Labor Law Support for Employers in Jubail, Dammam and the Eastern Province

Contracts that hold up

• Document every contract. Contracts must be in writing, in two copies, and documented as the regulations require (Article 51). They must follow the unified model contract (Article 52).
• Fixed term for non-Saudis. A non-Saudi's contract must be fixed-term. If no term is stated, it runs for one year from the actual start of work and renews for a similar year if work continues (Article 37). It stays fixed-term however often it is renewed (Implementing Regulations, Article 12).
• Arabic prevails. The Arabic text prevails over any English version (Article 9). Reconcile both versions before signature.
• Probation. It must be stated expressly, with its length, and cannot exceed 180 days in total (Article 53). See Probation Period in Saudi Arabia.
• Mobility. If staff may be moved between sites in different cities, include a clear mobility clause. Such a clause counts as the employee's prior written consent to a transfer (Article 58; Implementing Regulations, Article 20).
• Termination compensation. Article 77 lets the contract set the compensation for termination without a legitimate reason, but it can never be less than two months' wage.
• Terms that conflict with the law are void (Article 8). A clause that favours the company but goes below the statutory minimum will not protect you.

See Contract Drafting and Review.

Discipline done properly

The Labor Law lists the disciplinary penalties an employer may impose (Article 66). They range from a warning to dismissal in the cases the law allows.

Before any penalty, the worker must be told the accusations in writing, questioned, and given the chance to defend himself. The outcome must be recorded in his file (Article 71). Skipping this step can undermine a disciplinary dismissal.

Terminations

• Notice. For indefinite contracts with monthly pay, the employer must give at least 60 days' written notice and the employee at least 30 days. The termination must rest on a legitimate reason (Article 75). If notice is not given, the wage for the notice period is payable, unless the parties agreed on a larger amount (Article 76).
• Dismissal without notice or award is permitted only in the nine cases listed in Article 80, and only after the worker has had the chance to state his objection. Some cases also carry their own steps. Failure to perform essential obligations requires a prior written warning. Unexcused absence requires the warnings the law specifies. See Article 80.
• Termination without a legitimate reason exposes the company to compensation under Article 77, unless the contract sets its own figure:
  • 15 days' wage per year of service for an indefinite contract;
  • the wage for the rest of the term for a fixed-term contract;
  • never less than two months' wage.
• Illness. A worker cannot be terminated because of illness before using up the statutory sick leave periods (Article 82).

Final settlement

Deadline. Wages and entitlements must be paid within one week if the employer ended the contract, or within two weeks if the worker resigned (Article 88). The employer may deduct any work-related debt the worker owes it.

Which wage. The end-of-service award is based on the worker's last wage (Article 84). "Wage" means the actual wage: the basic wage plus the other amounts the worker receives for his work, such as allowances and commissions (Article 2). Commissions and similar components that go up and down can be left out of the calculation, but only by agreement (Article 86). Calculating the award on basic salary alone can lead to claims against the employer. See End of Service Calculation.

Timing of releases. A settlement or waiver signed while the contract is still running is void unless it is more favorable to the worker (Article 8). Time your settlement documents accordingly. See Signing a Final Settlement.

When an employee files a claim

A labor dispute starts with amicable settlement at the Ministry of Human Resources and Social Development. If no settlement is reached, the claim is referred to the labor courts under the Ministry of Justice.

A claim filed more than 12 months after the end of the employment relationship is not admissible (Article 234(a)). There are two exceptions: an excuse the court accepts, or an acknowledgment of the right by the employer. Be careful with what the company acknowledges in writing.

Settlement sessions are a chance to close a claim on known terms. Attend prepared, with:

• the Qiwa contract;
• payroll records and proof of bank wage payments;
• attendance and overtime records;
• the disciplinary file;
• the termination documents.

We represent employers at the settlement stage, before the labor court, and on appeal. Remote hearings are available. See Appealing a Labor Court Judgment.