Article 74 of the Saudi Labor Law (المادة 74 من نظام العمل) sets out the ways an employment contract ends. Knowing which one ended your contract is not a technicality: it decides whether you are owed the full end-of-service award or only part of it, whether you are owed compensation, and whether the other party had to give you notice first.
Ways an employment contract ends under Article 74
| # | Case | What matters |
|---|---|---|
| 1 | Both parties agree to end the contract | The employee's consent must be in writing. |
| 2 | The fixed term in the contract expires | Unless the contract was renewed under the law, in which case it continues to its new end date. |
| 3 | The will of either party in an open-ended contract | Under the conditions of Article 75, including written notice and a legitimate reason. |
| 4 | The employee reaches retirement age | As set by the regulations, unless the parties agree to continue. |
| 5 | Force majeure | An event beyond both parties' control that makes performing the contract impossible. |
| 6 | Permanent closure of the establishment | |
| 7 | Ending the activity in which the employee works | Unless otherwise agreed. |
| 8 | Any other case provided for by another law |
The table summarizes the text. Check the current official text of the Labor Law before taking any action, as the law has been amended more than once.
What are you owed in each case?
- A fixed-term contract expires: the employee is usually owed the full end-of-service award under Article 84, because the relationship ended when its term ran out, not by resignation.
- The employer ends the contract: the employee is owed the full award, and if the termination was for an illegitimate reason, also compensation under Article 77.
- The employee resigns: they are owed part of the award depending on length of service under Article 85, except in cases where the full award is due.
- Termination by agreement: what the employee is owed depends on how the agreement is worded and who initiated the termination, so read any final settlement (clearance) carefully before signing it.
- Closure of the establishment or end of the activity: the employee did not end the contract by choice, so they keep their right to the award and any wages due.
Work out the award for your situation with the end-of-service calculator.
Written consent when ending by agreement
The article requires the employee's consent to end the contract by agreement to be in writing. If an employer claims the contract ended by mutual consent but cannot produce the employee's written agreement, its position is weak, and the termination may be treated as one made by the employer. On the other side, do not sign a "termination by mutual consent" document if you were in fact dismissed, without first understanding its effect on your rights. If the document is in Arabic and you do not read Arabic, have it explained before you sign.
Fixed-term contracts and renewal
If the parties keep performing the contract after its term ends, or the contract is renewed, the provisions of the law apply to the renewal and its length. Renewing a fixed-term contract more than once may change its nature in some cases, so keep a copy of every contract and every renewal.
How Article 74 differs from Articles 80 and 81
Article 74 lists the ordinary ways a contract ends. Article 80 covers the employer terminating the contract for the employee's misconduct without an award, and Article 81 covers the employee leaving because of the employer's breach while keeping their rights.
Frequently asked questions
Is an employee owed an award if their fixed-term contract ended and was not renewed?
Yes, as a rule. The end of the term is not a resignation, and the award is due under Article 84.
Can an open-ended contract be ended without a reason?
The law requires a legitimate reason and written notice under Article 75. Ending the contract without a legitimate reason entitles the other party to compensation.
The company I work for has closed. What are my rights?
You are owed your overdue wages, the end-of-service award and any leave balance due. If these are not paid, the route is a labor complaint and then the Labor Court.
Has your contract ended and you want to know your rights?
The Usus Law Firm team handles labor cases in Riyadh and Tabuk, and can advise you in English. See also our guide to the Saudi Labor Law.
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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