Saudi Labor Law Termination of Contract and Resignation

The Saudi Labor Law termination of contract and resignation framework provides a comprehensive set of rules governing the relationship between employees and employers in the Kingdom of Saudi Arabia. Understanding these regulations is essential for both parties, as they clearly outline the rights and obligations regarding ending employment, whether through voluntary resignation or employer-initiated termination.

Under the Saudi Labor Law termination of contract and resignation, employees are guaranteed their financial and non-financial entitlements, including end-of-service benefits, accrued leave, and other compensations.

Saudi Labor Law Termination of Contract and Resignation

Reasons for Termination of Contract in Saudi Arabia

Occurs when the employer ends the employee’s contract without the employee’s consent, in accordance with the Saudi Labor Law. This includes cases such as

• Death of the employee.
• Suffering from an illness that completely incapacitates the employee from performing their work.
• Reaching the legal retirement age.
• A final and binding court ruling against the employee for a prescribed legal punishment.
• A final and binding court ruling against the employee for crimes such as bribery, forgery, embezzlement, or drug trafficking.

Read also: Saudi Labor Law Resignation Guide 2025 – Etqan Law Firm

Resignation

Occurs at the employee’s own initiative, where the employee submits a resignation request voluntarily and ends the contract with the employer’s approval. However, if the resignation is due to coercion, mistreatment by the employer, or one of the cases outlined in Article 81 of the Saudi Labor Law, it is considered unfair dismissal, and the employee is entitled to compensation for the unfair termination.

The Saudi Labor Law clearly regulates the resignation process. An employee has the right to submit a written resignation notice while adhering to the following notice periods:

• 30 days for fixed-term contracts.
• 60 days for unlimited-term contracts.

If the employee complies with these notice periods, the employer does not have the right to refuse the resignation

Saudi Labor Law Termination of Contract by Employee

1. The employer may terminate an employee’s service if there is a legitimate reason under the Saudi Labor Law.
2. The employee is entitled to all rights when termination occurs in cases such as contract expiration, mutual agreement, reaching retirement age, force majeure, closure of the establishment, or resignation.
3. Entitled rights include end-of-service benefits, accrued leave, and any other financial entitlements.
4. The employer may terminate the contract without any compensation if the employee commits a serious violation or causes harm to the establishment, after being given a chance to state objections.
5. Serious violations include assault, failure to fulfill duties, immoral conduct, forgery, unjustified absence, misuse of position, and disclosure of confidential information.
6. The employer may terminate the contract during the probation period without any obligation to pay rights.

Check out: A Comprehensive Guide: Saudi Labor Law Resignation Benefits

Qiwa Contract Termination by Employee

To terminate an employment contract via Qiwa, follow these steps:

1. Log in to your business account.
2. Go to the Services page and select Contract Management.
3. From the Termination Requests section or from the top of the page, click Terminate Contract to start the process.
4. Review the information in the summary, then click Start Service.
5. Select the employee whose contract you want to terminate, then click Next Step.
6. Choose the appropriate reason for termination, then click Go to Summary to complete the process.

What are The Saudi Labor Law Resignation Benefits?

When an employee resigns, they are entitled to all financial and non-financial benefits stipulated in the employment contract, as well as the rights provided under the Saudi Labor Law and its executive regulations, including:

• Remaining wages owed by the employer.
• Cash compensation for accrued but unused leave.
• All allowances and compensations due as a result of their work with the employer.
• End-of-service benefits based on the length of service:
  • One-third of the benefit for service between 2 and 5 years.
  • Two-thirds of the benefit for service between 5 and 10 years.
  • Full benefit for service exceeding 10 years, provided the employee has served at least 2 years.
• The right to receive a work certificate or experience certificate indicating the start and end dates of employment, job title, and salary received.
• Retrieval of all documents, tools, and equipment provided to the employee by the employer as part of the employment contract.

Learn about: Discover Saudi Labor Law End of Service Calculator – Etqan

Can Employer Reject Resignation in Saudi Arabia?

• Fixed-term contracts: If an employee wants to terminate the contract before its end without a valid reason, they may be required to pay compensation or complete the contract period. However, if the contract expires and the employee submits a proper resignation, the employer cannot refuse it.
• Unlimited-term contracts: The employee only needs to notify the employer 60 days in advance, after which they have the right to leave work even if the employer rejects the resignation. Therefore, a resignation cannot be refused as long as the employee follows the legal procedures.

Conclusion:

Saudi Labor Law termination of contract and resignation provides a clear legal framework for both employers and employees to manage the end of employment contracts. By following the rules of the Saudi Labor Law termination of contract and resignation, organizations can maintain a fair and stable work environment. For guidance, legal advice, consulting Etqan Law Firm can help ensure that all procedures are handled correctly and in accordance with the law.

The Etqan Al Mutamayza Law Firm is ready to provide the essential support you need. You can reach their team at the following mobile numbers: +966550600204, +966551020060.

Additionally, feel free to visit our branches located at:

• Jeddah: Al-Aziziyah District, Mohammed bin Abdulaziz Street (Tahlia)
• Riyadh: King Abdulaziz Street, across from the Kingdom Tower
• Dammam: Al-Ashri’a Street, Al-Badeea, Dammam 32415.

FAQ