Summary
The difference between lawful termination and unfair dismissal, Article 77 compensation (15 days' wage per year or the remaining contract period, with a two-month minimum), pay in lieu of notice, and how to prove the stated ground is not genuine.
When is termination lawful, and when is it unfair?
Either party may end an indefinite contract for a legitimate reason with written notice. A legitimate reason is a genuine, serious, work-related ground, such as a documented economic redundancy or proven poor performance backed by warnings and appraisals. Termination without reason, on a pretextual ground, or for personal or retaliatory motives (filing a complaint, refusing unlawful work) is unfair dismissal for which the worker is owed compensation.
Ending a fixed-term contract before its term without a legitimate reason is also unfair. The burden of proving the ground lies on the employer, not the worker.
How much is the compensation? Article 77
If the contract does not fix a specific compensation amount, it is calculated as follows:
- Indefinite contract: 15 days' wage for each year of service.
- Fixed-term contract: the wage for the remaining period of the contract.
- In both cases, not less than two months' wage.
This compensation is separate from the end-of-service award, pay in lieu of notice and leave balance, so all are claimed together. Example: a worker on an actual wage of SAR 10,000, six years' service on an indefinite contract, dismissed without a legitimate reason and without notice: compensation 6 × 5,000 = SAR 30,000, plus two months' pay in lieu of notice SAR 20,000, plus the full end-of-service award SAR 35,000, plus remaining leave.
Pay in lieu of notice
Even lawful termination requires prior written notice. For an indefinite contract with a monthly-paid worker, the notice period is sixty days when the employer terminates and thirty days when the worker does, under the latest Labor Law amendments. Whoever fails to observe the notice period pays the other party compensation equal to the wage for the notice period or the balance of it. If you were told your service ends "as of today", you are owed the full notice-period wage on top of everything else.
How do you prove the dismissal was unfair?
The court examines the reason stated in the termination decision and whether it is genuine. Signs of unfair dismissal that persuade the court: no reason stated at all, a reason that changes between the letter and the defence, no prior warnings or appraisals despite an alleged performance problem, a replacement hired into the same "abolished" position, or dismissal coinciding with a complaint, sick leave or a claim for a right.
Keep everything: the termination letter, messages, positive performance reviews, colleagues' statements and attendance records. And do not sign an "amicable" resignation offered in place of a dismissal decision; a resignation forfeits unfair-dismissal compensation and may cut the end-of-service award to a third or two thirds.
Cases with no compensation
No compensation is due if the contract was ended for an Article 80 ground that is actually established (assault, essential breach after warning, forgery, long unjustified absence, and the rest), during a probation period agreed in writing and within its statutory length, or by expiry of a fixed-term contract at its term. But many termination decisions are dressed as Article 80 or probation without meeting their conditions, and that is where a lawyer exposes the difference.
The claim must be brought within twelve months of termination. Our employment law team evaluates your termination decision, calculates the full amount owed, and handles the claim. Request a consultation and attach the termination decision and your contract.