SAUDI ARABIA Law and Practice Contributed by: Dana Halwani and Leanne Farsi, Derayah LLPC
Article 80 Article 80 allows an employer to terminate a contract for certain specified causes, most of which involve misconduct. Article 80 (2) permits termination “if the worker fails to perform his essential obligations arising from the employ - ment contract, or to obey legitimate orders, or if, in spite of written warnings, he deliberately fails to observe the instructions related to the safety of work and workers as may be posted by the employer in a conspicuous place”. This is a catch-all provision and is applicable to any breach of the essence of the contract of employment, but the breach must be mate - rial. Ordinary, trivial errors are punishable only by disciplinary measures. Any dismissal under Article 80 requires that the employee be given a chance to justify their conduct. For this, a meeting must be called, at which at least two management representatives must be present, and which must be minuted. If the employee fails to respond within a reasonable time, it may be assumed that they have no valid objection to the termination, or that they are not interested in prolonging the employment relationship. Dis - missal under Article 80 can only be invoked in isolated instances, and not, for example, to reduce a company’s workforce. Article 75 Article 75 of the Labour Regulation permits the termination of an indefinite-term contract, where the salary is paid monthly, for lawful cause, upon 60 days’ notice by the employer, or 30 days’ notice by the employee, although the term “lawful cause” is not defined. In principle, it can include any reason, such as: • the Labour Regulation and other applicable laws; • contractual obligations;
Resolution No 142906 of 13 Sha’ban 1441 Hejra corresponding to 6 April 2020, inserting Article 41 into the Implementing Rules of the Labour Regulation, which is applicable to situations where the government has taken measures in relation to a situation that necessitates a reduc - tion in working hours or has implemented pre - cautionary measures to prevent the worsening of a situation. It allows employers to take certain measures to lessen the adverse impact of the pandemic within six months of the beginning of government-imposed restrictions taking effect. Such options include reducing an employee’s salary in proportion to a decrease in their work - ing hours. On 13 January 2021, the HRSD announced that Article 41 would no longer be effective in relation to the COVID-19 pandemic. 4.4 Termination of Employment Contracts Under Saudi Arabian law, staff can be dismissed in the following circumstances: • non-renewal of a fixed-term contract; • for a cause listed under Article 80 of the Labour Regulation; and • termination of an indefinite-term contract under Article 75 of the Labour Regulation. Fixed-Term Contract A fixed-term contract comes to an end when its term expires. Therefore, an employee can be dismissed by being given notice that the con - tract will not be renewed. In such circumstanc - es, no compensation is payable other than the statutory end-of-service award, and repatriation costs for non-Saudis.
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