Article 77 of the Saudi Labor Law
المادة 77 من نظام العمل · الباب الخامس: علاقات العمل
Article 77 sets the compensation due to the party harmed by termination of an employment contract for an illegitimate reason, where the parties have not agreed a specific compensation in the contract.
Official text after amendments (Arabic)
Compiled from the original text and every officially published amendment; the amendments are shown in full below for comparison.
ما لم يتضمن العقد تعويضاً محدداً مقابل إنهائه من أحد الطرفين لسبب غير مشروع، يستحق الطرف المتضرر من إنهاء العقد تعويضاً على النحو الآتي :
1 - أجر خمسة عشر يوماً عن كل سنة من سنوات خدمة العامل، إذا كان العقد غير محدد المدة.
2 - أجر المدة الباقية من العقد إذا كان العقد محدد المدة.
3 - يجب ألا يقل التعويض المشار إليه في الفقرتين (1) و(2) من هذه المادة عن أجر العامل لمدة شهرين.
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 77 explained in plain English
Article 77 of the Labor Law deals with the case of one party ending the employment contract for an illegitimate reason, and guarantees the injured party financial compensation. It applies to both parties: the injured party may be the worker who was dismissed without a legitimate reason, and it may be the employer if the worker left work without a statutory justification.
The starting point is what the parties agreed in the contract. If the contract provides for a specific compensation for illegitimate termination, this compensation is what applies. If the contract lacks this, the compensation is calculated according to the following rules:
- An open-ended contract: 15 days' wage for each year of the worker's service.
- A fixed-term contract: the wage for the remainder of the contract until its original end date.
- The minimum: in both cases the compensation may not be less than the worker's wage for two months, even if the result of the calculation is lower than that.
Note that this compensation is independent of the notice-period payment provided in Article 76; that article deals with failure to observe the notice period in an open-ended contract, whereas Article 77 deals with the illegitimacy of the reason for termination itself. Article 78 also gives the worker rights during the notice period, such as absence with pay to look for work.
The article does not specify what counts as an illegitimate reason, so that is referred to the other provisions of the Law and the assessment of the competent judicial body. Anyone harmed by the ending of their contract who wishes to know precisely what they are entitled to is advised to consult a lawyer specialized in labor cases.
Practical example
Fahad has worked for a company in Jeddah under an open-ended contract for 6 years, with a monthly wage of SAR 6,000. The company ended his contract without a legitimate reason, and the contract contained no agreed compensation for this case. Applying Article 77, Fahad is entitled to 15 days' wage for each year, that is, 90 days, equal to 3 months' wage (SAR 18,000). If his length of service had been only two years, the calculation would give 30 days, but the minimum in paragraph 3 raises the compensation to two months' wage. And if his contract were fixed-term with 5 months remaining, he would be entitled to the wage for these five months.
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 77 of the Saudi Labor Law
How is compensation for unlawful dismissal calculated in an open-ended contract?
If the contract does not specify compensation, the injured party is entitled to 15 days' wage for each year of the worker's service, provided that the compensation is not less than two months' wage.
What is the compensation if the contract is fixed-term and was ended before its end for an illegitimate reason?
The injured party is entitled to the wage for the remainder of the contract, provided that the compensation is in all cases not less than the worker's wage for two months.
Does the compensation in Article 77 apply if the parties agreed on compensation in the contract?
No. The article applies only if the contract does not include a specific compensation for the illegitimate termination; if there is an agreement in the contract, that is what applies.
Is an employer entitled to compensation under Article 77?
Yes. The article gives compensation to the party harmed by the illegitimate termination whichever it is, whether the worker or the employer.
Amendment history
Royal Decree No. M/46 — 5/6/1436 AH
Official amendment text (Arabic)
تم تعديل هذه المادة بموجب المرسوم الملكي رقم ( م/ 46) وتاريخ 5 / 6 / 1436 هـ ؛ لتكون بالنص الآتي:
"ما لم يتضمن العقد تعويضاً محدداً مقابل إنهائه من أحد الطرفين لسبب غير مشروع، يستحق الطرف المتضرر من إنهاء العقد تعويضاً على النحو الآتي :
1 - أجر خمسة عشر يوماً عن كل سنة من سنوات خدمة العامل، إذا كان العقد غير محدد المدة.
2 - أجر المدة الباقية من العقد إذا كان العقد محدد المدة.
3 - يجب ألا يقل التعويض المشار إليه في الفقرتين (1) و(2) من هذه المادة عن أجر العامل لمدة شهرين".
Original text before the amendments (Arabic)
إذا أنهي العقد لسبب غير مشروع كان للطرف الذي أصابه ضرر من هذا الإنهاء الحق في تعويض تقدره هيئة تسوية الخلافات العمالية، يراعى فيه ما لحقه من أضرار مادية وأدبية حالة واحتمالية وظروف الإنهاء.
More articles on Terminating the Employment Contract
- Article 57
Article 57 provides that an employment contract concluded to perform a specific job ends automatically once the agreed work is completed.
إذا كان العقد من أجل القيام بعمل معين فإنه ينتهي بإنجاز العمل المتفق عليه.
- Article 64Amended (1436 AH)
Article 64 requires the employer, on the end of the contract, to give the worker a free service certificate free of anything harmful to them, and to return all certificates and documents they deposited with it.
يلتزم صاحب العمل عند انتهاء عقد العمل بما يأتي : 1 - أن يعطي العامل – بناءً على طلبه – شهادة خدمة دون مقابل، يوضح فيها تاريخ التحاقه بالعمل، وتاريخ انتهاء علاقت
- Article 66
Article 66 sets out exhaustively the six disciplinary sanctions an employer may impose on a worker, from a warning to dismissal in the cases set in the Law.
الجزاءات التأديبية التي يجوز لصاحب العمل توقيعها على العامل: 1 - الإنذار. 2 - الغرامة. 3 - الحرمان من العلاوة أو تأجيلها لمدة لا تزيد على سنة متى كانت مقررة من
- Article 74Amended by M/44
Article 74 lists the cases in which an employment contract ends, including written agreement of the parties, expiry of the term, resignation, reaching retirement age, force majeure, permanent closure of the establishment, and bankruptcy.
ينتهي عقد العمل في أي من الأحوال الآتية : 1 - إذا اتفق الطرفان على إنهائه، بشرط أن تكون موافقة العامل كتابية. 2 - إذا انتهت المدة المحددة في العقد، ما لم يكن ال
- Article 75Amended by M/44
Article 75 sets the written notice period for ending an open-ended contract for a legitimate reason: 60 days from the employer and 30 days from the worker if wages are monthly, and 30 days for both otherwise.
1- إذا كان العقد غير محدد المدة وكان الأجر يدفع شهريًّا، جاز لأي من طرفيه إنهاؤه بناءً على سبب مشروع، وفق ما يلي: أ- إذا كان الإنهاء من طرف العامل، فيجب عليه أن
- Article 76Amended (1436 AH)
Whoever ends an open-ended contract without observing the notice period in Article 75 must pay the other party a sum equal to the worker's wage for that period, unless they agree on more.
إذا لم يراع الطرف الذي أنهى العقد غير المحدد المدة المهلة المحدد للإشعار وفقاً للمادة (الخامسة والسبعين) من هذا النظام، فإنه يلتزم بأن يدفع للطرف الآخر عن مهلة
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.