Saudi Labor Law for Expats: Resignation, Termination, and Your Rights

Disclaimer: I am an expat living in Saudi Arabia, not a lawyer. The information below is based on my understanding of the Saudi Labor Law and personal experience. For specific legal disputes, always consult a certified legal advisor or the Ministry of Human Resources.

There is one moment every expat dreads: Sitting in a meeting room and hearing the words, "We are terminating your contract."

Or perhaps the opposite: You found a better job, but your current boss refuses to let you go, claiming you have to pay a penalty.

The Saudi Labor Law is actually very protective of employees, but 90% of expats don't know their rights. We assume the "Kafeel" (Sponsor) holds all the power. In 2025, that is no longer true.

Whether you are planning to resign, fearing termination, or just want to know how much "End of Service" money you are owed, this guide covers every single Article you need to know.

Chapter 1: The "Golden Rule" of Contracts (Fixed vs. Indefinite)

Before we talk about quitting, you need to know what kind of contract you actually have. This changes everything regarding your payout.

1. The Non-Saudi Rule

Here is the most important thing to know: Almost all expat contracts are "Fixed Term." Even if your paper contract doesn't have an end date, the law says that for non-Saudis, the contract duration is tied to your Iqama (Work Permit).

Example: If your Iqama is valid for 1 year, your contract is effectively valid for 1 year.

2. The Renewal Trap

Most contracts have an "Auto-Renewal" clause.

The Clause: "This contract renews automatically unless one party notifies the other X days in advance."
The Danger: If you miss that notification window (usually 30 or 60 days before expiry), you are legally locked in for another year. If you try to resign after the renewal starts, you might have to pay a penalty (Compensation) to your employer.

Pro Tip: Set a reminder in your phone 90 days before your contract ends. This is your decision window.

Chapter 2: Resignation (How to Quit Legally)

So, you found a new job. Congratulations! Now, how do you leave without losing your bonus?

The Notice Period (2025 Rules)

In the past, notice periods were vague. Now, they are strict.

If you are on a Fixed Term Contract: You must normally wait until the contract ends to leave without penalty. However, most companies accept a resignation with a 30-day to 60-day notice (check your specific contract).
If you are on an Indefinite Contract (Rare for Expats): The law requires a 60-day notice period.

The "Ghosting" Rule (New Update)

A huge update in the Labor Law amendments involves "Resignation Acceptance." In the past, managers would just ignore resignation emails, leaving the expat in limbo.

The New Rule: If you submit a resignation and the employer does not respond, it is considered automatically accepted after a set period (usually 30 days, depending on contract specifics). They cannot "hold you hostage" anymore.

Can you withdraw a resignation?

Yes. Legally, you have 7 days to withdraw your resignation after submitting it, provided the employer hasn't already accepted it formally.

Chapter 3: Termination (Getting Fired)

This is the scary part. There are two ways an employer can fire you: The "Nice" way (Article 77) and the "Ugly" way (Article 80).

1. Article 77: Unjustified Termination (The "Nice" Way)

If the company is downsizing, or they just don't like you, they can use Article 77. This is termination without a valid legal reason.

The Good News: They have to pay you compensation.
The Compensation Formula:
- Fixed Term Contract: They must pay you the salary for the remaining months of your contract.
- Indefinite Contract: They must pay you 15 days of wages for every year you worked.
- Minimum: The compensation cannot be less than 2 months' salary.

2. Article 80: Termination for Cause (The "Ugly" Way)

This is the nuclear option. If an employer invokes Article 80, they can fire you immediately, with zero notice, and zero End of Service Benefits. They can only do this for specific, serious crimes:

Assaulting a manager or colleague.
Forging documents (fake degrees).
Being absent without reason for 30 days in a year (or 15 consecutive days).
Disclosing commercial secrets.
Being intoxicated at work.

Warning: Some bad employers try to use Article 80 to avoid paying benefits. If they fire you under Article 80 and you didn't do these things, go to the Labor Court immediately. You will win.

Chapter 4: The "Escape Hatch" (Article 81)

Did you know you can resign immediately (no notice period) and still get Full End of Service Benefits? This is called Article 81. It is the employee's superpower.

You can use Article 81 if:

The Employer Lies: The job is totally different from what was agreed in the contract.
Fraud: The employer cheated you during hiring.
Safety: The workplace is dangerous, and they refuse to fix it.
Abuse: The employer or manager insults, beats, or harasses you.
No Pay: They haven't paid your salary for 3 consecutive months.

If you leave under Article 81, the law treats it as if they fired you, meaning you get maximum payout.

Chapter 5: The Money (End of Service Benefits Calculation)

This is what you have been working for. The "End of Service Benefit" (ESB) is your severance package. Note: This is calculated on your Gross Salary (Basic + Housing + Transport).

Scenario A: They Terminate You (or Contract Expires)

If the company ends the contract, you get the Full Amount.

Formula:
- First 5 Years: Half (1/2) a month's salary for each year.
- Years 6+: One (1) full month's salary for each year.

Scenario B: You Resign (The Sliding Scale)

If you choose to leave before the contract finishes (resignation), you don't get the full amount.

Less than 2 years service: Zero. You get nothing.
2 to 5 years service: You get 1/3 of the total award.
5 to 10 years service: You get 2/3 of the total award.
10+ years service: You get the Full Amount.

Example Calculation

Salary: 10,000 SAR
Worked: 4 Years
You Resign:
- Total Award = (10,000 ÷ 2) x 4 years = 20,000 SAR.
- Because you resigned (2-5 years), you get 1/3.
- Payout: 6,666 SAR.
They Fire You:
- Payout: 20,000 SAR.

Chapter 6: The Probation Period (The "Wild West")

When you start a new job, the first 90 days are usually the Probation Period (can be extended to 180 days if written).

Termination: During this time, either party can terminate the contract instantly.
Notice: No notice required.
Compensation: No compensation required.
Ticket: If you quit, you buy your own ticket home. If they fire you, they usually pay.

Expats Beware: Never sign a lease for an expensive apartment until your probation period is over.

Chapter 7: Common Questions (FAQ)

Q: My employer refuses to give me a Final Exit visa. What can I do? A: Under the new Labor Reform Initiative (LRI), if your contract has ended, you can issue your own Final Exit visa via the Absher or Qiwa platform after 60 days. You do not need their permission anymore.

Q: Can they ban me from returning to Saudi Arabia? A: Only if you leave illegally (Huroub) or break a contract. If you finish your contract and leave respectfully, there is no "ban." You can come back on a new visa the next day.

Q: Do I get paid for unused vacation days? A: Yes! This is a strict law. If you leave and you have 15 days of unused vacation, they must pay you for those 15 days in your final settlement.

Q: My contract says "Total Salary 8,000" but my Basic is only "3,000". How is ESB calculated? A: Legally, ESB is calculated on the Gross Salary (Basic + Allowances), NOT just the basic. However, some bad companies try to use the Basic only. Fight this. The law says "Last Wage," which implies the full package. (Note: Performance bonuses/commissions are usually excluded).

Final Thoughts

The Saudi Labor Law is there to protect you, but it only works if you read your contract.

My advice:

Never sign a resignation letter unless you are 100% sure.
Always keep a copy of your contract (download it from the Qiwa platform—that is the only official version).
If you are in a dispute, call the Ministry of Human Resources at 19911. They speak English, Hindi, Urdu, and Tagalog, and they are incredibly helpful.

Know your rights, work hard, but don't let anyone take what you have earned.