Saudi Labor Law Article 75

The Saudi labor law article 75 tells us the importance of employment contracts for employees and employers. Likewise, the differences in the process of terminating their contracts depending on the type of contract. Furthermore, with this article, the labor law mainly seeks the benefit of workers, whether Saudi or foreign.

In this article, you will learn more about this important labor law that is one of many developed for the termination of contracts. Likewise, you will see the regulations to proceed with the different forms of contract termination in the country.

Overview of reforms in Saudi labor law

The authorities established certain reforms focused on employee mobility, such as the Saudi labor law article 75. To begin with, in March 2021, a resolution came into effect to facilitate the departure of workers from their jobs. In this case, the resolution is No. 51848/1442 and establishes that employees can leave employment in the following cases:

• Upon termination of the contract without the consent of the employer
• Leave your job before the expiration of the contract by giving 90 days notice

Likewise, the reforms impact foreign employees working in Saudi Arabia. Thus, previously expatriates with an Iqama and a work permit needed permission from their employer to leave the country. Currently, the Saudi Arabian government portal is at your disposal to make the exit or re-entry request.

Also, workers will not need permission to leave the country permanently and emigrate to their native country.

Saudi labor law article 75

For both employees and employers, the right to terminate a contract is equally important. Therefore, the labor law has conditions for termination that protect the labor rights of workers. Likewise, Saudi labor law article 75 regulates the termination of indefinite-term employment contracts. Thus, according to the article, both employees and employers may decide to terminate a contract for a valid cause.

Also, both parties must express the reason for the end of the contract in writing. In addition, one must deliver to the other party at least 60 days before the date set for the termination of the contract.

This notice is for the employee who earns monthly and for workers who do not earn monthly, it will be 30 days. On the other hand, the article offers steps for processing termination that ensure employees know their rights. Also, they indicate to employers what their obligations are when terminating an employment contract.

Similarly, it provides a clear and truthful vision that helps protect employees from dismissals without reason.

Reasons for the termination of a labor contract

Under Saudi labor law, there are employment contracts for a fixed or indefinite period and there is no such thing as at-will employment. Likewise, the rules for termination will be different for each type of employment contract. In addition, labor law lists the bases to allow the termination of the contract without prior notice and without compensation.

Therefore, below you will find the bases for justified dismissal:

• Acts of employee misconduct
• Breach of employment contract
• Not following explicit orders from the employer
• Deliberate conduct that causes loss of material to the company
• Unauthorized absences from work
• Disclosure of trade or business secrets

On the other hand, if these are indefinite contracts, the termination may be for reasons such as the above. Likewise, employees must give 60 days advance written notice for any valid reason. Although, the term “valid reason” is not established in the decree of the labor law No. M/51 of 08/23/1426H.

Therefore, in these cases, the valid reason is determined individually since the courts do not have systems of binding precedents. Likewise, they also have no notification methods which makes it difficult to determine if there is a valid reason for termination. However, the authorities try to make the decision fair.

Ways in which employers will be able to dismiss their employees in KSA

As we mentioned, contracts may be for a defined or indefinite period, in which a fixed-term contract will end on a specific date. Furthermore, they are generally contracts for foreigners. On the other hand, those of indefinite duration do not have a specific end date which are for Saudi citizens only.

At the end of a fixed-term contract, workers will have 2 options:

• Do not renew their contract.
• Or, if applicable, convert your contract to permanent.

Furthermore, if the employer does not renew the contract of a worker, he must notify it correctly. In the same way, an employer will dismiss the employee during the contract, in case of serious misconduct.

According to Article 75 of Saudi labor law, the employer will terminate the indefinite contract by presenting a valid reason in writing. In addition, the employer must comply with a 60-day notice if the employee is paid monthly or, otherwise, a 30-day notice. However, when an employer wants to immediately dismiss the employee, they must pay the salary they would have received for the notice.

Resignation under probation period Saudi Arabia

The Saudi labor law resignation notice period 2021 says that the employee can do it in the said period. However, you will not receive any type of compensation from the contracting company. Additionally, you will not receive severance benefits from your employer. However, if the worker is a foreigner, the employer must bear all the expenses for his/her departure from the country.

Notice period in Saudi Arabia

Generally, the period provided is 60 days for employees with indefinite period contracts but they may extend it by mutual agreement. Alternatively, the employer may agree to pay you severance instead of notice.

Reasons for dismissal without notice

The employer may dismiss the employee without prior notice or without reward, due to the following circumstances:

• If the worker attacks the employer or any person in a higher position or subordinates.
• If you fail to fulfill your obligations or if you fail to comply with safety instructions despite written warnings.
• Additionally, when the worker has misconduct or lewd acts against honesty or integrity.
• If the worker intentionally causes serious losses to the company, as long as the employer submits a report to the authorities. This must be done within 24 hours of the event.
• Likewise, when the employee presents false documentation when applying for employment
• If the worker is a condition of probation.
• If the worker is absent for more than 30 days in a year without justification or for more than 15 days in a row. However, the employer will first present a written warning when absent for 20 days in the first case. In the second case, it will be 10 days after the absence.
• The employee illegally takes advantage of his position for personal benefit.
• In case the employee reveals business secrets.

Procedural requirements for dismissing an employee

An employer who terminates a contract for valid cause without notice or compensation must allow the employee to refuse dismissal. Likewise, for this, the employer will invite a disciplinary meeting. In this meeting, the worker will present his/her defense and then the employer will consider whether or not to issue the termination.

Collective dismissal

Collective dismissal is when there is a termination of a contract for a group of Saudi workers. Likewise, for this type of dismissal, you will need the collective dismissal notification through Human Resources and Social Development (MHRSD). Notification must be made 60 days in advance.

Also, the termination of the contract will not be for illegal reasons on the part of the employees but for reasons attributed to their employer.

Monetary compensation for dismissal

According to Saudi labor law article 75, employees will be entitled to end-of-service compensation. Likewise, it will be equal to half a month of base salary for each of the first 5 years. Additionally, the employer will grant one month of base salary per year thereafter, extendable for the time used. However, the law provides for certain exceptions to this compensation.

In the same way, if the dismissal is considered illegal, the worker will have the right to compensation. Thus, the payment depends on whether the employee’s contract was for a limited or unlimited time. Nevertheless, if the contract stipulates it, there will be compensation for the employee in the event of:

• The limited-term contract will be entitled to the basic salary for the remaining time of the contract, or 2 months of salary, whichever is greater.
• An indefinite-term contract will be entitled to 15 days of salary for years of service, or 2 months of salary at a minimum.

Protection for the employee against dismissal

Saudi law protects workers against unjustified dismissal in the following cases:

• Services of the employee due to illness without requesting sick leave. A worker may request to combine annual leave with sick leave.
• In case of threats of dismissal to pregnant employees or on maternity leave. To do this, the employee must present a medical justification and that the absence from work does not exceed 180 consecutive days.

As we have seen, article Saudi labor law article 75 provides protection for both defined and permanent contract workers. Likewise, the regulations of the article are aimed at guaranteeing the integrity of the worker in front of the employee.

If you have any questions about this and other Saudi labor law topics, please contact us and we will provide you with more information.