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Sunday, 6 July 2014

End of Service Benefits and Expiry of Contract

My contract is expired and I do not want to renew it, does it mean Resignation or Termination of Contract?


Question by Visitor
Steve my question is, is it correct that an unspecified contract ends on the expiry of my iqama or resident permit? I have finished 4 years in my previous company and according to what I have understood on the Saudi labor law if my contract is finished at the end of my contract and no longer wish to continue I am entitled to 1/3 of my basic salary meaning 1/3 of 10,000 riyals right? Does it mean 3,333 riyals? But why my previous employer divides this 3,333 by 3? Is it legal? I really did not find this in Saudi labor law. I question my company regarding this and they said I resigned in the company but what really happened is I finished my contract because I have an unspecified contract and this kind of contract will end at the expiry of my iqama and that is different from resignation where you are not finishing your contract like for example before completion of 2 years and before the iqama expires on unspecified contract like I had. I was planning to complain at that time to labor office in Saudi but I hesitate when my colleague told me I will lose if I did because I am not in my country and I just got my ESB 1 day before my exit from Saudi so if I stay longer my iqama is already expired which is a risk from apprehension of Saudi police and no salary to sustain my stay in Saudi and I need to shoulder my plane ticket and probably wait for months to wait for the decision of labor office about my claims. Please Steve help me clarify these issues, by the way my company is ETA - (Electromechanical and Technical Associates) which is run by Indians which has a 90% Indian work force and they actually make me work 10 hours instead of 8 hours and no compensation for the extra 2 hours. Am I abused and mistreated by this company Steve?




Answer by Steve
If your unspecified contract ended on the expiry of Iqama, and your employer does not want to renew it, it is presumed to be termination. In this case, Case 5 given in the article “End of Service Benefits” will be applied. Case 5 states that;




Case 5: If employer terminates an employee before completing 5 years in the company, employee will be entitled to half salary.
Illustration:
Let’s say an employee is terminated after completing 4 years in a company, his last total salary was 10,000/-. He will be entitled to (10,000 X 4 X 1/2) = 20,000/- end of service benefits.

If your contract is finished and you do not want to renew it, it is resignation. In this case, Case 2 given in the article “End of Service Benefits” will be applied. Case 2 states that;




Case 2: If employee resigns from the company after completing 2 years but before 5 years, he is entitled to 1/3rd of his ESB award. ESB award in this case is half salary.
Illustration:
Let’s say an employee resigns after completing 4 years in a company, his last total salary was  10,000/-. He will be entitled to (10,000 X 16.67% X 4) = 6,667 end of service benefits.




If your employer was not paying you overtime as per the rates mentioned in the “Working Hours andOvertime in Saudi Arabia” article, you should have complained against them in the labor court. Now the time has passed as you are already out of KSA.

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