Introduction
Wrongful termination in Saudi Arabia arises when an employer ends an employment relationship in violation of the Saudi Labor Law or without a legally justified cause. Because termination decisions carry financial and legal consequences for both parties, understanding the lawful grounds, procedural requirements, and available remedies helps employers manage risk and enables employees to protect their rights.
read about: Saudi Labor Law 2026: Guide for Employers & Employees
What Is Considered Wrongful Termination?
Wrongful termination occurs when an employer dismisses an employee without a valid legal basis or fails to follow the required procedures. In practice, the court or labor authority evaluates:
- Whether the employer relied on a legitimate cause recognized by the Saudi Labor Law.
- Whether the employer documented performance or disciplinary issues properly.
- Whether the employer respected contractual terms and notice requirements.
If the employer cannot justify the termination with evidence or a recognized legal ground, the dismissal may qualify as wrongful.
also look at: Saudi Labor Law Article 80 (2026)
Lawful vs. Unlawful Grounds for Termination
Lawful Termination (With Valid Cause)
An employer may terminate employment when the employee commits a serious violation that falls within recognized legal grounds (for example, specific misconduct addressed under the Labor Law), provided that the employer documents the incident and follows due process.
Unlawful (Wrongful) Termination
Termination may be deemed wrongful when:
- The employer dismisses the employee without a valid reason.
- The employer relies on unproven allegations.
- The employer ends the contract in retaliation or without respecting agreed contractual terms.
- The employer fails to provide notice where notice is required.
Key Legal Framework Governing Termination
Saudi Labor Law regulates termination through multiple provisions that address:
- Termination with cause (disciplinary dismissal).
- Termination without cause and the resulting compensation.
- End-of-service benefits.
- Notice periods and contractual obligations.
Employers must align termination decisions with the applicable article governing the employment contract type (fixed-term or indefinite).
see more about:Article 77 Saudi Labor Law: Compensation and Termination
Employer Obligations Before Terminating an Employee
A prudent employer should:
- Document performance issues, warnings, or violations.
- Provide the employee with an opportunity to respond.
- Apply internal disciplinary procedures consistently.
- Issue written notice where the contract or law requires it.
- Calculate final dues accurately, including accrued leave and end-of-service benefits.
These steps demonstrate procedural fairness and reduce the risk of a wrongful termination claim.
Employee Rights in Cases of Wrongful Termination
When an employee challenges a dismissal, the employee may seek:
- Financial compensation for unlawful termination.
- Payment of unpaid wages or benefits.
- End-of-service entitlements.
- Issuance of a service certificate reflecting the employment period.
The competent labor authority reviews evidence from both parties before determining the appropriate remedy.
Compensation for Wrongful Termination
The compensation amount depends on several factors:
- The type of employment contract (fixed-term vs. indefinite).
- The remaining duration of the contract (for fixed-term agreements).
- The employee’s wage and length of service.
- Any contractual clauses governing termination.
Courts typically assess compensation by applying the relevant statutory formula or contractual provisions.
How to File a Wrongful Termination Claim
An employee who believes the dismissal was unlawful should:
- Gather employment documents (contract, salary records, warnings, correspondence).
- Submit a complaint through the competent labor dispute resolution channel.
- Participate in the amicable settlement phase.
- Proceed to formal adjudication if the dispute remains unresolved.
Accurate documentation significantly strengthens the claim.
Preventing Wrongful Termination Disputes
For Employers
- Implement clear HR policies.
- Maintain written performance evaluations.
- Train supervisors on lawful disciplinary procedures.
For Employees
- Retain copies of contracts and official communications.
- Request written clarification for disciplinary actions.
- Seek legal guidance before signing termination documents.
Proactive compliance and documentation often prevent disputes from escalating.
Frequently Asked Questions (FAQ)
When does termination become legally risky for an employer?
Termination becomes risky when the employer lacks documented cause, ignores notice obligations, or deviates from internal disciplinary procedures.
Can an employee receive compensation even if the contract allows termination?
Yes. If the employer terminates without a recognized legal basis or fails to meet contractual or statutory requirements, compensation may still apply.
Does contract type affect the remedy?
Yes. Fixed-term and indefinite contracts involve different compensation calculations and notice rules.
Is amicable settlement required before litigation?
In many cases, the dispute first enters a settlement phase designed to resolve the matter efficiently before formal proceedings.
Conclusion
Wrongful termination in Saudi Arabia exposes both employers and employees to legal and financial consequences. Employers who follow documented procedures and rely on lawful grounds reduce exposure to claims, while employees who understand their rights can pursue appropriate remedies when a dismissal lacks justification. The site also provides additional legal articles on related employment topics, and professional legal services remain available to assess specific cases and recommend the most effective course of action.
