Unfair Dismissal in Saudi Arabia: Articles 77, 80, and 81 Explained
Unfair Dismissal in Saudi Arabia: Articles 77, 80, and 81 Explained
Losing a job is stressful enough without the uncertainty of not knowing whether the dismissal was even lawful. Saudi Labor Law gives both employers and employees a clear framework for when a termination is justified, when it is arbitrary, and what each side owes the other when things go wrong. Three articles carry most of the weight here: Article 77 sets the compensation owed for an unfair dismissal, Article 80 lists the narrow grounds where an employer can dismiss with no indemnity at all, and Article 81 lets an employee walk away with full benefits when the employer is at fault.
The February 2025 amendments, which came into force on 18 February 2025 (180 days after publication in the Official Gazette on 23 August 2024), tightened several of these rules. This guide breaks down what each article says, what changed, and how disputes are actually resolved.
Article 77: Compensation for Arbitrary Termination
When a contract is terminated for an invalid or arbitrary reason, Article 77 sets the compensation the wronged party can claim. The formula depends on the type of contract.
The compensation formula
- Indefinite-term contracts: 15 days' wage for each year of service.
- Fixed-term contracts: wage for the remaining period of the contract.
- Minimum floor: in either case, the compensation can never be less than the worker's wage for two months.
A crucial point that is often misunderstood: this Article 77 compensation is paid on top of the end-of-service award, not instead of it. End-of-service benefits are a separate statutory entitlement, so an unfairly dismissed employee can be owed both.
A practical floor, set by the court
The 15-days-per-year figure (or the remaining-period figure for fixed-term contracts) is the statutory baseline the Labour Court applies. In practice, the final amount is set at the court's discretion based on the circumstances of the case, subject to the two-month minimum. So treat the two-month figure as a hard floor and the per-year figure as the starting point, rather than a rigid, court-proof entitlement.
Article 80: Dismissal Without Notice or Indemnity
Article 80 is the mirror image of Article 77. It lists the narrow, exceptional grounds where an employer may dismiss a worker without notice, indemnity, or compensation. These grounds include:
- Physical assault on the employer or a manager.
- A serious breach of the worker's duties (after a written warning, where applicable).
- Dishonesty or misconduct.
- Unjustified absence exceeding 15 consecutive days or 30 intermittent days in a single year.
What the 2025 amendment changed
The absence thresholds were recently raised. Before the amendment, the limits were 10 consecutive days and 20 intermittent days; they now stand at 15 consecutive and 30 intermittent days per year. That gives employees more leeway before absence can justify a no-indemnity dismissal.
Article 80 is not self-executing
This is the part employers get wrong most often. Having a valid Article 80 ground on paper does not, by itself, make a dismissal lawful. Under current practice, the employer must:
- Document each ground properly.
- Not invoke a ground retroactively for conduct that was previously tolerated.
- Issue a written warning where applicable.
- Give the employee a genuine opportunity to respond and defend themselves before the dismissal takes effect.
Saudi labour courts emphasise this right to respond. A dismissal that skips the procedure can be reclassified as arbitrary, pulling the employer straight back into Article 77 territory.
Article 81: When the Employee Can Leave With Full Benefits
Article 81 protects the employee in the opposite scenario. It allows a worker to leave without notice while keeping their full end-of-service entitlement when the employer fails essential obligations. Because the departure is treated as the employer's fault, it is not counted as a resignation. The grounds include:
- The employer commits fraud at the time of contracting.
- Non-payment of wages.
- Assault or abusive conduct toward the employee.
- Endangering the employee's health or safety.
- Reassigning the worker to materially different work without the employee's consent.
In all of these cases, the employee keeps the full gratuity they would have earned, exactly as if the employer had terminated them without cause.
Notice Periods and Article 75
Articles 77 and 80 sit alongside the notice rules in Article 75, which the 2025 amendments also reshaped. For indefinite-term, monthly-paid contracts:
- The employer must give at least 60 days' written notice.
- The employee needs to give only 30 days' written notice.
If the terminating party fails to observe the Article 75 notice period, they must pay the other party an amount equal to the wage for that notice period (unless a larger amount was agreed). This payment is separate from any Article 77 arbitrary-termination compensation, so a botched termination can stack both costs.
| Obligation | Indefinite-term, monthly-paid |
|---|---|
| Employer notice | At least 60 days (written) |
| Employee notice | At least 30 days (written) |
| Penalty for missing notice | Wage equal to the notice period |
| Article 77 compensation | Separate and additional |
How Disputes Are Resolved
If you believe a dismissal was unfair, the path runs through the Ministry of Human Resources and Social Development (MHRSD) before it ever reaches a courtroom.
- Friendly Settlement (Widdi). The case starts on MHRSD's electronic Friendly Settlement platform. The Amicable Settlement Department schedules sessions, and the goal is an agreed resolution.
- Referral to the Labour Court. If no amicable settlement is reached within 21 working days from the first session, the case is electronically referred to the Labour Court.
This two-phase design means most disputes get a structured chance to settle before formal litigation, but the clock matters: the 21-working-day window is the trigger for moving to court.
Frequently Asked Questions
Is Article 77 compensation instead of end-of-service benefits?
No. Article 77 compensation is paid in addition to the end-of-service award. They are two separate entitlements, so an unfairly dismissed worker can be owed both. For a full breakdown of how gratuity itself is calculated, see our end-of-service benefits guide.
Can my employer fire me without any indemnity for being absent?
Only if your absence exceeds 15 consecutive days or 30 intermittent days in a year, and only if the employer follows the Article 80 procedure: documenting the ground, not invoking it retroactively, issuing any required written warning, and giving you a genuine chance to respond. Skipping those steps can make the dismissal arbitrary.
What is the minimum compensation for arbitrary dismissal?
The floor under Article 77 is the worker's wage for two months. The baseline calculation is 15 days' wage per year of service for indefinite-term contracts, or the wage for the remaining period for fixed-term contracts, but it can never drop below the two-month minimum. The final figure is set at the Labour Court's discretion.
How long does the settlement process take before it reaches court?
If no amicable settlement is reached within 21 working days from the first Friendly Settlement (Widdi) session, the case is electronically referred to the Labour Court.
Know the Rules Before You Act
Whether you are an employer building a defensible termination file or an employee weighing whether a dismissal was lawful, the difference between a justified termination and an arbitrary one often comes down to procedure and documentation. For the wider context on what changed in 2025, read our overview of the updated Saudi Labor Law.
Still unsure how Articles 77, 80, and 81 apply to your specific situation? The Saudi HR assistant can walk you through the rules, estimate compensation scenarios, and point you to the right MHRSD process in seconds. Ask it your question and get a clear, labor-law-grounded answer.