Saudi Labor Law Articles 77, 80 & 85 Explained

Explaining Labor Law Articles 77, 80, and 85: what they actually mean

These three articles come up more than almost anything else in Jeddah labor cases, because they determine when an employee is owed compensation for termination, and when an employer can dismiss without paying anything. Here's a direct explanation of each.

Article 77: compensation for unlawful termination

Article 77 governs termination of an employment contract by either party without a legitimate reason, or without following proper procedure (such as not honoring an agreed notice period). If the contract itself doesn't specify a pre-agreed compensation amount, the law sets it as follows:

• Indefinite-term contracts: compensation equal to 15 days' wages for each year of service, with a minimum of two full months' wages regardless.
• Fixed-term contracts: compensation equal to the wages for the remaining contract period, also with a two-month minimum.

This compensation is entirely separate from end-of-service gratuity and notice pay: neither replaces the other.

Article 80: when can an employee be dismissed without compensation or notice?

Article 80 gives the employer the right to terminate immediately without gratuity, notice, or compensation, but only in specific enumerated cases: for example: the employee assaulting the employer or a superior at work, failing to perform core duties or lawful instructions despite a written warning, deliberately causing financial harm to the employer, unauthorized absence for periods specified in the law, or disclosing work secrets. The law always requires giving the employee a chance to respond before dismissal under this article, and failing that requirement can turn what looked like an Article 80 dismissal into an unlawful one.

Article 85: how the way employment ends affects the gratuity

Article 85 relates to reducing the end-of-service gratuity specifically when the employee resigns (not when dismissed), on a sliding scale: nothing is owed for under 2 years of service, one-third of the gratuity for 2–5 years, two-thirds for 5–10 years, and the full gratuity at 10 years or more. This reduction doesn't apply when the employer ends the contract, or in certain exceptional cases.

The practical difference between the three articles

Article 77 concerns compensation for unlawful termination. Article 80 defines when an employer is exempt from paying anything upon dismissal. Article 85 only concerns reducing the end-of-service gratuity when the employee resigns. Confusing these three is extremely common, and it's exactly why many workers and businesses in Jeddah misjudge their actual rights or obligations.

Worked examples

An employee earning SAR 6,000 on an indefinite contract, with 4 years of service, dismissed without a legitimate reason: owed compensation equal to 15 days' wages × 4 years, and since that figure is close to the two-month minimum, whichever is greater applies in practice, as assessed by the labor court. If instead the contract was fixed-term with 6 months remaining at dismissal, compensation equals the full wages for those remaining six months.

What to do if you're in this situation

• Keep a copy of your employment contract and any notices or correspondence related to its termination
• Document the date and stated reason for dismissal as you were officially informed of it
• File a complaint through the Ministry of Human Resources' "Wedi" (Ta'awi) platform as a first step toward an amicable settlement before escalating to the labor court
• Consult a specialized lawyer to determine which article actually applies to your situation, since the assessment varies with the details of each case

This explanation is general and covers each article's core principle, but actual application depends on the specifics of your contract and how it ended. For an accurate assessment of your situation in Jeddah, reach out to us directly on WhatsApp.

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