In Saudi Arabia, the notice period requirements for terminating employment contracts are governed by the Saudi Arabian Labor Law (Royal Decree No. M/39).

Notice Period Length

The length of the notice period is contingent on the type of employment contract and salary frequency:

• For indefinite contracts, the notice period is 60 days for both employers and employees as per Article 75 of the Saudi Labor Law.
• Fixed-term contracts typically don't require notice from the employer as the termination date is predetermined within the contract itself. However, employees with fixed-term contracts are required to provide 30 days' notice if they wish to terminate before the contract end date according to Article 75 of the Saudi Labor Law.
• It's important to note that the employment contract can specify a longer notice period, which will supersede the legal minimums mentioned above.

Exceptions to Notice Period Requirements

There are certain situations where the notice period may not apply:

• If both parties agree to terminate the contract by a specific date, the notice period can be waived.
• If an employee commits gross misconduct as defined by the labor law, the employer can terminate the contract immediately without notice as per Article 80 of the Saudi Labor Law.
• During the probationary period (typically 3 months), either party can terminate the contract without notice according to Article 77 of the Saudi Labor Law.

Compensation in Lieu of Notice

Employers have the option to offer the employee compensation equivalent to their wages for the notice period instead of requiring them to work during that time.

Consequences of Failing to Provide Notice

If a party fails to provide the legally mandated notice period without a valid reason, they are liable to pay the other party compensation equal to their wages for the notice period that wasn't served as per Article 75 of the Saudi Labor Law.

In Saudi Arabia, labor laws mandate severance pay, also known as End-of-Service Award (EOS), to employees under specific conditions. The Saudi Labor Law (Royal Decree No. M/39) provides the framework for these entitlements.

Eligibility for Severance Pay

Employees are entitled to EOS if they have completed at least two continuous years of service with the employer and if the termination is initiated by the employer for reasons other than the employee's resignation or gross misconduct.

Severance Pay Calculation

The EOS calculation depends on the employee's length of service. For 2-5 years of service, it's half a month's salary for each year of service. For 5-10 years of service, it's one month's salary for each year of service. For over 10 years of service, it's one month's salary for each year of service, plus an additional half-month's salary for each year beyond ten. The EOS is calculated based on the employee's last basic salary.

Exceptions to Severance Pay Entitlements

There are situations where an employee may not be entitled to the full EOS or any at all. These include resignation, termination for cause as defined in Article 80 of the Saudi Labor Law, and employees on fixed-term contracts who may have different severance entitlements stipulated in their contract.

The termination of employment in Saudi Arabia is regulated by the Saudi Arabian Labor Law (Royal Decree No. M/39). It's crucial to understand the legal process to ensure compliance and avoid potential disputes.

Termination with Cause

Employers can terminate an employee with cause for reasons outlined in Article 80 of the Saudi Labor Law. These include reasons like gross misconduct (e.g., fraud, theft, violence), repeated disciplinary violations, failure to fulfill contractual obligations, and chronic absenteeism or lateness. No notice is strictly required for termination due to cause. However, it's advisable for employers to document and communicate the reasons for termination to the employee in writing.

Termination Without Cause

For open-ended contracts, employers are required to provide a 60 days' notice if they wish to terminate the contract without cause (Article 74 of the Saudi Labor Law).

Fixed-Term Contracts

Employers can terminate a fixed-term contract early, but must provide compensation to the employee unless there's a valid reason for termination due to cause. Fixed-term contracts expire on the end date. If they are renewed, they're treated as indefinite contracts.

Employee Rights

Employees have the right to challenge unlawful terminations through the labor dispute resolution system in Saudi Arabia.

Best Practices for Employers

Employers should keep thorough documentation of any performance issues, disciplinary actions, and the reasons for termination. It's also advisable to consult with a legal expert specializing in Saudi labor law to ensure compliance and minimize risks. Lastly, employers should communicate clearly to the employee about the reasons for termination.