Definition of a disciplinary fine
A disciplinary fine (الغرامة التأديبية) is one of the penalties the Saudi Labor Law (نظام العمل) allows an employer to impose on a worker who breaches their obligations, and it takes effect as an amount deducted from the worker’s wage.
It is the second penalty in the closed list in Article 66 of the Labor Law. That article confines disciplinary penalties to six: a warning; a fine; withholding or deferring a raise, for a period of no more than one year; deferring a promotion, for a period of no more than one year; suspension from work without pay; and dismissal in the cases the Labor Law provides. How the closed list bears on a measure it does not name is examined under demotion.
Two questions are specific to the disciplinary fine and are not answered by the list alone: which wage its ceilings are measured on, and how it adds up with other deductions from pay.
Disciplinary fine ceilings in Article 70 of the Labor Law
Article 70 of the Labor Law contains five rules. Two of them are ceilings on the fine, and they operate together:
- The ceiling for a single violation. The fine for one violation may not exceed five days’ wage.
- The monthly ceiling on deductions. No more than five days’ wage in one month may be deducted from the worker’s wage to settle fines.
A third rule in the same article is not a money ceiling: no more than one penalty may be imposed for a single violation. It reaches every penalty in Article 66 of the Labor Law, so a fine cannot be added to a suspension or to any other penalty for the same violation.
A fourth rule concerns conduct rather than amounts. No disciplinary penalty may be imposed for something the worker did outside the workplace, unless it is connected with the work, with the employer or with the responsible manager. A fine for unconnected conduct outside work is therefore barred altogether, not merely limited in size.
The fifth rule contains a number that is not a wage ceiling. Suspension from work without pay may not exceed five days in a month. The figure limits the duration of a different penalty in Article 66 of the Labor Law and sets no ceiling on the fine. How that limit works is set out under suspension. Counting “five days” three times and treating the result as one rule confuses a limit on money with a limit on time.
Which wage the disciplinary fine ceilings are measured on
Article 70 of the Labor Law speaks of five days’ wage in the first ceiling and of five days’ wage in one month in the second, and it qualifies the wage in neither place. Article 2 of the Labor Law states the rule of interpretation expressly: the wage, where unqualified, means the actual wage (الأجر الفعلي).
Both ceilings are therefore measured on the actual wage, not on the basic wage (الأجر الأساسي). This is not an inferred rule. It applies a rule of interpretation that Article 2 of the Labor Law states in terms. In a pay structure where the two bases diverge, measuring the ceilings on the basic wage produces narrower ceilings than the ones the Labor Law sets.
The ceilings are stated in days of wage, not in riyals. In the sources we reviewed, we found no general rule in the Labor Law or in its Implementing Regulation (اللائحة التنفيذية) fixing the divisor used to convert a monthly wage into a day’s wage, so a riyal figure for one day of the ceiling would rest on a choice the text does not make. The divisor question is examined under pro rata salary.
A worked example of the disciplinary fine ceilings, in days
Take an employee who commits two separate violations in the same month, and suppose the employer, acting within its work regulation, sets a fine of three days’ actual wage for each of them.
- Each fine is within the ceiling for a single violation, because three days are fewer than five.
- Together the two fines come to six days’ actual wage, while the monthly ceiling allows no more than five days’ actual wage to be deducted for fines in that month.
The monthly ceiling limits what is deducted in the month, not whether each fine may be imposed. Article 70 of the Labor Law does not state what becomes of the balance above that limit, which in this example is one day’s actual wage. In the sources we reviewed, we found nothing that settles whether that balance is deducted in a later month or lapses, and we draw no conclusion about it.
A single fine of six days’ actual wage for one violation is a different case. It would exceed the ceiling for a single violation whatever the employee’s other fines in that month.
The disciplinary fine and a deduction for damage: two ceilings that stack
The Labor Law contains two similar figures for two different routes, and they can be merged into one rule by mistake:
- Article 70 of the Labor Law caps the fine as a disciplinary penalty for a violation.
- Article 91 of the Labor Law caps what may be deducted to repair or restore what the worker has lost, damaged or destroyed: no more than five days’ wage in each month, for that purpose alone. The deduction requires three conditions: the loss, damage or destruction concerns machines or products owned by the employer or in its custody; it arose from the worker’s fault or from a breach of the employer’s instructions; and it did not result from a third party’s fault or from force majeure. Article 91 of the Labor Law also carries a different grievance window, fifteen working days for each party, after which the right lapses.
These are two different grounds with two independent ceilings, and both sit beneath a higher ceiling in Article 93 of the Labor Law. The five days in Article 91 of the Labor Law are unqualified as well, so that ceiling, like the fine ceilings, is measured on the actual wage.
Where the disciplinary fine sits under the overall ceiling on deductions
Article 92 of the Labor Law bars deducting any amount from a worker’s wages against private claims without the worker’s written consent, except in the cases it lists. Among those cases are the fines imposed on the worker for violations they commit. The deduction of a disciplinary fine therefore does not depend on the worker’s written consent.
Article 93 of the Labor Law then sets a ceiling over every deduction, and that ceiling has three limbs, not one:
- The amounts deducted may not exceed half of the wage due to the worker.
- That applies unless the labour court (المحكمة العمالية) is satisfied that a larger deduction is possible.
- It also applies unless the court is satisfied that the worker needs more than half of their wage, and in that last case the worker is given no more than three quarters of their wage, whatever the circumstances.
Shortening Article 93 of the Labor Law to “deductions may not exceed 50%” states one limb out of three. The wage due in that article is unqualified too, so the half is measured on the actual wage.
The procedure before a disciplinary fine is imposed
Article 71 of the Labor Law bars imposing a disciplinary penalty until the employer has notified the worker in writing of what is alleged against them, questioned them and investigated their defence, with all of this recorded in a minute placed in the worker’s file. What the article states is a duty. It does not state the consequence of breaching that duty.
The same article allows one exception, and it reaches the fine only in part. The questioning may be oral in minor violations whose penalty goes no further than a warning or a fine deducting no more than one day’s wage, provided this is recorded in the minute. That one day is measured on the actual wage, for the same reason as the ceilings in Article 70 of the Labor Law. A fine above one day’s wage requires the full written procedure. How the exception works for a warning is examined under verbal warning, and the route as a whole under procedural justice.
After a disciplinary fine is imposed: Article 72 of the Labor Law
Article 72 of the Labor Law requires the worker to be notified in writing of the decision imposing the penalty. If they refuse to take delivery, or are absent, the notice is sent by registered letter to the address shown in their file. Three periods follow, and each belongs to one party and starts from one event:
- The worker’s grievance. Thirty days, excluding official holidays, from notification of the decision, to file a written grievance with the competent body at the employer.
- The employer’s reply. Fifteen days from the submission of the grievance, to decide it in writing.
- The worker’s objection. Thirty days, excluding official holidays, to object before the labour courts (المحاكم العمالية), from the rejection of the grievance or the expiry of the period set for deciding it, whichever is earlier.
The grievance period against a disciplinary penalty is not the grievance period in Article 91 of the Labor Law, and carrying one over to the other can cost a right.
A disciplinary fine that neither the Labor Law nor the work regulation provides for
Article 67 of the Labor Law bars the employer from imposing any penalty not provided for in the Labor Law or in the work regulation (لائحة تنظيم العمل), and it states a prohibition, not a nullity. Nullity comes from Article 8 of the Labor Law, which voids any term that conflicts with the Labor Law, and also voids any release of a right the Labor Law gives the worker, made while the contract is in force, unless it is more favourable to the worker.
So a statement that a fine agreed outside those two sources is void even with the worker’s consent rests on Article 8 of the Labor Law, not on Article 67 of the Labor Law. The conclusion is the same, but the provision it rests on is different.
Each ceiling set out above is statutory, and follows from the text of its article. The establishment’s work regulation is where the violations and the fines that correspond to them are set out, within those ceilings. How that regulation is prepared is covered in our guide to the work organisation regulation.
The provisions relied on are those of the Saudi Labor Law as published by the Ministry of Human Resources and Social Development: Article 2 (the wage, where unqualified, is the actual wage), Article 8 (terms and releases that conflict with the Labor Law), Article 66 (the closed list of penalties), Article 67 (no penalty outside the Labor Law or the work regulation), Article 70 (the five rules on penalties, including the two fine ceilings), Article 71 (the procedure before a penalty, and the oral questioning exception), Article 72 (notification, the grievance and the objection), Article 91 (deduction for damage), Article 92 (deductions without written consent) and Article 93 (the overall ceiling on deductions). Royal Decree M/44 amended a number of provisions of the Labor Law, among them Article 72 of the Labor Law, and the route set out above is that article as amended. That decree did not amend Articles 66, 67, 70 or 71 of the Labor Law or Articles 91, 92 and 93 of the Labor Law, and while it added definitions to Article 2 of the Labor Law, it left the definitions of the basic wage and the actual wage unchanged.
This is an explanation of the concept and of the statutory provisions cited, not legal advice.
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