Article 18 of the Saudi Labor Law
المادة 18 من نظام العمل · الفصل الأول: التعريفات
Employment contracts stay in force and service continues when an establishment changes ownership or legal form, and the previous and new owners are jointly liable for workers' earlier rights.
Official text (Arabic)
This article has not been amended since the law was issued.
إذا انتقلت ملكية المنشأة لمالك جديد، أو طرأ تغيير على شكلها النظامي بالدمج أو التجزئة أو غير ذلك، تبقى عقود العمل نافذة في الحالين، وتعد الخدمة مستمرة.
أما بالنسبة لحقوق العمال الناشئة عن المدة السابقة لهذا التغيير من أجور، أو مكافأة نهاية خدمة مفترضة الاستحقاق بتاريخ انتقال الملكية، أو غير ذلك من حقوق؛ فيكون الخلف والسلف مسؤولين عنها بالتضامن. ويجوز في حال انتقال المنشآت الفردية لأي سبب اتفاق السلف والخلف على انتقال جميع حقوق العمال السابقة إلى المالك الجديد بموافقة العامل الخطية. وللعامل في حال عدم موافقته طلب إنهاء عقده وتسلّم مستحقاته من السلف.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 18 explained in plain English
Article 18 of the Labor Law deals with the position of workers when the employer's identity changes without the work itself changing, in two cases: transfer of ownership of the establishment to a new owner (such as selling it), or a change in its legal form by merger, division or otherwise. The basic rule is that this change does not affect the worker: employment contracts remain in force as they are, and the worker's service is considered continuous without interruption, meaning it does not start being counted anew with the new owner.
- Rights prior to the change: wages, the end-of-service award presumed due at the date of the transfer of ownership, and any other rights that arose from the earlier period are the responsibility of the previous owner (the predecessor) and the new owner (the successor) jointly; the worker can claim them in full from either.
- A special exception for individual establishments: if an individual establishment is transferred for any reason, the predecessor and successor may agree that all the workers' prior rights pass to the new owner alone, but this agreement applies to the worker only with his written consent.
- The worker's right on refusal: if the worker does not agree to transfer his rights to the new owner, he may request termination of his contract and receive his dues from the previous owner.
This article complements what Article 19 provides, which makes the worker's dues first-degree privileged debts on all of the employer's property; while Article 19 protects the worker when the establishment goes bankrupt or is liquidated, Article 18 protects him when it passes to another owner. The records and files that Article 17 requires the employer to keep at the workplace also help prove the previous period of service and the rights resulting from it. Where there is a dispute about determining the party bound to pay or about the validity of the written consent, it is advisable to consult a labor lawyer.
Practical example
Ahmed has worked for 6 years at a maintenance workshop in Dammam owned by one person, and then the owner sold the workshop to a new buyer. Under Article 18, Ahmed's contract continues with the new owner without signing a new contract, and his service is counted as continuous from his first day of appointment. Because the workshop is an individual establishment, the seller and buyer agreed that the buyer alone would bear Ahmed's rights for the previous six years, and asked for his consent in writing. If Ahmed signs, responsibility for those rights passes to the new owner; and if he refuses, he may request termination of his contract and receive his dues from the previous owner. If no such agreement is made at all, the two owners remain jointly liable for his earlier rights.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Active contributorFrequently asked questions about Article 18 of the Saudi Labor Law
Does the employment contract end if the company is sold or merged with another company?
No. Article 18 provides that employment contracts remain in force when ownership of the establishment is transferred or its legal form changes by merger, division or otherwise, and the worker's service is considered continuous.
Who pays the end-of-service award for the years before the establishment was sold?
The previous owner and the new owner are jointly liable for it, together with wages and any other rights that arose before the change. Individual establishments are excepted if the parties agree to transfer the rights to the new owner with the worker's written consent.
What if the worker refuses to transfer his rights to the new owner in an individual establishment?
He may request termination of his contract and receive his dues from the previous owner (the predecessor), because the transfer of earlier rights to the new owner takes place only with his written consent.
Is my period of service counted anew with the new owner?
No. Article 18 considers service continuous in both cases of transfer of ownership and change of legal form, so the period of service is not broken and is not recalculated from the date of transfer of the establishment.
More articles on The Employment Contract
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Article 2 defines the terms used in the Labor Law, such as worker, employer, basic and actual wage, continuous service, types of work, secondment and resignation.
يقصد بالألفاظ والعبارات الآتية -أينما وردت في هذا النظام- المعاني المبينة أمامها ما لم يقتض السياق خلاف ذلك: الوزارة: وزارة العمل. الوزير: وزير العمل. مكتب العم
- Article 8
Article 8 voids any term that contravenes the Labor Law, and any release or settlement of the worker's legal rights during the contract unless it is more beneficial to the worker.
يبطل كل شرط يخالف أحكام هذا النظام، ويبطل كل إبراء أو مصالحة عن الحقوق الناشئة للعامل بموجب هذا النظام أثناء سريان عقد العمل، ما لم يكن أكثر فائدة للعامل.
- Article 9
Article 9 requires Arabic in employment contracts, records, data and the employer's instructions, and makes the Arabic text alone the one relied on where a foreign translation exists.
اللغة العربية هي الواجبة الاستعمال في البيانات والسجلات والملفات وعقود العمل وغيرها مما هو منصوص عليه في هذا النظام، أو في أي قرار صادر تطبيقًا لأحكامه، وكذلك ا
- Article 37Amended by M/44
Article 37 requires a non-Saudi's employment contract to be written and for a fixed term, treats its term as one year from actual commencement if not stated, and renews it for a similar term if work continues.
يجب أن يكون عقد عمل غير السعودي مكتوباً ومحدد المدة. وإذا خلا العقد من بيان مدته تعد مدته (سنة) من تاريخ مباشرة العامل الفعلية، وإذا استمر العمل بعد انتهاء هذه
- Article 50
Article 50 defines the employment contract as an agreement between an employer and a worker under which the worker undertakes to work under the employer's management or supervision for wages.
عقد العمل هو عقد مبرم بين صاحب عمل وعامل، يتعهد الأخير بموجبه أن يعمل تحت إدارة صاحب العمل أو إشرافه مقابل أجر.
- Article 51Amended by M/44
Article 51 requires the employment contract to be written in two copies and authenticated, treats the contract as existing even if unwritten, and gives the worker alone the right to prove it by all means of proof.
يجب أن يكتب عقد العمل من نسختين، يحتفظ كل من طرفيه بنسخة منه، ويجب توثيقه وفق الأحكام النظامية ذات الصلة وفي ضوء ما تحدده اللائحة، ويعد العقد قائماً ولو كان غير
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.