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Saturday, 31 May 2014

What are Fixed Term and Indefinite Contract under Saudi Labor Law?

What is Fixed Term Contract? How is it terminated?
I have already explained in one article about the matters to consider while signing a contract in Saudi Arabia. All of us sign a fixed term contract in the beginning of our job. A fixed term contract can be terminated in the following cases.

  • A Fixed term contract is terminated at the end of the term of the contract under Article 74 of Saudi Labor Law. If your employer wants to terminate you at the end of the contract, he just has to give you notice as mentioned in the contract or one month notice if it is not mentioned in the contract. Similarly, you also can leave your employer until the end of the contract by giving same notice period. Recommended: Completion of Contract under Article 74 of Saudi Labor Law
  • It also means that your employer cannot terminate you within the term of the contract except as provided in Article 80 of Saudi Labor Law. Recommended: Termination without Notice Period under Article 80 of Saudi Labor Law
  • If an employer wants to terminate your fixed term contract or you want to resign within fixed term contract in any other way, the initiator will have to indemnify the aggrieved party for that under Article 77 of Saudi Labor Law. Recommended: Article 77 of Saudi Labor Law
 What is Indefinite Term Contract?
  • If there is no clause in the initial contract (fixed term contract) for the renewal and your employer does not terminate you at the end of the fixed term contract, this contract becomes an indefinite contract. There is no need to sign the extension of contract in writing - Article 55 (1) of Saudi Labor Law.
  • If the initial fixed term contract contains a clause for the renewal of the contract for the same term or any specified term, it will be renewed for that period only. It becomes a Fixed Term Contract in this case. Source: Article 55 (2) of Saudi Labor Law.
  • However, if it is renewed for 3 consecutive times or the total period of fixed-term contract and renewal equals to 4 or more years, the contract becomes an indefinite contract. Source: Article 55 (2) of Saudi Labor Law.
  • Employment contract with non-Saudi employees will always be a fixed-term contract. In case an employment contract does not mention the term of the contract, the duration of the work permit (iqama expiry) shall be deemed the contract term.  – Article 37 of Saudi Labor Law
 How is an indefinite term contract terminated?
  • In the case of an indefinite contract, either party can terminate it subject to Article 75 of Saudi Labor Law. Article 75 states that an indefinite contract can be terminated by either party based upon a valid reason after giving 60 days’ notice period. Now the question arises, what is the valid reason to terminate the contract under Article 74 (3) of Saudi Labor Law? We have covered these reasons in detail in this link – Article 74 (3) of Saudi Labor Law. We have covered it in detail in this link. Recommended: Completion of Contract under Article 74 of Saudi Labor Law
  • An indefinite contract can always be terminated under Article 80 of Saudi Labor Law. Recommended: Termination without Notice Period under Article 80 of Saudi Labor Law
  • If an employer wants to terminate your indefinite term contract he will have to indemnify you for that under Article 77 of Saudi Labor Law. Recommended: Article 77 of Saudi Labor Law

Job Continuation under Saudi Labor Law
  1. Rights of Expatriates in Saudi Arabia
  2. Rules related to Annual Leave under Saudi Labor Law
  3. Weekends are not part of Annual Leave, SR 100,000 fine for Violation
  4. Right of Air Ticket as per Saudi Labor Law
  5. Rules regarding Emergency Leave in Saudi Arabia

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