Saudi Labor Law Article 77: Compensation for Unfair Termination
Quick answer: Article 77 says that if a contract is ended for an illegitimate reason, the harmed party gets compensation, unless the contract sets its own amount. For an open-ended (indefinite) contract it is 15 days' wage for each year of service. For a fixed-term contract it is the wage for the rest of the contract. In both cases it can never be less than two months' wage.
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What Article 77 says, in plain words
- It applies when the employer (or the worker) ends the contract without a valid reason under the law.
- If the contract already states a compensation amount for this case, that amount applies.
- Otherwise: indefinite contract = 15 days' wage × years of service.
- Fixed-term contract = the wage for all the months left until the contract's end date.
- Minimum in both cases: two months' wage.
Worked examples (open-ended contract)
| Service | Monthly wage | 15 days × years | Two-month minimum | Compensation |
|---|---|---|---|---|
| 2 years | 8,000 SAR | 8,000 SAR | 16,000 SAR | 16,000 SAR |
| 4 years | 6,000 SAR | 12,000 SAR | 12,000 SAR | 12,000 SAR |
| 10 years | 10,000 SAR | 50,000 SAR | 20,000 SAR | 50,000 SAR |
15 days is half a month, so the formula is wage × 0.5 × years. Take whichever is higher: this result or two months' wage.
Worked examples (fixed-term contract)
| Months left in the contract | Monthly wage | Wage for the rest | Compensation |
|---|---|---|---|
| 5 months | 7,000 SAR | 35,000 SAR | 35,000 SAR |
| 1 month | 7,000 SAR | 7,000 SAR | 14,000 SAR (two-month minimum) |
Article 77 is on top of your end of service award
Compensation under Article 77 is separate from the end of service award. When the employer ends the contract, you are normally owed the full award under Article 84, plus your last salary and unused leave (final settlement guide).
When Article 77 does not apply
- The employer had a valid ground under Article 80, such as assault, forgery or long unexcused absence.
- The contract ended for one of the normal reasons in Article 74, such as the end of a fixed term or mutual written agreement.
- You resigned. Resignation has its own rules: see Article 85.
How to claim it
- Keep the termination letter and your contract, and ask for the reason in writing.
- File a labor complaint with the Ministry of Human Resources (amicable settlement first, then the Labor Court if it is not settled).
- Do not wait: claims are generally not heard after 12 months from the end of the work relationship.
This guide explains the law in plain words and is not legal advice. Check the official text with HRSD and speak to a lawyer for your own case.
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Frequently asked questions
What is Article 77 of the Saudi Labor Law?
It sets the compensation for ending a contract for an illegitimate reason: 15 days' wage per year (indefinite contract) or the rest of the contract (fixed-term), with a two-month minimum.
How much is Article 77 compensation for 3 years?
For an open-ended contract: wage × 0.5 × 3 = 1.5 months, so the two-month minimum applies. With 6,000 SAR wage that is 12,000 SAR.
Do I get end of service and Article 77 compensation together?
Yes. Compensation is separate from the end of service award, which is normally paid in full when the employer ends the contract.
Can the employer use Article 77 to dismiss me?
Article 77 does not give a right to dismiss. It sets what the employer must pay if it ends the contract without a valid reason.
Was Article 77 changed in 2025?
The amended Labor Law in force since 19 February 2025 keeps the 15 days per year, rest-of-term and two-month minimum rules, as published by HRSD.
Official sources
This guide explains the general rules. It is not legal advice.