Terminating a Contract Without Lawful Cause
When Does It Constitute Unfair Dismissal?
Introduction:
This article examines circumstances in which terminating an employment contract may be unlawful under Saudi Labor Law. It explains the distinction between lawful termination and unfair dismissal and outlines the rights and procedures that help workers protect their legal position when a dispute arises.
Termination of employment is among the most sensitive issues in the Saudi labor market, particularly when it occurs without lawful cause or in a manner that lacks fairness. As labor regulations have developed, the concept of unfair dismissal has become clearer, and workers’ rights in such cases are protected through specific legal procedures. This article analyzes the rules governing unlawful dismissal and the principal rights and procedures available to workers.
First: The concept of unfair dismissal.
Unfair dismissal occurs when an employer terminates an employment contract without lawful cause or contrary to prescribed legal procedures, where this infringes the worker’s rights. Dismissal is considered unlawful in circumstances including:
Terminating the contract without clear justification or prior notice.
Terminating the contract for an unlawful reason unrelated to the worker’s performance or professional conduct.
The employer exercising its authority arbitrarily.
Terminating the contract while the worker is on statutory or sick leave.
Important rule: Not every dismissal is unfair; the reason, procedures, and surrounding circumstances must be considered.
Second: The most common cases of unlawful dismissal.
In practice, several situations are among the most prominent forms of unfair dismissal, including:
1) Dismissal because a worker claimed their rights:
Such as claiming wages, leave, or a safe working environment.
2) Dismissal during sick or annual leave:
This is one of the circumstances in which dismissal may be regarded as unlawful if it is established that the termination was connected to the leave or occurred contrary to applicable legal controls.
3) Dismissal due to malicious reports or personal disputes:
Where the employer uses its authority to terminate the contract without a professional reason.
4) Dismissal without notice or without allowing the worker an opportunity to respond:
Particularly in cases involving alleged violations.
Third: A worker’s rights following unfair dismissal.
When an unlawful dismissal occurs, the worker may claim several statutory rights, most notably:
1) Compensation for termination:
Compensation is assessed based on:
The type of contract—fixed-term or indefinite-term.
Length of service.
Monthly wage.
The extent of harm suffered by the worker.
The assessment differs according to the nature of the contract. For a fixed-term contract, consideration is generally given to the remaining contractual term and what the parties agreed. For an indefinite-term contract, the wage, length of service, compliance with the notice period, and existence of lawful cause for termination are considered.
For illustration, if three months remain on a fixed-term contract and the worker’s monthly wage is SAR 6,000, compensation may be considered up to the wage payable for the remaining term, subject to any specific compensation clause in the contract. If the contract is indefinite and the worker served for four years at a monthly wage of SAR 6,000, compensation may be considered on the basis of fifteen days’ wages for each year of service, provided that compensation is not less than two months’ wages in all cases where the applicable conditions are met. These examples are illustrative because the final assessment depends on the contract, the reason for termination, and the competent authority’s determination.
2) Receiving an end-of-service award:
The end-of-service award remains a right to which the worker may be entitled under its applicable statutory conditions and controls. Its amount is considered according to the length of service and the reason the employment relationship ended.
3) Receiving an experience certificate:
The employer must provide the worker with an experience certificate containing no offensive or unprofessional statements.
4) Payment of financial entitlements:
Such as:
Accrued unused leave.
Any amounts due but not previously paid.
Allowances agreed in the contract.
5) The possibility of transferring services without the employer’s consent:
In certain cases and subject to the relevant statutory controls, a worker may be able to transfer their services without the employer’s consent where arbitrariness or abuse of authority is established.
Fourth: Procedures for a worker facing unfair dismissal.
When dismissal occurs, the worker is advised to take the following steps:
1) File a complaint through the Qiwa platform:
To document the incident officially and require the employer to explain the reason for termination.
2) Proceed to amicable settlement:
This is a mandatory stage before filing a claim and allows the parties to reach a prompt resolution.
3) File a claim through the Najiz platform:
If no agreement is reached, the worker may file a claim before the labor court, which considers:
Whether the dismissal was lawful.
Compensation due.
Any other financial rights.
4) Submit evidence and supporting indications:
Such as:
Termination messages.
Emails.
Attendance records.
Any documents establishing arbitrary conduct or the absence of lawful cause.
Fifth: The employer’s responsibilities when terminating a contract.
The employer must:
State the reason for termination clearly and in writing.
Comply with statutory notice procedures.
Pay financial entitlements immediately.
Not use dismissal as a means of pressure or as an unlawful penalty.
Sixth: Frequently asked questions about unfair dismissal.
1) When does terminating an employment contract constitute unfair dismissal?
Termination may constitute unfair dismissal if it occurs without lawful cause, without following statutory procedures, or if the circumstances show that the decision was made vindictively or arbitrarily in a manner that infringes the worker’s rights.
2) Is dismissal during sick or annual leave always unfair?
Not necessarily. The determination depends on the reason for termination, its connection to the leave, and the employer’s compliance with statutory controls. If the termination is shown to have been connected to the leave or to have violated prescribed procedures, it may be regarded as unlawful.
3) How is compensation for unfair dismissal calculated?
If the contract does not specify compensation, the type of contract, length of service, wage, and reason for termination are considered. For an indefinite-term contract, compensation may be calculated on the basis of fifteen days’ wages for each year of service. For a fixed-term contract, the wage for the remaining contractual term may be considered, subject to the statutory minimum where its conditions apply and to the competent authority’s determination.
4) Can compensation and an end-of-service award both be claimed?
A worker may be entitled to more than one financial right, such as compensation for unlawful termination, an end-of-service award, and overdue entitlements, where the conditions for each right are met according to the length of service, the reason the employment relationship ended, and the contractual provisions.
5) What evidence helps a worker establish unfair dismissal?
Important evidence includes the termination letter, emails, professional correspondence, attendance records, payroll statements, and any document explaining the reason for termination or establishing that the worker claimed their rights before dismissal. Written and dated evidence is stronger in supporting the claim.
6) Is filing a complaint through Qiwa sufficient to end the dispute?
A complaint does not necessarily end the dispute, but it documents the incident and begins the statutory process. The dispute may proceed to amicable settlement, and if no resolution is reached, the claim may be referred to the labor court under the approved procedures.
7) Must the worker object within a specific period?
The worker should promptly document the termination date and the date they became aware of it and retain relevant documents because some labor claims may be subject to statutory periods or procedural deadlines affecting the admissibility of the claim or the strength of the worker’s legal position. It is preferable not to wait for informal negotiations to end before preserving the right through the appropriate process.
Unfair dismissal is not merely the termination of a contract; it is a violation affecting the worker’s stability and fundamental rights. Saudi law has established clear mechanisms to protect workers and ensure that they receive appropriate compensation when unlawful dismissal occurs. With the development of digital systems, access to rights has become easier and more transparent, promoting fairness in the labor market.
Every case remains subject to its particular facts and documents, the nature of the contract, and the reason for termination. This general overview therefore does not replace obtaining specialist legal advice where there is an actual dispute or existing claim.
Important notice: This article was prepared for general legal awareness and does not constitute a binding legal opinion or legal advice tailored to a particular case. Legal outcomes vary according to the facts, documents, and nature of the employment relationship. It is therefore advisable to consult a legal specialist before taking any action or filing any claim.