Navigating Termination and Notice Periods in Saudi Arabia: An HR Professional's Guide

Understanding employment termination regulations is crucial for international HR professionals managing teams in Saudi Arabia. The Kingdom's labor laws establish clear frameworks for contract termination, notice periods, and employee benefits that balance employer flexibility with worker protections. This comprehensive guide examines key considerations for lawful workforce management in Saudi Arabia.

Legal Grounds for Employment Termination

Saudi labor law permits contract termination under specific circumstances including employee misconduct, force majeure events, constructive dismissal, business liquidation, retirement, or mutual written agreement. The legislation aims to prevent arbitrary dismissals while ensuring procedural fairness. Notably, collective termination of Saudi nationals is generally prohibited unless the business permanently closes or declares bankruptcy. Companies with 50+ employees must provide 60-day advance notice to labor authorities before implementing workforce reductions.

Notice Period Requirements

Notice periods vary depending on contract type and employment status:

Probationary Period: Either party may terminate without notice or compensation during probation
Indefinite Contracts: Minimum 60-day notice period applies, unless contract specifies longer duration
Non-Monthly Paid Employees: 30-day minimum notice requirement
Fixed-Term Contracts: 30-day notice required for non-renewal decisions

Contractual provisions supersede statutory minimums when they establish longer notice periods.

End-of-Service Benefits Calculation

Employees receive End-of-Service Gratuity (EOSG) rather than traditional severance pay:

Termination Circumstance	Benefit Calculation
Employer-Initiated Termination	Half-month salary per year for first 5 years; full month salary per year thereafter
Employee Resignation (2-5 years service)	One-third of total EOSG entitlement
Employee Resignation (5-10 years service)	Two-thirds of total EOSG entitlement
Employee Resignation (10+ years service)	Full EOSG entitlement

Special provisions apply for military conscription, force majeure, and female employees resigning within six months of marriage or three months of childbirth.

Termination Process Compliance

Proper termination procedures involve multiple steps:

Provide written notice specifying termination reason and effective date
Engage in good-faith negotiations during notice period
Complete offboarding procedures including asset return
Calculate and disburse EOSG payments

Employers must provide employment certificates detailing service duration and nature of work. Non-compliance may result in legal penalties and unfair dismissal claims.

Saudi Unemployment Insurance (SANED)

The SANED program provides temporary financial support to eligible Saudi nationals meeting specific criteria:

Involuntary termination without personal fault
Registered with Ministry of Labor
Actively seeking employment
Aged under 60 years
No private business income

Benefit structure includes 60% of average contributory salary for first three months (capped at SAR 9,000), reducing to 50% thereafter (capped at SAR 7,500). Maximum benefit duration is 12 months within any 24-month period.

International companies like SailGlobal can assist with navigating Saudi Arabia's complex employment regulations, ensuring termination processes remain fully compliant with local requirements while minimizing legal risks.

Saudi Arabia Employment Termination Guide: Notice Periods & Labor Laws