Termination as per Saudi Labor law
Contract Termination as per Article 74 of Saudi Labor Law
Saudi Labor Law Article 74 lists seven conditions for an employer or employee to terminate a contract for an unfinished job.
You can read the details related to the termination of the contract as per Article 74 of Saudi labor Law below:
Saudi Labor Law Article 74
For an employment contract to be completed, expired, or terminated, the following events might occur:
Must Read: Working Hours in Saudi Arabia
- Agreement of both parties
According to Saudi Labor Law’s Article 74(1), a contract may be canceled with the written consent of both the employee and the employer. For instance, an employer in Saudi Arabia might accept a resignation letter for an unfulfilled job contract.
- Completion of contract
If the contract’s specified time limit has passed, the agreement is considered to have ended per Article 74(2).
- Indefinite contract Termination
According to Article 74(3) of Saudi Labor Law, an indefinite contract may only be canceled for valid reasons; under Article 75, an employer can terminate a tentative agreement by giving 60 days’ notice.
Saudi Labor Law’s Article 37 states that expatriate employees always have fixed-term contracts. Accordingly, Article 74(3) does not apply to foreign workers.
- Retirement Age
Saudi Labor Law Article 74(4) states that the contract can be terminated with all benefits once an employee reaches retirement age.
According to the KSA rules, the retirement age for men is 60 years. For women, it is 55 years. The retirement age for the males working in government departments is 62 years.
- Force Majeure
Force majeure is defined as events that are beyond the control of any party. A contract may be terminated, for instance, by changes in legislation, disasters, riots, armed conflict, terrorist attacks, or Coronavirus as per article 74(5).
The Saudi Labor Law’s Article 74(5) was suspended by the Ministry of Labor during the coronavirus epidemic for a duration of six months, from April 2020 to October 2020.
- Business Closure
Article 74(6) of Saudi Labor Law states that a contract automatically expires after a company or business has permanently gone out of business.
- Activity Closure
If the division or branch where the employee once worked has shut down, that could result in a termination under Article 74. (7).
After the employer terminates the employee’s services, final compensation must be paid within two days. In the event of an employee’s resignation, the last payout might be issued as part of the company’s regular payment cycle.
It is the employer’s responsibility to pay both the salary and the notice period. An employee must first request wage payment due to him after being fired before sending a formal notification to the employer.
According to the Ministry of Human Resources and Social Development, if the employee is paid monthly and the contract is unlimited, the employee must notify the employer at least 60 days before terminating the contract.
Now that you know the conditions for contract termination as per Saudi labor law make sure you don’t face any unfair situation. If you live in Saudi Arab or plan to go there in future, we suggest you educate yourself about their laws and regulations.
If you have any issues at your workplace or have a dispute with your employer, you should always consult the law first.