This specialty rests on three key articles of the Saudi Labor Law: Article 77 (compensation for unlawful termination), Article 80 (cases of dismissal without compensation), and Articles 84/85 (end-of-service gratuity). Many employees and employers in Jeddah confuse these three, which is exactly why rights and obligations often get misjudged.
If your contract was terminated without legitimate cause and without a pre-agreed compensation clause: on an indefinite contract you're owed 15 days' wages per year of service, minimum two full months. On a fixed-term contract you're owed the wages for the full remaining term, same minimum.
Only in specific enumerated cases (assault on the employer, material breach after written warning, deliberate harm to the business, unauthorized absence for set periods): and only if the employee was given a chance to respond first.
Half a month's wage per year for the first 5 years, then a full month per year after. On resignation, the scale changes: nothing under 2 years, one-third between 2–5 years, two-thirds between 5–10 years, full gratuity after 10 years.
Before escalating to a labor court, the law requires attempting amicable settlement through the "Wedi" platform run by the Ministry of Human Resources, which offers a virtual session between the parties overseen by a settlement officer within a defined period. Most clear-cut cases (such as calculating an end-of-service gratuity not disputed in principle) are actually resolved at this stage without needing judicial escalation, saving both sides considerable time and cost.
A common mistake among both workers and employers is calculating compensation or gratuity on base salary alone, when the law recognizes the "actual wage," which may include fixed allowances such as housing and transport if they form a regular part of the employee's monthly entitlements rather than an occasional exception. This distinction can noticeably change the value of what's due, especially for employees whose allowances make up a large share of their total monthly income.
In an unfair dismissal claim, the burden of proving a lawful reason for dismissal falls on the employer, not on the worker to prove they didn't deserve dismissal. This means an employer who fails to document the grounds for dismissal with written warning records and concrete evidence of breach finds themselves in a weak position before the labor court, even where the dismissal was actually justified in practice.
This is a general explanation: your actual entitlement depends on your contract, wage, and how employment ended. For an accurate calculation of your case in Jeddah, reach out to us on WhatsApp.
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