Termination Process
In Saudi Arabia, there are various circumstances in which an employer may terminate an employment contract without notice or an end-of-service indemnity.
If the contract is of an indefinite term, and the wage is paid on monthly basis, either party may terminate the contract for a valid reason as follows:
- If the termination is initiated by the employee, a written notice must be issued to the employer at least thirty (30) days prior to the termination date.
- If the termination is initiated by the employer, a written notice to the employee must be issued at least sixty (60) days prior to the termination date.
If the contract is of an indefinite period and the wage is not paid on a monthly basis, the party intending to terminate the contract for a legitimate reason must serve the other party a written notice at least thirty (30) days prior to the termination date.
An employee’s resignation application shall be considered accepted if thirty (30) days pass without a response from the employer. The employer shall have the right to postpone the acceptance of the resignation for a period not exceeding sixty (60) days if the interests of the work require, provided that a written explanation of the postponement justification is given to the employee.
This postponement in acceptance must occur before the expiry of the 30-day notice period. The postponement period will be calculated from the date the explanation is provided to the employee.
Severance Pay
In Saudi Arabia, when a fixed-term employment agreement comes to an end, or when an employer terminates an indefinite-term agreement other than for cause, the employee is entitled to half a month’s wages for each of the first five years of employment and a full month’s wages for each year of employment thereafter, in both cases pro-rated for part of a year’s service.
An employee who resigns during the term of a contract receives no end-of-service award for the first two years of employment.
