Fired Early? Know Your Compensation

Fired Early? Know Your Compensation

Disclaimer: This is a legal article that provides information that does not replace consulting a competent lawyer to help you and for more accurate information.

If it is proven that the termination of your fixed-term contract before its expiration was for an illegal reason, and the contract does not include specific compensation for this case, your compensation will be calculated in accordance with Article Seventy-Seven of the Labor Law.

Article Seventy-Seven states:

Unless the contract includes specific compensation for its termination by one of the parties for an unlawful reason, the party harmed by the termination of the contract shall be entitled to compensation as follows:

1- Fifteen days’ wages for each year of the worker’s service, if the contract is of indefinite duration.

2- The fee for the remaining period of the contract if the contract is of a fixed term.

3- The compensation referred to in paragraphs (1) and (2) of this article must not be less than the worker’s wage for two months.”

Calculation method

1. First check that the contract is fixed term at the time of termination.
2. Check for a clause in the contract that specifies compensation for wrongful termination:

• If there is a specific compensation clause, the clause applies.
• If there is none, the second paragraph of Article 77 shall apply.

1. Calculate the period from the actual termination date to the end date of the contract.
2. Calculate the wage for that period.
3. Compare the result with two months’ wages; The compensation is higher than that.

Equation:

Compensation = highest among:

• The wage for the remainder of the contract.
• Two months’ wages.

Example: six months left

• Actual monthly wage: 8,000 riyals.
• Termination date: six months before the end of the contract.
• There is no special compensation clause in the contract.
• Termination has been proven to be for an illegal reason.

arithmetic

8,000 6 = 48,000 riyals.

Compensation: 48,000 riyals.

Example: 1 month left

• Actual monthly wage: 7,000 riyals.
• Remaining period: one month.
• There is no special compensation requirement.
• Termination has been proven to be for an illegal reason.

Remaining period wage = 7,000 riyals.

But the minimum in Article 77 is two months’ wages:

7,000 2 = 14,000 riyals.

Compensation: 14,000 riyals.

If days remain plus months

Article 2 of the Labor Law defines wages as actual wages, and defines a month as thirty days unless the employment contract or labor regulations stipulate otherwise.

Therefore, if your monthly wage is 9,000 riyals and there are two months and ten days left of the contract:

• Two-month salary: 18,000 riyals.
• Daily wage: 30,000 = 300 riyals.
• Ten-day wage: 3,000 riyals.
• Remaining period fee: 21,000 riyals.

Compensation: 21,000 riyals, as it is higher than two months’ wages.

Conclusion: Dismissal before the end of the contract does not automatically make compensation due; it must be proven that the termination was for an unlawful reason. When this is achieved, and there is no compensation specified in the contract, the remaining period of the contract is required to be paid a minimum of two months’ wages.

For law and legal consultations..Contact the office of lawyer Abdul Majeed Al Rashid.

• References
• Article Seventy-Seven of the Labor Law
• Article Two of the Labor Law