Summary
The limits on deductions from wages and final dues under the Saudi Labor Law: loans, damages, residency fees, training costs, return tickets, notice periods, and how to recover what was wrongly deducted.
The rule: no deduction without a legal basis
Under the Labor Law, wages and dues are a protected right, and an employer may deduct from them only in the cases the law specifies and within the limits it sets. At final settlement, unsupported deductions appear under labels like "administrative costs", "penalties" or "for non-compliance"; all of these are recoverable before the Labor Court if they lack a legal basis and proof.
What may be deducted (and within what limits)
- Loans and advances granted by the employer to the worker, with written consent, at no more than 10% of the wage per month during service. On termination the balance may be deducted from the dues.
- GOSI contributions and contributions to savings funds or housing loans the worker agreed to.
- Fines provided for in the work regulations approved by the Ministry, subject to the investigation and notification procedure.
- Damages caused by the worker deliberately or by gross negligence, after an investigation establishing liability, and not exceeding five days' wage per month.
In all cases, total deductions may not exceed half the wage except by order of the Labor Court.
What may never be deducted
- Residency and work-permit fees, their renewal, and sponsorship-transfer fees: on the employer by law; they cannot be charged to or deducted from the worker even with consent.
- The return ticket for a non-Saudi at the end of the relationship: on the employer, unless the worker moves to another employer.
- Recruitment and medical examination costs.
- A "resignation penalty" or charge for leaving without a basis in approved regulations.
- Compensatory deductions for damages that were not investigated or proven.
- The end-of-service award itself: it cannot be waived or reduced on grounds of performance or "internal policy"; its minimum is statutory.
Training costs and notice period: the two grey areas
Training costs: an employer may recover the cost of qualifying or training a worker if the contract or a written agreement provides for it and the worker leaves before the agreed period ends. But recovery is proportional to the remaining period and limited to actual documented costs, not lump sums.
Notice period: if you resigned without notice, the employer may deduct the equivalent of the notice-period wage or its balance. That deduction is lawful, but it cannot be doubled or topped up with another "compensation". If the employer waived the notice in writing, there is no deduction.
How to recover what was wrongly deducted
Ask the company for a written breakdown of the final settlement with each deduction and its basis; that is your right and should be requested before signing the release. Then sort the deductions into those with a legal basis and limit and those without. Claiming the difference follows the same path: demand letter, friendly settlement at the Ministry of Human Resources, then the Labor Court, within twelve months of the end of the relationship. The steps are detailed in My employment ended and I have not been paid.
Signing a release does not bar you from claiming a statutory right that cannot be waived, but it makes proof harder, so it is better not to sign before the figures are reviewed. Our employment law team reviews your settlement statement, identifies what is recoverable, and handles the claim.