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Termination

Notice
Are employers required to give notice of termination?

If the employment contract is for an unlimited term, either party may terminate it for a valid reason by serving on the other party no less than:

  • 30 days' written notice if the worker is paid monthly; or
  • 15 days’ written notice for other workers (or the period specified in the contract, if different).

Failure to give adequate notice entitles the other party to compensation equivalent to the notice period required or remaining (as the case may be).

The Labour Law also lists specific circumstances in which the employer or employee may terminate employment without notice.

An employee on an indefinite term contract is also entitled to written reasons for termination of employment.

Redundancies
What are the rules that govern redundancy procedures?

Recent amendments to the Labour Law (applicable from October 2015) allow the employer to terminate the employment contract validly if the business is closed permanently or the business unit or operation in which the employee is employed is closed.

In any case, as a matter of best practice and to reduce the risk of successful arbitrary dismissal claims, an employer should meet with its employees and follow a consultation process.

Are there particular rules for collective redundancies/mass layoffs?

Recent amendments to the Labour Law allow the employer to terminate the employment contract validly if the business is closed permanently or the business unit or operation in which the employee is employed is closed.

In any case, as a matter of best practice and to reduce the risk of successful arbitrary dismissal claims, an employer should meet with its employees and follow a consultation process.

Protections
What protections do employees have on dismissal?

If the employment contract is for an unlimited term, either party may terminate it for a valid reason by serving on the other party no less than:

  • 30 days' written notice if the worker is paid monthly; or
  • 15 days’ written notice for other workers (or the period specified in the contract, if different).

Failure to give adequate notice entitles the other party to compensation equivalent to the notice period required or remaining (as the case may be).

An employer without a valid reason for termination or which does not follow due process may face a successful claim for compensation for unjustified termination.

The level of compensation for termination of either a fixed-term or an indefinite contract depends on whether the employee is a Saudi national or an expatriate, and whether the fixed-term contract provides for a contractual notice period.

Further, in the case of a Saudi national, the employer may be ordered to reinstate the employee.

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