Losing your job unexpectedly can be stressful, especially if you believe the termination was unfair. In Saudi Arabia, Article 77 of the Saudi Labor Law plays a critical role in protecting employees in such situations. It determines how compensation is calculated when an employment contract is terminated without a valid reason.
In this guide, we will explain:
- What Article 77 means
- How compensation is calculated
- What counts as unfair dismissal
- Key conditions for eligibility
- How to protect your rights with SNDK’s AI-powered claim checker
What Is Article 77 of Saudi Labor Law?
Article 77 addresses cases where an employment contract is terminated for an unlawful or unjust reason. The law states that if the employment contract does not include a specific compensation amount for wrongful termination, the affected party—either the employer or the employee—is entitled to compensation according to specific rules.
This means that if you were dismissed without a legitimate reason, you have a right to claim financial compensation under this article.
How Is Compensation Calculated Under Article 77?
The calculation depends on the type of employment contract:
1. For Indefinite-Term Contracts
Employees under an open-ended contract are entitled to:
- 15 days of wages for every year of service
- With a minimum of two months’ salary
Example:
If you earned SAR 4,000 per month and worked for 5 years:
- 15 days’ wage = SAR 2,000
- 5 years × SAR 2,000 = SAR 10,000 compensation
- If the calculation is less than two months’ salary, you will still receive the minimum of two months’ wages.
2. For Fixed-Term Contracts
If the contract specifies an end date and termination happens before that date without a valid reason, the compensation equals:
- The salary for the remaining period of the contract
- With a minimum of two months’ salary
Example:
If your monthly salary is SAR 4,000 and three months remain on your contract:
- 3 months × SAR 4,000 = SAR 12,000 compensation
Again, if the remaining period is less than two months, the minimum payout is two months’ salary.
What Counts as Unfair Dismissal?
Unfair dismissal, also known as wrongful or unlawful termination, happens when the employer ends the contract without a valid reason recognized by law. Common examples include:
- Termination because you took medical leave or requested vacation
Termination due to marriage, pregnancy, or childbirth
Termination based on personal differences with your manager - Termination without any official justification
The valid reasons for termination are detailed in Article 80 of the Labor Law. If your situation does not fall under those reasons, you likely have a strong case for compensation.
Employee Rights After Unfair Dismissal
If you have been wrongfully terminated, you are legally entitled to:
- Financial compensation as outlined above
- A service certificate from your employer stating your job title and duration of employment
- Payment for any accrued benefits such as end-of-service gratuity and unused vacation days
Remember: even if you signed a resignation letter under pressure, the law may still protect you. Saudi labor courts consider the circumstances behind the resignation.
Conditions for Compensation Eligibility
To successfully claim compensation under Article 77, these conditions must be met:
- There must be an employment relationship
- This can be proven through a written contract or evidence such as salary transfers.
- Termination must be from the employer’s side
- If you voluntarily resigned, you generally cannot claim compensation unless the resignation was forced.
- Written notice of termination
- Always request official documentation. A verbal dismissal is not enough.
Failing to meet these conditions can weaken your claim, so make sure you keep all employment records and communication.
Common Questions About Article 77
Q1: Can an employee and employer agree on a fixed compensation amount in the contract?
Yes. If the contract specifies a compensation amount for unlawful termination, that agreed amount applies instead of Article 77 calculations.
Q2: Does this apply to non-Saudi employees?
Yes, but note that non-Saudi contracts are usually fixed-term, so compensation is based on the remaining contract duration.
How to Protect Your Rights with SNDK
Navigating legal processes can be overwhelming, but technology makes it easier. SNDK’s AI-powered claim checker helps you:
- Instantly calculate your potential compensation under Article 77
- Understand your legal position without costly consultations
- Start the claim process quickly and efficiently
Don’t leave your rights unclaimed. Check your eligibility in minutes.
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