Article 19 of the Saudi Labor Law
المادة 19 من نظام العمل · الفصل الأول: التعريفات
Article 19 makes sums due to the worker or his heirs first-degree privileged debts on all of the employer's property, with an advance of one month's wage paid on bankruptcy or liquidation.
Official text (Arabic)
This article has not been amended since the law was issued.
تعد المبالغ المستحقة للعامل أو ورثته بمقتضى هذا النظام ديونًا ممتازة من الدرجة الأولى. وللعامل وورثته في سبيل استيفائها امتياز على جميع أموال صاحب العمل. وفي حالة إفلاس صاحب العمل أو تصفية منشأته تسجل المبالغ المذكورة ديونًا ممتازة، ويدفع للعامل مبلغ معجل يعادل أجر شهر واحد، وذلك قبل سداد أي مصروف آخر، بما في ذلك المصروفات القضائية ومصروفات الإفلاس أو التصفية.
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 19 explained in plain English
Article 19 of the Labor Law gives special protection to the worker's financial rights when the employer falters, goes bankrupt or his establishment is liquidated. The sums due to the worker or his heirs under the law (such as wages, the end-of-service award and other things the law provides) are not treated as an ordinary debt but as first-degree privileged debts.
Three practical effects follow:
- Priority in payment: when creditors compete for the employer's property, the worker and his heirs come before ordinary creditors in collecting their dues.
- A privilege over all of the employer's property: the privilege is not limited to a particular asset but covers everything the employer owns.
- An advance sum on bankruptcy or liquidation: the worker's dues are recorded as privileged debts, and he is paid immediately an advance sum equal to one month's wage, before payment of any other expense, including judicial expenses and the expenses of the bankruptcy or liquidation itself.
The purpose of the advance sum is that the worker finds something to meet his urgent need as soon as the establishment stops, without waiting for liquidation procedures that may take long, and then collects the rest of his rights afterward as privileged debts.
This article complements Article 18, which protects workers' rights when ownership of the establishment is transferred or its form changes by making the previous and new owners jointly liable for earlier rights; while Article 18 deals with the case of the establishment continuing in the hands of another owner, Article 19 deals with its financial collapse. Article 20 also prohibits any party from misusing the provisions of the law or pressuring the freedom of the other party.
The article also protects the worker's heirs, who have the same privilege in collecting what was due to their predecessor. The article does not specify the procedures for registering the debt or paying the advance sum, so a person facing the bankruptcy of his employer is advised to consult a lawyer who specializes in labor cases.
Practical example
A contracting company in Dammam was declared bankrupt and its liquidation procedures began. Ahmed worked there on a salary of SAR 6,000, with wages overdue for three months and an end-of-service award. Under Article 19, all of Ahmed's dues are recorded as first-degree privileged debts that rank ahead of the debts of suppliers and ordinary creditors, and he is paid immediately an advance sum of SAR 6,000 (one month's wage) before any judicial or liquidation expenses are deducted, and then collects the rest of his rights from the company's property in priority over the other creditors.
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 19 of the Saudi Labor Law
What does it mean that a worker's dues are a first-degree privileged debt?
It means that what the worker or his heirs are entitled to under the Labor Law ranks ahead of the debts of other creditors on payment, and the worker has a privilege in collecting it over all of the employer's property.
What does the worker receive immediately if the employer goes bankrupt?
He is paid an advance sum equal to one month's wage before payment of any other expense, including judicial expenses and the expenses of the bankruptcy or liquidation, and the rest of his dues are recorded as privileged debts.
Do the worker's heirs benefit from this privilege?
Yes. Article 19 expressly provides that sums due to the worker or his heirs are first-degree privileged debts, and they have a privilege over all of the employer's property to collect them.
Are liquidation expenses deducted before the advance month's wage is paid?
No. The article provides that the advance sum is paid before payment of any other expense, including judicial expenses and the expenses of the bankruptcy or liquidation.
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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.