Termination of the employment contract is an important aspect of the employment relationship. In Saudi Arabia, labor law regulates the termination process and guarantees employers and employees certain rights and protections.

In this article, we will discuss what a termination of employment contract is, grounds for termination. Notice requirements, severance pay, procedural requirements, employee protections and types of contracts.

Introduction to Employment Contracts and Termination

termination of employment

The definition of an employment contract is a legal negotiation between an employer and a worker. That stipulates different conditions of employment for both parties. The purpose is to formalize the employment relationship by clarifying expectations for both parties. In the event of disagreements, this document will serve as an important point of reference.

Also, the contract usually specifies the procedures to be follow and the actions. To be take when the employment relationship ends. This refers to the termination of the employees collective bargaining agreement with the company, which may be voluntary or involuntary. There are several valid reasons for termination of employment in Saudi Arabia.

Compensation For Invalid Termination Of Contract

In Saudi Arabia. It depends on the type of contract, the reason for the Termination of employment and the applicable law. According to the Saudi Arabian Labor Law. If the contract is of indefinite duration. The party affect by the unjustified termination is entitle to compensation equivalent to 15 days salary for each year of service.

However, the Labor Law does not apply to domestic workers or public sector employees, who have their own regulations. In addition, the Labor Law does not adequately protect women from gender discrimination in employment.

For indefinite term contracts

In the case of indefinite-term contracts, termination of employment may be for just cause or for any lawful reason with at least 60 days written notice. However, just cause is not clearly define in the Labor Code and must be determinate on a case-by-case basis.

It allows for some flexibility in the dismissal process, but is intend to be less strict than for just cause.

For fixed-term contracts

In fixed-term contracts, the employer may termination of employment for non-renewal, for an event that triggers the contractual conditions or for conversion of the contract to an indefinite-term contract, with 60 days notice and a valid reason.

Termination of employment is usually permitted either for non-renewal or for cause. Cause, in the case of employer-initiated termination, includes grounds such as misconduct, breach of the employment contract or of lawful orders of the employer, acts intended to cause material prejudice to the employer, or disclosure of trade secrets.

Grounds For Termination In Saudi Labour Law

In Saudi Arabian labor law, they depend on the type and duration of the contract, as well as the reason and notice for termination of employment. Some of the valid grounds for termination of employment are:

  • Assaulting the employer, manager or superiors during work.
  • Failure to comply with essential obligations or legitimate orders.
  • Deliberately causing material injury to the employer.
  • Resorting to falsification to obtain employment.
  • Fulfilling the probationary period.
  • Force majeure.
  • Total closure of the establishment.
  • Cessation of the activity.
  • Retirement.
  • Dismissal.

It should be noted that, if the termination of employment is unjustified, the affected party is entitle to compensation equivalent to 15 days salary per year of service in indefinite-term contracts, or to the salary for the remaining period in fixed-term contracts.

Rights of the Worker During the Notice Period in KSA

termination of employment

During the notice period in Saudi Arabia depends on the type and duration of the contract, as well as the reason and notice of termination. Some of the rights for a termination of employment are:

  • If notice of termination of employment is issue by the employer, the employee is entitle to be absent during the notice period for one full day or eight hours during the week, to seek other employment, with the right to his regular salary for that time.
  • On the other hand, if the notice is issued by the employee, the employer cannot force the employee to work overtime during the notice period.
  • Also, if the contract is terminated for an unjustified cause, the affected party is entitled to an additional indemnity equivalent to two months’ salary for contracts of indefinite duration.
  • If the contract is terminated for a cause related to the employees health or safety, the employee is entitled to an indemnity equal to half of the salary for the remaining days of the notice period.

Notice Requirements in KSA

It depends on the type and duration of the contract, as well as the reason and notice of termination.  Some main notice requirements for termination of employment are:

  • The employee or employer must issue a termination of employment notice period as mentioned in the contract or 60 days if not mentioned in the contract. The contract with a non-Saudi employee will always be a fixed-term contract under the Saudi Arabian Labor Law.
  • For open-ended contracts, the employee or the employer may terminate the contract for just cause, with 60 days’ notice for employees who are paid monthly and 30 days’ notice for others.
  • If either party wants to terminate the contract without giving any notice, it may do so by paying the full salary for this period according to Article 76 of the Saudi Arabian Labor Law.
  • The employer may terminate a worker without giving any notice under Article 77 of the Saudi Arabian Labor Law, unless otherwise stated in the contract.
  • Also, he may terminate a contract for employee misconduct without any notice under Article 80 of the Saudi Arabian Labor Law.
  • The notice period mentioned above is the minimum required by the Saudi Arabian Labor Law. If a longer period is mentioned in the employment contract, both parties are obliged to comply with it.


Understanding the rights and protections associated with termination of employment is essential for both employers and employees in Saudi Arabia. Following labor law guidelines ensures a fair and legal termination process and protects the interests of both parties. Employers should understand the reasons for dismissal, dismissal requirements, severance packages and procedural steps to avoid legal problems.

For their part, employees can be assured that certain protections are in place to guarantee their employment rights. If you would like to learn more about reasons for termination of employment contract or other articles of interest we invite you to visit our blogs!

Leave a Reply

Your email address will not be published. Required fields are marked *