this label strip them of Labor Law rights? The legal answer is clear: no.

📜 The Legal Definition: What Actually Makes You a "Contractor"?

The new Civil Transactions Law (issued in 1444H) settled this ambiguity with a precise definition of the contracting agreement, containing one core condition that separates it from an employment contract:

Note the decisive phrase: "without being subordinate to the employer." This is the subordination test — the standard that separates an independent contractor from an employee. A genuine contractor manages his own work, decides how to execute it, and is not subject to daily supervision by the contracting party. But someone who receives direct instructions, is subject to fixed hours and oversight, and has his work managed day by day by an "employer" is legally an employee — regardless of the title written at the top of the contract.

🔍 Signs of Subordination That Reveal You Are an Employee, Not a Contractor

1. Fixed, set working hours — you are bound by hours set by the other party, not chosen by you.
2. Direct supervision and oversight — you receive daily instructions on how to perform the task, not just the agreed final outcome.
3. Tools and workplace — you use the contracting party's equipment and premises, not your own.
4. Exclusivity of the relationship — you cannot offer the same service to other clients at the same time.
5. Regular fixed pay — a steady monthly salary instead of a fee for completing a specific project.

⚖️ The Employment Contract Refers Entirely to Its Own Law

On the other hand, to avoid overlap between the two laws, the Civil Transactions Law itself states that it does not intervene at all in regulating the employment contract:

In other words: once it is established that your relationship carries the mark of subordination, it is the Labor Law — not the Civil Transactions Law — that governs every detail of your relationship: your pay, your leave, your termination, and your compensation. The Civil Transactions Law is used only to establish the correct classification of your relationship (employee or contractor), then refers you entirely to the Labor Law to activate your rights.

✅ What Should You Do If You Are a "Contractor" in Name Only?

1. Document the actual reality of your relationship: your working hours, who supervises you, who provides the work tools, and whether you work exclusively for one party.
2. Don't just read your contract's title — compare its terms and how it's actually carried out against the subordination signs above.
3. If subordination is established, file your claim before the competent authorities (labor courts) based on the reality of your relationship, not the contract label.
4. Use Sanad to assess your situation and find out whether your relationship meets the "subordination" conditions that open full Labor Law rights to you.