Saudi Arabia Employment Guide

Navigating Employment Termination in Saudi Arabia

Terminating an employment relationship in Saudi Arabia involves specific legal considerations, particularly concerning visa sponsorship cancellation. Employers must ensure compliance with local labor laws to avoid penalties.

Permissible Grounds for Termination

Termination can occur through several compliant pathways:

• Employee resignation
• Mutual agreement between employer and employee
• Employer-initiated termination, justified by:
  • Probationary period performance
  • Objective business reasons (e.g., restructuring)
  • Disciplinary dismissal for misconduct
  • Persistent underperformance despite warnings
• Natural expiration of the employment contract

Notice Period Requirements

Saudi labor law mandates a minimum notice period of 60 days, though this may vary based on contract type or seniority. For instance, managerial roles often require longer notice to ensure smooth transitions.

Understanding End-of-Service Benefits

Employees are entitled to statutory severance pay equivalent to half a month's wages for each year of service. Companies like SailGlobal streamline this process by accruing benefits monthly at 4.167% of the employee's salary. Upon termination, accrued funds cover the legal obligation; any surplus is refunded, while shortfalls are invoiced, ensuring transparency.

Case Study: Implementing Best Practices

A multinational firm recently faced challenges with involuntary terminations in Riyadh. By adopting SailGlobal's accrual system, they automated compliance, reduced disputes, and improved employee trust through clear communication of benefit calculations.