The termination of an employment contract is a regulated process under Saudi Labor Law that ensures fairness between employers and employees. However, some terminations are considered unlawful when they occur without a valid reason or in violation of the legal framework.
This article explains the key situations where termination is deemed unlawful, the rights of affected employees, and the remedies available under Saudi law.
1. Definition of Unlawful Termination
Unlawful termination refers to any case in which one party — typically the employer — ends the employment relationship without a legitimate reason recognized by the Saudi Labor Law.
Such an action entitles the affected party to claim compensation for the damages incurred as a result of this unlawful act.
2. Common Unlawful Termination Cases
The Saudi Labor Law identifies several cases where an employer is not legally permitted to terminate an employee’s contract. The most notable include:
a. Termination During Illness
Employers are prohibited from terminating an employee’s contract during sick leave, unless the employee has exhausted the legally allowed medical leave. Any dismissal during this period is considered unlawful.
b. Termination Due to Work Injury
It is unlawful to terminate the employment of a worker undergoing treatment or rehabilitation due to a work-related injury. The worker remains entitled to full wages during recovery.
c. Termination During Pregnancy, Maternity, or Leave
Employers cannot terminate the contract of a female employee during pregnancy, maternity leave, or any related absence covered by law. Doing so constitutes a violation of employee protection rights.
d. Termination for Filing a Complaint or Legal Claim
The law prohibits dismissal based on an employee’s act of filing a complaint, report, or legal case to claim their rights. Any such termination is considered retaliatory and unlawful.
e. Termination Based on Discrimination
Ending a contract due to gender, color, nationality, religion, or belief violates the principle of equality in employment and is explicitly deemed unlawful under Saudi labor regulations.
f. Termination Without a Valid Reason
When an employer dismisses an employee without a justified or documented reason, the termination is deemed unlawful under Article 77 of the Saudi Labor Law, and compensation becomes mandatory.
3. Compensation for Unlawful Termination
When termination is found to be unlawful, the employee is entitled to compensation determined as follows:
- For indefinite contracts: compensation equals 15 days of wages for each year of service.
- For fixed-term contracts: compensation equals the wages for the remaining period of the contract.
In all cases, the compensation must not be less than two months’ wages based on the employee’s last salary.
4. Legal Procedures to Protect Employee Rights
If an employee experiences unlawful termination, they should follow these legal steps:
- File a complaint with the Labor Office within 12 months from the date of termination.
- Attend the amicable settlement sessions arranged by the Ministry of Human Resources and Social Development.
- If no agreement is reached, the case is transferred to the Labor Court for a final judgment.
- The employee may claim unpaid wages, end-of-service benefits, and compensation for unfair dismissal.
5. Employer Obligations to Avoid Unlawful Termination
To maintain compliance and prevent disputes, employers should:
- Provide written documentation for all warnings and disciplinary actions.
- Comply with the notice period agreed upon in the contract.
- Avoid dismissals based on personal bias or non-work-related issues.
- Maintain accurate attendance and performance records to justify any employment decisions.
Conclusion
The Saudi Labor Law emphasizes fairness, equality, and the protection of all contractual parties.
Adhering to lawful termination procedures not only protects employers from litigation but also ensures a stable and transparent work environment.
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