Understanding the process and consequences of Contract termination in Saudi Arabia is of utmost importance for both domestic and international individuals and entities operating within its borders.
In the termination of contract without cause cases, the aggrieved party should prove breach of contract in Saudi Arabia to seek compensation for damages incurred.
By providing a comprehensive overview of contract termination in the Kingdom of Saudi Arabia, this article aims to empower readers with a profound understanding of the relevant laws, regulations, and penalties associated with scenarios of contract termination.
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Contract termination in Saudi Arabia.
According to the labor system, the Contract termination in Saudi Arabia is permissible under the following circumstances:
- Completion of the agreed-upon employment period between the worker and the employer.
- Attainment of the retirement age, which is 60 years for men and 50 years for women.
- Mutual agreement between the worker and the employer to terminate the contract before its expiration.
- Declaration of company bankruptcy and cessation of operations.
- Suspension or cancellation of the specialized field in which the worker is employed within the company.
- Extraordinary circumstances that compel either the worker or the employer to terminate the contract.
- Agreement between the employer and the worker, stipulating specific conditions for contract termination.
In the event of contract termination under the aforementioned circumstances, the worker is entitled to an end-of-service gratuity, which is a financial payment made by the employer upon the contract’s conclusion. The gratuity is calculated based on the worker’s latest salary and length of service within the establishment.
If the contract does not specify its duration, either party may terminate it with reasonable cause, as outlined in a written notice provided in advance. The notice period should be stipulated in the contract, with a minimum of sixty days for workers receiving monthly wages, and a minimum of thirty days for others.
In cases where the notice is issued by the employer, the worker is entitled to be absent for a full day per week or eight hours per week during the notice period, in order to seek alternative employment. The worker should be compensated for this day or the hours of absence.
As per the Saudi labor system, no legal consequences arise from the termination of an employment contract during the probationary period, if initiated by either party.
Reporting Violations of Labor Regulations.
To address violations of labor regulations in Saudi Arabia, there are two primary avenues available for reporting: online reporting and a toll-free helpline.
- Online Reporting:
To report labor law discrepancies or violations, individuals can make use of the convenient online platform offered by the Ministry of Human Resources and Social Development (MHRSD).
- Access the official MHRSD website and navigate to the designated (E-Services) section.
- Choose the option specifically designed for reporting labor violations.
- Provide accurate and comprehensive details regarding the violation, including any supporting evidence that may be available.
- Submit the report for thorough review and appropriate action by the relevant department.
- Toll-Free Helpline:
For urgent situations requiring immediate assistance, the MHRSD has established a toll-free helpline. Individuals can contact the helpline at 19911. Additionally, the Ministry of Interior has designated specific numbers for reporting labor regulation violations, such as 911 for residents in Riyadh and Makkah Al-Mukarramah, and 999 for other areas in Saudi Arabia.
penalty for breaking employment contract in saudi arabia.
As previously mentioned, under the Saudi Arabian labor law, there are specific grounds for justifiable termination of an employment contract.
However, in cases where the contract is terminated for an unjustifiable reason, the law provides for compensation to be paid by the party responsible for the unlawful termination. The amount and method of payment for this compensation depend on the type of employment contract.
- In the case of a fixed-term contract, if it is unjustifiably terminated, the compensation is calculated based on the remaining period of the contract.
- If the employment contract includes a provision specifying a predetermined amount of compensation for unjustified termination, that agreed-upon amount must be paid.
- For indefinite-term contracts, the compensation is calculated as fifteen days’ salary for each year of service, with a minimum compensation amount of two months’ salary.
Can I terminate my contract in Saudi Arabia??
Contract termination in Saudi Arabia is allowed in specific situations that include violations of contract terms or mutual agreement. As per Article 81 of labor law system, employers can terminate contracts without compensation. Likewise, employees can terminate contracts under Article 80 while retaining their rights.
What is the penalty for breaking employment contract in Saudi Arabia?
For fixed-term contracts, unjustified termination leads to compensation based on the remaining period. If a predetermined compensation amount is specified, it must be paid. Indefinite-term contracts entail compensation of fifteen days’ salary per year of service, with a minimum of two months’ salary.
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Learn about Contract termination in Saudi Arabia 2024.
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