You want to leave your job, or your employer wants to end your contract: what should you know before taking the step? Ending an employment contract in Saudi Arabia can happen in several ways, and each one affects the end-of-service award, compensation and the notice period. The rules also differ a great deal between a fixed-term contract and an indefinite (open-ended) contract. Here we bring together the common ways a contract ends, what follows from each, and links to the detailed explanations.
Ways an employment contract ends, and their effect
| How it ends | End-of-service award | Compensation |
|---|---|---|
| A fixed-term contract reaches its end date | Full | No compensation, as a rule |
| Mutual agreement | As agreed and as the law provides | As agreed. See the mutual termination template |
| Worker resigns from an indefinite contract | Depends on length of service (Article 85) | None if notice was given |
| Worker resigns from a fixed-term contract before it ends | Depends on length of service | The employer may claim compensation. Read Article 77 |
| Employer ends the contract without a legitimate reason | Full | Article 77 compensation |
| Dismissal for one of the reasons in Article 80 | May be lost | None. Read Article 80 |
| Worker leaves because the employer breached its obligations | Full | May be owed compensation. Read Article 81 |
The notice period
In an indefinite contract, the party who wants to end it must notify the other party in writing before termination, by a period set by the law and the contract, and recent amendments to the Labour Law changed these periods. If the terminating party does not observe the notice period, it must pay the other party the equivalent of the wage for the notice period or whatever remains of it. The current periods, after the 2025 amendments, are explained in Article 75 of the Labor Law.
What is the penalty for breaking an employment contract?
Saudi law does not punish an employee for leaving a job, and no one can be forced to keep working. The consequence of ending a contract the wrong way is financial, and it depends on who ended it and how:
| What happened | The usual consequence |
|---|---|
| Either party ends an indefinite contract without serving the notice period | Pays the other the wage for the notice period, or whatever remains of it |
| The employer ends the contract without a legitimate reason | Owes the worker compensation under Article 77, on top of the end-of-service award |
| The worker leaves a fixed-term contract early without a legitimate reason | The employer may claim compensation under Article 77, and the end-of-service award follows the resignation rules |
| The worker leaves because the employer breached the contract | No penalty for the worker, who may claim full rights. Read Article 81 |
| Dismissal for serious misconduct listed in Article 80 | No compensation, and the award may be lost. Read Article 80 |
The contract itself may set a different compensation amount, within what the law allows. Before signing a settlement, estimate your position with the end-of-service calculator.
How to resign properly
- Read your contract: is it fixed-term or not? What notice period does it set?
- Submit your resignation in writing and keep proof of the date it was delivered.
- Serve the notice period, or agree in writing to be released from it.
- Calculate your dues with the end-of-service calculator, and do not sign a final settlement (clearance) before you receive them.
- Ask for a service certificate and, if you are an expatriate, follow up the transfer of services or exit procedures. Read about the sponsorship (kafala) system.
Frequently asked questions
Can my employer refuse my resignation?
In an indefinite contract, the worker may end it by giving notice. In a fixed-term contract, leaving before it ends without a legitimate reason may make the worker liable to compensate the employer, but the worker cannot be forced to stay.
Does resigning cancel my right to the end-of-service award?
Not entirely, as a rule: after two years you are entitled to one third of it, after five years two thirds, and after ten years the full award. Read Article 84.
Thinking of resigning, or has your contract been ended?
The team at Usus Law Firm reviews your position before you take any step, as part of its labour cases practice, in Riyadh and Tabuk, and advises in English.
This article is general legal information and is not a substitute for advice on your specific case. Court proceedings in Saudi Arabia are in Arabic; the official Arabic text of each law prevails.
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