Signing a Final Settlement in Saudi Arabia: Check It Before You Sign

Why timing matters: Article 8

Article 8 of the Labor Law makes any waiver or settlement of your rights void if it was made while the contract is still running, unless it is more favorable to you. That protects you from releases signed during your employment.

Article 8 does not say the same about a release signed after the employment has ended. So a final settlement you sign after the end of the contract may be held against you if you later claim more. Read it as though it will be final.

What the settlement should include

Check that every item you are owed appears, with the right figure:

1. Unpaid wages, up to your last working day.
2. End-of-service award, calculated on your last actual wage, with part years counted (Articles 2 and 84). If you resigned, the reduction must match your years of service (Article 85).
3. Unused annual leave, calculated as monthly actual wage ÷ 30 × days owed (Articles 2 and 111).
4. Overtime, if any remains unpaid (Article 107).
5. Return ticket, unless you were found unfit for work or chose to return home without a legitimate reason (Article 40).
6. Compensation, if the contract was ended without a legitimate reason (Article 77).
7. Deductions. Only work-related debts you owe the employer may be deducted from your final dues (Article 88), and wage deductions are limited by law (Articles 92 and 93).

Worked example: checking the employer's figure

A QA inspector's contract was ended by the employer after 5 years and 6 months, not under Article 80. His pay was:

• basic salary: SAR 7,000
• housing and transport allowances (cash): SAR 3,000
• actual wage: SAR 10,000

He also had 20 days of unused leave. The employer's settlement was calculated on basic salary.

The shortfall is SAR 11,000. If he signs a release stating he has received all his dues, it becomes harder to recover that amount.

When it must be paid

Your employer must pay your wages and entitlements within one week if it ended the contract, or within two weeks if you resigned (Article 88).

Before you sign

• Ask for the calculation in writing, showing the wage basis, the service dates and the leave days.
• Compare it with your own calculation. See End of Service Calculation and Are Allowances Included in End of Service Pay?.
• Make sure the Arabic text says the same as any English version. The Arabic prevails (Article 9).
• If you disagree with any item, raise it in writing before signing, and keep a copy.
• Get advice before signing if the figures do not match.

If you have already signed

Whether a signed release prevents a further claim depends on when you signed it, what it says, and the facts. If you signed it while still employed, Article 8 can make it void. Either way, the deadline still applies: a claim filed more than 12 months after the end of the employment relationship is not admissible, unless the court accepts an excuse or the employer acknowledges the right (Article 234(a)).

If you have already signed a settlement, also check the deadline for bringing a labor claim.

For employers

• Prepare the settlement after the employment ends, not before. A release signed during the contract is void unless it is more favorable to the worker (Article 8).
• Calculate on the actual wage.
• Itemize every component.
• Pay within the Article 88 deadline.

A clear, itemized settlement leaves less room for later dispute. See Labor Law Support for Employers.