Compensation for unfair dismissal under the Saudi Labor Law (Article 77)
If your employer ends your contract without a valid reason, you have two separate rights: the full end-of-service award, and compensation on top set by Article 77. This guide explains how the compensation is worked out for each contract type, with figures.
What ending a contract without valid reason means
The valid reasons for an employer to end a contract are set in the law, chief among them the cases in Article 80, such as assault or continuous unexcused absence. A contract ended for none of these and none of the other accepted reasons is ended without valid reason.
In that case Article 85's share does not apply to you: your award is in full, and the compensation is added to it.
How much the compensation is
Unless the contract sets a different amount, Article 77 works it out like this:
- Open-ended contract: 15 days' wage for each year of service.
- Fixed-term contract: the wages for the rest of the contract.
- Either way, never less than two months' wage.
The compensation is on top of the end-of-service award, not instead of it.
Worked examples
All on the full wage, basic plus allowances:
- Open-ended, wage 6,000, 3 years: 15 days × 3 = 9,000, under two months' wage, so the compensation is 12,000; the award 9,000; together SAR 21,000.
- Open-ended, wage 10,000, 7 years: compensation 7 × 5,000 = 35,000; award 45,000; together SAR 80,000.
- Fixed-term, wage 10,000, 6 months left, 7 years' service: compensation 60,000; award 45,000; together SAR 105,000.
When there is no compensation
A dismissal for an Article 80 reason carries neither compensation nor an award, and so does an ending during probation. A fixed-term contract that runs out is not an ending without reason: you get the full award, without compensation.
How to claim
Start with a written request to the employer. If it is not settled, file a labour claim through the Ministry of Human Resources' amicable settlement services; if settlement fails, it goes to the labour court.
Keep your contract, payslips, the termination letter and any correspondence: they prove your service, your wage and the reason given.
A dismissal without valid reason earns the full award and compensation on top: 15 days a year on an open-ended contract, the rest of a fixed term, never under two months. Work out both together, then start on your CV for the next job.
Work out the compensation and the award together in the end of service calculator
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