Renewal, Resignation, and Termination of Employment Contracts in Saudi Arabia – A Complete Guide for Expats

If you are working in Saudi Arabia, understanding the rules surrounding employment contract renewal, resignation, and termination is essential. These regulations not only protect your rights as a worker but also help maintain a professional and legal relationship between employer and employee.

In this detailed guide, we will explore:

  • How employment contracts are renewed in Saudi Arabia

  • What the law says about resignation

  • The right way to terminate a contract

  • Legal consequences and best practices

📝 Types of Employment Contracts in Saudi Arabia

Before diving into renewals and resignations, it’s important to know the two main types of contracts under Saudi Labor Law:

  1. Fixed-Term Contract (Limited)
    Has a specific start and end date. Automatically ends unless renewed.

  2. Unlimited Contract (Indefinite)
    Open-ended and continues until either party decides to terminate it with proper notice.

🔄 Renewal of Employment Contract

✅ Automatic Renewal

In many cases, a fixed-term contract will automatically renew under the same conditions if:

  • Both parties agree to continue employment

  • The employee continues working after the contract expiry without formal renewal

  • The employer does not provide a written termination notice

After 3 automatic renewals, the fixed-term contract is considered unlimited under Saudi Labor Law.

❗Important Tip:

Always request a copy of the renewed contract and ensure it’s updated in your Absher and Qiwa accounts.

✍️ Resignation from a Job in Saudi Arabia

Resignation is the legal right of any employee. However, Saudi Labor Law outlines certain rules you must follow:

📌 Notice Period

  • 60 days if paid monthly

  • 30 days for other employees

The notice period must be served or compensated, unless:

  • The employer waives it

  • The resignation falls under Article 81 (when the employee can resign without notice due to mistreatment, abuse, etc.)

👉 Learn more: How to Resign Legally in Saudi Arabia

📝 How to Resign Properly

  • Submit a written resignation (email or printed letter)

  • Clearly mention the last working day

  • Keep proof of submission (signature or reply confirmation)

⚠️ Resigning Before Contract Expiry

  • For fixed-term contracts, early resignation can result in compensation to the employer.

  • For unlimited contracts, follow the notice period. Failing to do so may result in salary deductions or legal disputes.

🛑 Termination of Contract by Employer

Employers can terminate contracts, but only with valid legal reasons or by paying compensation.

✅ Valid Termination Includes:

  • Employee misconduct

  • Repeated absences

  • Poor performance with documentation

  • Business closure

❌ Invalid Termination:

  • Without notice or reason

  • Termination due to discrimination, race, or personal bias

Employers terminating a contract without valid reason must:

  • Provide notice or compensation equal to the notice period

  • Pay end-of-service benefits

  • Issue a final exit (if requested by the employee)

👉 Related: Common Reasons for Job Termination in KSA

📅 Ending a Contract at Expiry

When a fixed-term contract reaches its end:

  • It can end automatically

  • It can be renewed with new terms

  • No compensation is required unless the contract states otherwise

Employees should request a final settlement and receive:

  • End-of-service benefits

  • Unused leave salary

  • Experience certificate

🤝 Mutual Termination Agreement

Both the employer and employee can mutually agree to terminate the contract, provided:

  • It’s in writing

  • All dues are settled

  • No party is forced into agreement

This is the safest and cleanest way to end employment without legal trouble.

📲 Useful Platforms for Contract Updates

Make sure your employment status is always updated on:

  • Absher: For Iqama and job profession updates

  • Qiwa: For contract details and digital signatures

📚 Key Articles from Saudi Labor Law to Know

  • Article 74: Lists the legal reasons for contract termination

  • Article 77: Compensation for arbitrary termination

  • Article 80: Termination without benefits

  • Article 81: Employee rights to resign without notice

✅ Best Practices for Expats

  • Always read your contract carefully before signing

  • Keep copies of all employment-related documents

  • Never resign or terminate without written records

  • Use legal channels like the Labor Office in case of disputes

🧾 End of Service Benefits

Whether you resign or are terminated, you are entitled to end-of-service benefits unless terminated under Article 80.

👉 Read: Saudi Labor Law – End of Service Benefits Explained

🔗 Related Posts:

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