employer have the right to terminate the employee’s contract?

employer have the right to terminate the employee’s contract?

Does the employer have the right to terminate the employee’s contract? Find out the latest updates to the work system 2025

Terminating an employment contract in Saudi Arabia is an issue that concerns both employees and employers. It is essential to understand the rights and duties that result from such termination. In some cases, the contract is terminated with the employee receiving compensation, while in other cases, an employee’s contract may be terminated without receiving compensation from the employer.

In this article, we discuss cases of termination of the labor relationship by the employer or employee, the employee’s rights in the event of non-renewal of the contract, the role of the labor lawyer in providing various legal consultations in the work environment, and others that preserve the rights of both the employee and the employer.

You can also contact the best labor lawyer in the Kingdom of Saudi Arabia from the office of lawyer Abdul Majeed Al Rashid Law Firm and Legal Consultations.

What is an employment contract?

To work under the management or supervision of the employer for a fee.

Does the employer have the right to terminate the employee’s contract?

Yes, the employer has the right to terminate the employee’s service, but this must be for legally legitimate reasons in accordance with the labor system.

Legitimate reasons for terminating an employee’s employment contract

Legitimate reasons for terminating an employee’s employment contract

Cases in which an employee may be dismissed for legitimate reasons are divided into two parts, which are as follows:

1- Termination of the labor relationship by the employer, with the worker being entitled to all his rights, such as end-of-service benefits, compensation for vacations, and any other rights.
According to the amendments to Article 74 of the Labor Law, an employee may be terminated from service in the following cases:

Termination of the employee’s contract by mutual consent, with the written agreement of both parties.
A fixed-term contract expires after its expiration date and has not been renewed for a similar period or its two parties continue to implement it, so it expires on its specified expiration date.
If one of the parties wants to terminate the employment contract in indefinite-term contracts, he must send a letter requesting termination 30 days in advance, providing a legitimate reason for termination (the previously specified period was 60 days, but it has become 30 days according to the new amendments to the labor system)
He must have reached retirement age in accordance with the provisions of social insurance.
There must be a force majeure force that forces the employer to terminate the contract.
Close the facility permanently.
Termination of the activity in which the worker works unless otherwise agreed.
Any other case stipulated by another system in which the termination of a labor relationship is considered a termination for a legitimate reason, or it is a case of termination of a labor relationship.
Resignation.
Issuance of a final decision or ruling by the competent court to terminate the worker’s contract in any of the bankruptcy procedures opened in accordance with the bankruptcy system.

2- Termination of the labor relationship by the employer for a legitimate reason without the worker being entitled to any reward or compensation for this termination, provided that the worker is given the opportunity to state the reasons for his opposition to terminating the contract.

According to the amendments to Article 80 of the Labor Law, an employee may be terminated from service in the following cases:

An employee verbally or physically assaults an employer or any of his superiors, whether in the workplace or elsewhere.
If the worker does not fulfill his essential obligations arising from the employment contract or does not obey orders or observe the stipulated instructions despite being warned in writing to do so, these instructions are related to the safety of work and workers.
If the worker commits bad behavior that is contrary to public morals, such as harassment and others, or commits an dishonorable act, such as embezzlement of company funds.

If the worker intentionally commits any action or negligence intended to harm the employer, provided that the competent authorities are notified within 24 hours from the time of learning of the incident.

If it is proven that the worker has resorted to forgery of documents in order to be accepted into the job.

If this worker is under the probationary period, his contract may be terminated without any obligation on the facility towards him.
The worker is absent without a legitimate reason for more than 30 separate days during one year or more than 15 consecutive days during one year, provided that he is warned in writing after his absence for 20 days in the first case, and after his absence for 10 days in the second case.

If it is proven that the worker exploited his position to achieve personal interests and gains.

If the worker discloses industrial and commercial secrets in the place where he works.

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Legitimate reasons for termination of the employment contract by the employee

According to Article 81 of the Labor Law, the worker has the right to leave work without notice while retaining all his legal rights in any of the following cases:

If the employer fails to fulfill his essential obligations in the contract or regulatory provisions towards the worker.

If it is proven that the employer or his representative deceived the worker during the contracting phase regarding the terms or conditions of work.

If the employer requests the worker to perform tasks that are fundamentally inconsistent with the agreed-upon nature of the work without the worker’s consent, which is inconsistent with the provisions of Article 60 of the system.

If the worker or a member of his family is assaulted by the employer, a member of his family, or the responsible manager, whether the assault is violent or characterized by inappropriate behavior.

If the treatment of the employer or responsible manager is characterized by cruelty, injustice or insult towards the worker.

If the workplace poses a serious risk to the worker’s health or safety, and the employer is aware of this risk and has not taken the necessary measures to deal with it, such as working in factories, field projects, etc.

If the employer or his representative prompts the worker to decide to terminate the contract due to unfair treatment or violation of the terms of the contract, which makes the worker appear as if he was the one who decided to terminate the contract.

Does the employer have the right to terminate the employee’s contract?

Termination of employment contract for an unlawful reason
In some cases, the worker’s contract may be terminated by the employer or the employment contract may be terminated by the employee before the expiration of its term for an illegal reason, and this has several legal effects to protect the worker’s rights.

What do the consequences of terminating an employment contract for an illegal reason entail?

According to Article 77 of the Labor Law, unless the unified employment contract stipulates specific compensation in the event of its termination by one of the parties, the injured party is entitled to compensation as follows:

15 days’ wages for each year of the worker’s service if the contract is of indefinite duration.
Remaining period fee if the contract is of fixed term.
If compensation is specified in the employment contract in the event of termination by either party, the compensation must not be less than the worker’s wage for two months.

Termination of the employment contract during the trial period

According to Article 53 of the Labor Law, and in accordance with the new amendments to the 2025 Labor Law, if the worker is subject to a trial, this must be explicitly stipulated in the employment contract and its duration must be clearly defined, provided that the total duration does not exceed 180 days in all cases, and each party has the right to terminate the contract within this period.

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Employee dismissed due to absence

The employer has the right to terminate the employee’s contract without compensation or remuneration in the event of his absence from work without a legitimate reason.

According to Article 80 of the Labor Law, the employer has the right to dismiss a worker if he is absent without a legitimate reason for a period exceeding 30 separate days or 15 consecutive days during one year. However, it is required that the worker be warned in writing after his absence for a period of 20 days in the first case and 10 days in the second case before making the dismissal decision.

Does the employer have the right to cancel the employee’s contract due to illness?

The labor system in the Kingdom of Saudi Arabia regulates the absence of a worker due to illness in accordance with certain specific articles that guarantee the worker’s rights in this case:

According to Article 82 of the Labor Law, the employer is prohibited from terminating the worker’s service due to illness before the worker has exhausted the specified periods of sick leave stipulated in the law. The worker also has the right to request that his annual leave be combined with sick leave.

According to Article 117 of the Labor Law, a worker who proves his illness is entitled to paid sick leave for the first 30 days, then three-quarters of the wage for the next 60 days, and without pay for the next 30 days. These leaves, whether continuous or intermittent, are calculated during one year, starting from the date of the first sick leave.

What disciplinary penalties may an employer impose on an employee?

According to Article 66 of the Labor Law, the employer has the right to impose disciplinary penalties on the worker in accordance with the terms and conditions specified in the law. These penalties include the following:

Worker alarm.
Imposing a fine on the worker.
Deprivation of the bonus or postponement of it for a period not exceeding one year, if the bonus is decided by the employer.
Postponing the promotion for a period not exceeding one year if the promotion is scheduled by the employer.
Suspension from work with deprivation of wages.
Dismissal from work in cases specified in accordance with the system.

What are the employee’s rights if the contract is not renewed?

The employer must notify the employee of his intention not to renew the contract before its expiration by an agreed period of time, which is usually one or two months, as stipulated in the employment contract.

The employee is entitled to obtain a service certificate from the employer free of charge. The certificate includes the date the employee joined the job and the date his relationship with the job ended, ensuring that it does not contain any content that offends the employee or reduces his chances of obtaining future jobs.

The employee is entitled to obtain all certificates and documents related to him that the company may keep during the period of employment.

If an employee does not benefit from his vacation balance during his work period, he is entitled to financial compensation for those unused vacations.

The employee is entitled to receive an end-of-service gratuity in accordance with the provisions of the Labor Law contained in Article 84. Upon termination of the employment contract, the employer is obligated to pay the worker a gratuity for his period of service, calculated on the basis of half a month’s wages for each of the first five years, and one month’s wages for each of the following years. The latter wage is taken as the basis for calculating the gratuity, and the worker is entitled to a gratuity for the parts of the year in proportion to what he spent on work.

Upon termination of the worker’s service, the employer must pay his wages and liquidate his rights within a maximum of one week from the date of termination of the contractual relationship. However, if the worker is the one who terminated the contract, the employer must liquidate his rights in full within a period not exceeding two weeks. The employer has the right to settle any debt owed to him due to work from the amounts owed to the worker.

“Whether you are considering submitting your resignation or your employer has terminated your contract, make sure you understand your rights and duties well before taking any step. Review your contracts carefully and do not hesitate to consult a competent lawyer from the office of Lawyer Abdul Majeed Al Rashid to ensure that your legal rights are protected.”