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Employee termination in Saudi Arabia is not simply an HR decision. It is a legal process governed by the Saudi Labor Law, the employment contract, the employer’s work organization regulations, and the facts of the individual case. A termination that appears commercially justified can still expose an employer to compensation claims or labor litigation if the legal basis, notice period, disciplinary procedure, evidence, or final settlement is mishandled.
For employers, the safest approach is to distinguish between: (i) expiry or lawful termination of a contract, (ii) termination of an indefinite-term contract for a legitimate reason with the required notice, (iii) termination for an illegitimate reason and the compensation consequences under Article 77, and (iv) dismissal without notice or compensation in the limited cases listed in Article 80.
Terminating an Employment Contract Without a Proper Legal Basis
One of the most significant risks in employee termination in Saudi Arabia is treating every contract as though the same termination rules apply. They do not. The correct legal analysis starts with the type of contract and the specific ground for termination.
Indefinite-term contracts
Under Article 75, an indefinite-term contract may be terminated for a legitimate reason, subject to written notice. If the employee is paid monthly, an employer must generally provide at least 60 days’ written notice; an employee terminating the contract must generally provide at least 30 days’ written notice. Where wages are not paid monthly, the statutory notice period is at least 30 days for either party. Failure to observe the required notice may trigger payment in lieu of notice under Article 76.
Fixed-term contracts
A fixed-term contract normally ends when its stated term expires, subject to the renewal rules in Article 55. There is no general rule requiring a statutory non-renewal notice in every fixed-term contract. However, the contract itself may contain a notice or renewal clause, and that wording must be reviewed carefully. If the parties continue performance or the contract contains a renewal mechanism, Article 55 may affect whether and how the contract renews.
Termination for an illegitimate reason
If a contract is terminated for an illegitimate reason and the contract does not specify a particular termination compensation, Article 77 provides a statutory compensation framework: 15 days’ wages for each year of service for an indefinite-term contract, or wages for the remaining term for a fixed-term contract. In either case, the statutory compensation must not be less than two months’ wages.
Failing to Observe Notice and Disciplinary Procedures
A common misconception is that Saudi law always requires an oral warning followed by a written warning before any dismissal. That is too broad. The required procedure depends on the legal ground relied upon and whether the action is being imposed as a disciplinary sanction.
- Article 66 recognizes dismissal as a disciplinary sanction in cases permitted by law.
- Article 71 requires the worker to be informed in writing of the alleged violation, questioned, allowed to present a defense, and for the process to be documented in a record before a disciplinary sanction is imposed. Minor violations are subject to a limited exception for oral questioning.
- Article 72 requires written notification of the disciplinary decision. If the worker refuses receipt or is absent, the Law provides for notification by registered mail to the address shown in the worker’s file.
- For the specific Article 80(2) scenario involving failure to perform essential obligations, disobedience of lawful orders, or intentional disregard of posted safety instructions, a prior written warning is expressly required.
- Article 80 also requires that the worker be given an opportunity to state the reasons for objecting to the termination.
From a practical risk-management perspective, employers should maintain a clear documentary trail: the allegation, supporting evidence, the employee’s response, the internal decision, the legal basis relied upon, and proof that the final decision was properly communicated.
Ignoring Compensation Exposure for Unlawful Termination
Employers sometimes focus only on whether an employee can be removed from the workplace and overlook the financial consequences of an unlawful or procedurally defective termination. In Saudi employment practice, this can convert a personnel decision into a compensation claim.
- For an indefinite-term contract, Article 77 may entitle the affected party to 15 days’ wages for each year of service, unless the contract provides a specific compensation mechanism.
- For a fixed-term contract, Article 77 may entitle the affected party to wages for the remaining contract period, again subject to any valid contractual compensation provision.
- The statutory compensation under Article 77 is subject to a minimum of two months’ wages.
For SEO purposes, readers often search for “unfair dismissal in Saudi Arabia.” In legal drafting, however, it is better to analyze the issue by reference to the statutory concepts of legitimate or illegitimate termination, the contractual terms, and the remedies provided by the Saudi Labor Law.
Common Employer Mistakes When Terminating Employees
The following mistakes frequently increase the risk of labor disputes and should be avoided when planning employee termination in Saudi Arabia:
- Relying on rumors or informal complaints without obtaining reliable evidence or carrying out a fair internal review.
- Using Article 80 as a general “serious misconduct” clause without proving that the facts fall within one of the specific statutory cases.
- Applying the wrong notice period or assuming that every fixed-term contract requires the same statutory non-renewal notice as an indefinite-term contract.
- Failing to preserve performance records, warnings, investigation notes, attendance records, emails, policies, or other documents needed to support the employer’s position.
- Treating poor performance as self-proving without a documented performance record, clear expectations, and evidence showing why termination is justified under the contract and applicable rules.
- Making a high-risk termination decision without legal review where the facts involve protected leave, allegations of misconduct, a senior employee, significant compensation exposure, or disputed evidence.
Article 80 of the Saudi Labor Law: When Dismissal Without Notice May Be Available
Article 80 is one of the most searched provisions relating to Saudi Labor Law termination. It allows an employer, in specified cases, to terminate the contract without end-of-service award, notice, or compensation, provided the statutory conditions are met and the worker is given an opportunity to object to the termination.
Examples of Article 80 cases include assault connected with work; failure to perform essential contractual duties or obey lawful orders in the circumstances specified by the Law; proven misconduct involving honor or trust; intentional conduct aimed at causing material loss (subject to the statutory reporting condition); obtaining employment by forgery; probation; qualifying periods of unauthorized absence; unlawful exploitation of a job position for personal gain; and disclosure of industrial or commercial secrets.
Get a Labor Consultation Now Before You Take Any Step to End the Contract
Confirm your legal position, rights and entitlements first, so the employment relationship ends in the proper way without forfeiting a right or taking on an avoidable liability.
- Contract and termination grounds review
- Assessment of rights and entitlements
- Clear, compliant next steps
A defensible Article 80 process should include
- Identify the exact Article 80 ground relied upon. Avoid generic references to “misconduct” where the facts do not match a statutory case.
- Collect and preserve evidence before making the final decision.
- Follow the applicable disciplinary procedure, including written allegations, an opportunity for the employee to respond, and documented consideration of the defense where required.
- Check whether the particular ground requires a prior written warning or another special condition.
- Issue a clear written termination decision and retain evidence of delivery.
Because Article 80 removes substantial employee entitlements that would otherwise arise on termination, it should be applied narrowly and on a well-documented factual record.
Procedural Errors in the Employee Final Settlement
The employee final settlement is a separate compliance step. Even where the termination itself is lawful, mistakes in final payments can create a new dispute.
- Final settlement deadline: under Article 88, where the employer terminates the employment relationship, wages and entitlements must be settled within a maximum of one week from the end of the contractual relationship. If the employee ends the contract, the employer has up to two weeks to settle the employee’s rights.
- End-of-service benefits: where due, the award must be calculated in accordance with Article 84 and the applicable statutory rules, taking account of the employee’s service and the wage basis prescribed by law.
- Unused annual leave: Article 111 entitles an employee who leaves employment before using accrued leave to payment for the unused accrued leave days, including the proportionate entitlement for part of a year.
- Deductions: employers should not make unauthorized deductions from wages or final amounts. Article 92 identifies circumstances in which deductions may be made without written employee consent, and Article 88 also permits the employer to deduct a work-related debt owed by the employee from amounts due at termination.
- Delayed wages and unlawful deductions: Article 94 allows labor-court claims for wrongfully deducted or delayed wages and provides for possible financial penalties in qualifying cases.
A good final-settlement file should show each component separately: unpaid wages, notice pay if applicable, Article 77 compensation if applicable, end-of-service benefits, unused leave pay, approved deductions, and any other contractual or statutory entitlement.
Termination During Pregnancy, Maternity Leave, or Illness
Saudi Labor Law provides specific protection for working women during pregnancy and maternity-related leave. Article 155 prohibits an employer from dismissing a female employee or giving her notice of dismissal during pregnancy or maternity leave, including illness arising from pregnancy or childbirth, subject to the statutory medical-certification and absence conditions.
Article 151 currently provides 12 weeks of fully paid maternity leave, including six mandatory weeks following childbirth, with rules governing how the remaining leave may be taken and the possibility of an additional unpaid extension.
Sick leave should also be handled carefully. Article 82 provides that an employer may not terminate an employee because of illness before the employee has exhausted the sick-leave periods provided by law. This is not the same as saying that no termination can ever occur while an employee is on sick leave for an unrelated lawful reason; the legal ground and timing must be analyzed carefully.
Dismissal for Unauthorized Absence: Do Not Skip the Statutory Thresholds
Absence-related dismissals are a classic area where a correct decision can become legally vulnerable because the employer acts too early or fails to issue the required warning.
- Under Article 80(7), dismissal may be available if the employee is absent without a legitimate reason for more than 30 days during one contractual year, provided a written warning is issued after 20 days of absence in that case.
- Dismissal may also be available if the employee is absent without a legitimate reason for more than 15 consecutive days, provided a written warning is issued after 10 days of consecutive absence.
The employer should preserve attendance records, the warning, proof of delivery, any employee explanation, and the final decision. The Law expressly addresses registered-mail notification in the disciplinary context when a worker refuses receipt or is absent; employers should also ensure that the employee contact details maintained in the personnel file are current.
Employer Compliance Checklist Before Employee Termination in Saudi Arabia
- Confirm whether the contract is fixed-term or indefinite-term.
- Identify the exact legal and contractual ground for termination.
- Check the applicable notice period and any contractual notice or renewal clause.
- Determine whether the decision is disciplinary and, if so, follow Articles 66–72 and the employer’s approved work organization regulations.
- If relying on Article 80, match the facts to a specific statutory case and verify every condition attached to that case.
- Give the employee a proper opportunity to respond where required and document the response.
- Preserve evidence: attendance, performance records, warnings, policies, emails, investigation notes, and signed acknowledgments.
- Calculate all termination payments and employee final settlement items independently of the decision to terminate.
- Check for pregnancy, maternity leave, illness, or other circumstances that may require additional legal analysis.
- Have high-risk cases reviewed by Saudi employment counsel before the termination is communicated.
Frequently Asked Questions About Employee Termination in Saudi Arabia
Can an employer terminate an employee without notice in Saudi Arabia?
Only in specific circumstances. Article 80 permits dismissal without notice, end-of-service award, or compensation in listed statutory cases, subject to the conditions of the relevant case and the employee’s opportunity to object. Otherwise, the ordinary termination, notice, and compensation rules may apply.
What is the employer notice period under the Saudi Labor Law?
For an indefinite-term contract where wages are paid monthly, Article 75 generally requires an employer to give at least 60 days’ written notice. If wages are not paid monthly, the party terminating the indefinite-term contract generally gives at least 30 days’ written notice.
What compensation is payable for unfair dismissal in Saudi Arabia?
Where termination is for an illegitimate reason and the contract does not set a specific compensation amount, Article 77 generally provides 15 days’ wages for each year of service for an indefinite-term contract, or wages for the remaining term for a fixed-term contract, with a statutory minimum of two months’ wages.
How quickly must an employee final settlement be paid in Saudi Arabia?
Article 88 generally requires settlement within one week where the employer ends the employment relationship and within two weeks where the employee ends it.
Can an employer dismiss an employee for absence?
Potentially, but only after the Article 80(7) thresholds and warning requirements are met: more than 30 days of unauthorized absence in one contractual year with a written warning after 20 days, or more than 15 consecutive days with a written warning after 10 days.
Can a pregnant employee be dismissed in Saudi Arabia?
Article 155 provides specific protection by prohibiting dismissal or notice of dismissal during pregnancy or maternity leave, including qualifying pregnancy- or childbirth-related illness. Case-specific facts should be reviewed before any action is taken.
Conclusion: A Legally Sound Termination Requires More Than a Business Reason
The most serious employer mistakes in employee termination in Saudi Arabia usually arise from one of four areas: choosing the wrong legal basis, skipping a required procedural step, failing to document the evidence, or calculating the employee’s financial entitlements incorrectly. A lawful result depends on the interaction between the Saudi Labor Law, the employment contract, the employer’s policies, and the facts of the case.
Before communicating a termination—especially one involving Article 80, alleged misconduct, prolonged absence, pregnancy or maternity protection, senior employees, or significant financial exposure—employers should conduct a documented legal review. That approach reduces avoidable disputes and supports a defensible position if the matter later reaches the labor courts.
Need a case-specific review of an employee termination in Saudi Arabia?
A Saudi employment-law review before termination can help identify notice, Article 80, compensation, final-settlement, and evidentiary risks before the decision is implemented.
Official Legal References
Saudi Labor Law — Labor Relations (HRSD) — Articles 66–88, including disciplinary rules, notice, compensation, Article 80, end-of-service benefits, and final settlement.
Saudi Labor Law — Employment Contracts (HRSD) — Articles 50–57, including fixed-term contracts and renewal.
Saudi Labor Law — Work Conditions (HRSD) — Articles 92–94 and 111, including deductions, delayed wages, and accrued leave pay.
Saudi Labor Law — Women Employment (HRSD) — Articles 151 and 155, including maternity leave and dismissal protection.
Legal note: This article is general legal information, not a substitute for advice on a specific employment matter. Saudi employment disputes are fact-sensitive, and contractual terms, work regulations, evidence, and later amendments may affect the analysis.
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