Unfair Dismissal

What unfair dismissal is

Unfair dismissal (الفصل التعسفي) is the ending of a worker’s contract by the employer without a legitimate reason that the Saudi Labor Law (نظام العمل) permits, or without meeting the procedure that the Labor Law requires before the contract is ended. The Arabic term can also be rendered in English as arbitrary dismissal.

Not every dismissal is unfair dismissal. Article 80 of the Labor Law sets out the cases in which the employer may rescind the contract without an award, notice or compensation, and Article 75 of the Labor Law requires that ending a contract of indefinite duration rest on a legitimate reason. A termination for a reason that is not legitimate gives rise to compensation under Article 77 of the Labor Law, which is described further down.

Unfair dismissal and the cases in Article 80 of the Labor Law

Article 80 of the Labor Law is written as a prohibition with exceptions. The employer may not rescind the contract without an award, notice or compensation except in nine cases:

1. The worker assaults the employer, the responsible manager, a superior or a subordinate, during the work or because of it.
2. The worker fails to perform the essential obligations arising from the contract, fails to obey lawful orders, or deliberately disregards the workplace safety instructions that the employer has posted in a visible place, despite a written warning.
3. The worker’s bad conduct is proven, or the worker commits an act offending honour or honesty.
4. The worker commits a deliberate act or omission intended to cause the employer material loss, provided the employer notifies the competent authorities of the incident within 24 hours of learning of it.
5. Forgery by the worker to obtain the job is proven.
6. The worker is appointed on probation.
7. The worker is absent without a legitimate reason for more than 30 days in one contract year, or for more than 15 consecutive days, provided the dismissal is preceded by a written warning from the employer after 20 days of absence in the first case and after 10 days in the second.
8. It is proven that the worker exploited their position unlawfully to obtain personal gain.
9. Disclosure by the worker of industrial or commercial secrets relating to the work is proven.

Alongside these cases, the same article sets a procedural condition: the employer must give the worker the opportunity to state their objections to the rescission. That condition is part of Article 80 of the Labor Law, not a commentary on it. The article permits rescission without an award, notice or compensation only where both requirements are satisfied: one of the cases is present, and the condition has been met. An employer who dismisses a worker without giving them the opportunity to state their objections has not met what Article 80 of the Labor Law requires, even where one of the nine cases is present.

The full text of Article 80 of the Labor Law, with its conditions, is set out in our guide to dismissal without an award and leaving work without notice.

Compensation for unfair dismissal under Article 77 of the Labor Law

Where a contract is ended for a reason that is not legitimate, Article 77 of the Labor Law sets the compensation, unless the contract fixes a different sum:

• A contract of indefinite duration. The compensation is the wage for 15 days for each year of the worker’s service.
• A fixed term contract. What is due is the wage for the remaining period of the contract.
• Both kinds of contract. In either case the compensation may not be less than two months’ wage.

Article 77 of the Labor Law refers to the wage in each of these measures without qualification, and an unqualified reference to the wage in the Labor Law is taken as the actual wage (الأجر الفعلي) as the Labor Law defines it.

The compensation is due to the injured party. Article 77 of the Labor Law is not confined to the worker, because a contract can be ended unfairly by either of its parties. The measures themselves are covered in the entry on unlawful termination compensation.

The time limit for an unfair dismissal claim: twelve months

Article 234 of the Labor Law provides that no claim relating to a right provided for in the Labor Law, or arising from the employment contract, is admissible before the labour courts after twelve months have passed from the date on which the employment relationship ended. Compensation under Article 77 of the Labor Law is a right provided for in the Labor Law.

Three points in Article 234 of the Labor Law can be stated wrongly:

• The starting point. The twelve months run from the end of the employment relationship, not from the date on which the right arose.
• The exceptions. The period is not absolute. Article 234 of the Labor Law allows two exceptions: the claimant presents an excuse that the court accepts, or the defendant acknowledges the right.
• The nature of the rule. It governs whether a claim is admissible, not whether the right itself exists.

The same article adds that labour cases are heard as a matter of urgency.

Where an unfair dismissal claim is heard

Jurisdiction over an unfair dismissal claim now lies with the labour courts (المحاكم العمالية), and a claim reaches them after the amicable settlement stage (التسوية الودية) at the Ministry of Human Resources and Social Development. According to the Ministry’s service page, where no settlement is reached at that stage, the matter is referred to the labour court. The two stages are set out in our guide to amicable settlement and the labour court, and the courts are described under labour courts.

The labour dispute settlement bodies (هيئات تسوية الخلافات العمالية) are a different matter. Articles 210 to 228 of the Labor Law, which provided for them, were repealed by Royal Decree M/1 dated 22/1/1435H and are marked as repealed in the consolidated text in force. A source that still names those bodies as the forum for a dismissal claim is relying on provisions that have been repealed.

The provisions relied on are those of the Saudi Labor Law as published by the Ministry of Human Resources and Social Development: Article 75 (a legitimate reason for ending a contract of indefinite duration), Article 77 (the measures of compensation and the party entitled to them), Article 80 (rescission without an award, notice or compensation, and the worker’s opportunity to state objections), Articles 210 to 228 (the repealed dispute settlement bodies) and Article 234 (the twelve month limit on admissibility and the urgency of labour cases). Royal Decree M/44 of 1446H amended Article 75 of the Labor Law. That decree did not amend Articles 77, 80 or 234 of the Labor Law. Articles 77 and 80 of the Labor Law were last amended by Royal Decree M/46 dated 5/6/1436H, and Article 234 of the Labor Law was added by Royal Decree M/14 dated 22/2/1440H.

To assess a particular case, consult a specialist or the amicable settlement service of the Ministry of Human Resources and Social Development.

This is an explanation of the concept and of the statutory provisions cited, not legal advice.