Article 86 of the Saudi Labor Law
المادة 86 من نظام العمل · الباب الخامس: علاقات العمل
Article 86 allows an agreement to exclude commissions, sales percentages and other naturally variable pay from the wage on which the end-of-service award is calculated, as an exception to Article 8.
Official text (Arabic)
This article has not been amended since the law was issued.
استثناء من حكم المادة (الثامنة) من هذا النظام، يجوز الاتفاق على ألا تحسب في الأجر الذي تسوى على أساسه مكافأة نهاية الخدمة جميع مبالغ العمولات أو بعضها والنسب المئوية عن ثمن المبيعات وما أشبه ذلك من عناصر الأجر الذي يدفع إلى العامل وتكون قابلة بطبيعتها للزيادة والنقص.
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 86 explained in plain English
Article 8 of the Labor Law sets a strict general rule: any condition that contradicts the provisions of the law is void, and any waiver by the worker of their rights during the contract is void unless it is more beneficial to the worker. Article 86 is an express exception to this rule on one specific matter: the wage on which the end-of-service award is settled.
Under this article, the employer and the worker may agree that the following elements of wage are not counted when calculating the end-of-service award:
- Commission amounts, in whole or in part.
- Percentages of the price of sales.
- Similar elements of wage that are by their nature subject to increase and decrease.
Several important limits can be understood from the text:
- An agreement is required: the exclusion does not happen automatically but needs an agreement between the parties. If there is no such agreement, this exception does not apply.
- The exclusion is limited to variable elements: the article does not permit excluding fixed wages; it is limited to commissions, percentages and the like, which rise and fall by their nature.
- The exclusion may be total or partial: the text allows an agreement to exclude all commissions or only some of them.
In practical terms, this article matters particularly to workers in sales and marketing and to those who receive a large part of their income as commissions, since an agreement on this term can make a big difference to the value of the award at the end of service. A worker should therefore read their contract carefully and check whether it contains a term of this kind.
This article complements Articles 85 and 87: Article 85 sets the proportion of the award due on resignation (one third, two thirds or the full award depending on length of service), and Article 87 gives the full award in certain cases such as force majeure, or where a female worker ends the contract within 6 months of her marriage or 3 months of giving birth, while Article 86 determines the wage base to which those proportions are applied. If there is a dispute over the validity or scope of an exclusion term, it is advisable to consult a lawyer who specializes in labor cases.
Practical example
Ahmed works as a sales representative for a company in Riyadh. He receives a fixed monthly wage plus a commission calculated as a percentage of the value of his sales, which varies from month to month. His contract includes a term in which the parties agree that commissions are not counted in the wage on which the end-of-service award is settled. Under Article 86, this agreement is permitted because commissions are by nature an element that can increase and decrease, so his award is calculated on his wage without commissions. Had his contract lacked this term, the exception provided by Article 86 would not apply.
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 86 of the Saudi Labor Law
Are commissions counted in the end-of-service award under the Saudi Labor Law?
Article 86 permits an agreement to exclude commissions and percentages of the price of sales, in whole or in part, from the wage on which the award is calculated. So it depends on whether the worker and the employer have made such an agreement.
Can an employer exclude the basic salary from the end-of-service award calculation?
No. Article 86 limits the permitted exclusion to commissions, percentages and similar elements of wage that are by nature subject to increase and decrease, and does not cover fixed wages.
Why is Article 86 an exception to Article 8?
Because Article 8 voids any condition that contradicts the law unless it is more beneficial to the worker, whereas Article 86 expressly allows an agreement that may reduce the wage base for the end-of-service award as regards variable elements.
Must the whole commission amount be excluded, or can part of it be?
Article 86 permits an agreement to exclude all or some of the commission amounts, so the exclusion may be total or partial, as the parties agree.
Articles this article refers to
More articles on End-of-Service Award
- Article 54Amended (1436 AH)
Article 54 prevents placing a worker on probation more than once with the same employer except on conditions, and provides that ending the contract during probation gives rise to no compensation or end-of-service award.
لا يجوز وضع العامل تحت التجربة أكثر من مرة واحدة لدى صاحب عمل واحد. واستثناء من ذلك يجوز باتفاق طرفي العقد - كتابة - إخضاع العامل لفترة تجربة أخرى بشرط أن تكون
- Article 56
Article 56 provides that the term to which a fixed-term contract is renewed is treated as an extension of the original term when calculating the worker's rights linked to length of service.
في جميع الحالات التي يتجدد فيها العقد لمدة محددة، تعد المدة التي تجدد إليها العقد امتدادًا للمدة الأصلية في تحديد حقوق العامل التي تدخل مدة الخدمة في حسابها.
- 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 79 bisAmended by M/44
Article 79 bis regulates resignation: it is deemed accepted after 30 days without a reply, acceptance may be deferred up to 60 days by written explanation, and the worker may withdraw it within 7 days.
1- يُعد طلب الاستقالة المقدم مقبولاً إذا مضى على تقديمه (ثلاثون) يوماً دون ردٍّ من صاحب العمل. ولصاحب العمل تأجيل قبول طلب الاستقالة مدة لا تزيد على (ستين) يوما
- Article 84
Article 84 requires the employer to pay the worker an end-of-service award when employment ends, based on the last wage: half a month per year for the first five years and a month per year after.
إذا انتهت علاقة العمل وجب على صاحب العمل أن يدفع إلى العامل مكافأة عن مدة خدمته تحسب على أساس أجر نصف شهر عن كل سنة من السنوات الخمس الأولى، وأجر شهر عن كل سنة
- Article 85
Article 85 sets a resigning worker's share of the end-of-service award: one third after two to five years, two thirds after five up to ten years, and the full award at ten years.
إذا كان انتهاء علاقة العمل بسبب استقالة العامل يستحق في هذه الحالة ثلث المكافأة بعد خدمة لا تقل مدتها عن سنتين متتاليتين، ولا تزيد على خمس سنوات، ويستحق ثلثيها
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.