Termination of Employment Contracts

The termination of an employment contract in Saudi Arabia or any other country occurs either by canceling the agreed-upon contract between the worker and the employer or after the contract’s term has expired. Many workers and employers seek clarity on the legal reasons that allow for the termination of the contract before its expiration. This is particularly important because if the contract is terminated prematurely without legal justification, the other party is entitled to financial compensation. In the absence of compensation, they can file a complaint to claim their rights under the law.

Legal Reasons for Terminating an Employment Contract

Both the worker and employer must adhere to the agreed terms in the employment contract and abide by them until the stipulated duration. However, the contract can be legally terminated before its expiration without disputes, provided financial compensation is paid later. Termination is allowed under the following circumstances:

1. If the contract’s duration has ended as agreed between the employee and the employer, without renewal.
2. Mutual agreement between the employer and the worker to end the contract, provided the worker’s consent is documented in writing.
3. Either party’s desire to terminate an indefinite-term contract, with a written notice sent to the other party. This notice must be given at least two months in advance for monthly-paid workers, or one month in advance for weekly or annual-paid workers.
4. If the contract specifies a monetary penalty for termination, the agreed amount must be paid accordingly.
5. If unforeseen circumstances or force majeure prevent the worker from performing their job, the employer may terminate the contract without issues.
6. If the company declares bankruptcy and ceases operations permanently.
7. If the company discontinues the field or specialization in which the worker is employed.
8. Upon reaching the retirement age—50 years for women and 60 years for men. Early retirement is also possible if the employee resigns early, or the contract may include a clause allowing continuation beyond the retirement age.
9. If the party intending to terminate the contract fails to notify the other party, they must compensate the other party with an amount equivalent to two months’ salary for monthly-paid workers, or one month for weekly or daily-paid workers.

Termination of Employment by the Employer

An employer cannot terminate a contract before its agreed duration without valid justification. However, certain cases allow for immediate termination without prior notice to the employee:

1. If the employee assaults the manager, a superior, or a colleague.
2. If the employee commits acts that violate integrity, honesty, or religion, provided there is conclusive evidence.
3. If the employee neglects their duties as specified in the contract, despite prior written warnings.
4. If the employee secured the job through fraud, deception, forgery, or misinformation.
5. If the employee is absent for 30 non-consecutive days in a year or 15 consecutive days without valid justification.
6. If the employee exceeds the permitted absence during the probation period, with prior notice.
7. If the employee exploits their position for personal gains.
8. If the employee leaks company secrets, causing harm or financial losses.
9. If the employee’s actions lead to deliberate damage or financial losses, requiring the employer to notify the authorities within 24 hours.

Termination of Employment by the Employee

Employees are entitled to terminate their contracts under certain conditions without notifying the employer, and in these cases, the employer cannot claim compensation or object. These include:

1. Non-compliance by the employer with the terms of the contract.
2. Assigning the employee to a location different from that stated in the contract, especially if it’s unsuitable.
3. Verbal abuse, physical assault, or mistreatment by the employer or their representatives.
4. Failure to pay the employee’s due wages or undue delays in payment.
5. Life-threatening risks associated with the job, provided the employee has informed the employer and no action was taken to address the issue.
6. Deception by the employer, such as increasing working hours, altering the work environment, or changing the job type.

Conclusion

When seeking to terminate an employment contract before its agreed duration, whether initiated by the employer or employee, it is advisable to consult a specialized lawyer. This ensures all legal procedures are followed correctly, enabling the termination to proceed smoothly and without legal complications.