Article 77 of the Saudi Labor Law is the compensation rule for a contract ended without a legitimate reason. Unless the contract fixes its own figure, the affected party is owed 15 days' wage for every year of service on an indefinite contract, or the wage for the rest of the term on a fixed-term contract, and never less than two months' wage. It is paid on top of the end-of-service award, which Article 84 owes however the job ends.
That one article only makes sense alongside the others around it: Article 74 lists how a contract can end, Articles 75 and 76 set notice, Article 80 lets an employer dismiss without paying anything, and Article 81 lets a worker walk out and keep every right. This guide takes them in that order, with the amounts worked through. Put your own figures into the settlement calculator first; the Article 77 line is off until you choose it.
Saudi Arabia Final Settlement Calculator
Final settlement calculator
Based on Saudi Labor Law (Royal Decree M/51), Articles 84, 111, 76, 77 & 88
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How a contract ends under Saudi Labor Law (Article 74)
Article 74, as amended in 2025, lists the ways an employment contract comes to an end:
- Agreement between the parties, provided the worker's consent is in writing.
- Expiry of a fixed-term contract, unless it was expressly renewed.
- The will of either party under an indefinite contract, following the notice rules in Article 75.
- Resignation (paragraph 3 bis, added in 2025).
- The worker reaching retirement age under the social insurance rules, unless both agree to continue.
- Force majeure, final closure of the business, or the end of the activity the worker was employed in.
- A final court decision ending the contract in bankruptcy proceedings (paragraph 7 bis, added in 2025).
- Any other case another law provides for.
Article 79 adds two more: the contract ends on the worker's death or on their inability to do the work, shown by an approved medical certificate. It does not end on the employer's death unless the employer's person was the point of the contract.
None of these grounds is "unlawful" in itself. Article 77 comes into play when a party uses one of them, or simply stops the relationship, without a legitimate reason.
Ending an indefinite contract: notice under Articles 75 and 76
An indefinite contract can be ended by either side for a legitimate reason with written notice. Since the 2025 amendments, Article 75 sets the minimum by who is ending it and how the worker is paid:
| Situation (indefinite contract) | Minimum notice |
|---|---|
| Employer ends it, monthly pay | 60 days |
| Worker ends it, monthly pay | 30 days |
| Either side, pay not monthly | 30 days |
If notice is not given, Article 76 owes the other side an amount equal to the worker's wage for the notice period, unless the parties agreed on more. During notice given by the employer, Article 78 lets the worker take one full day a week, or eight hours across the week, to look for another job on full pay. The Saudi notice pay calculator prices the notice alone.
A fixed-term contract has no Article 75 notice. Ending it early without a legitimate reason is an Article 77 matter.
Article 77 Saudi Labor Law: what the compensation is
This is the Ministry of Human Resources and Social Development's English translation; the Arabic text governs:
Article 77. Unless the contract includes specific compensation for the termination by either party for an invalid reason, the party affected by termination shall be entitled to compensation as follows: 1. For indefinite term contracts: an amount equivalent to fifteen-day wage for each year of the worker's employment. 2. For fixed-term contracts: the wage for the remainder of the contract term. 3. The compensation referred to in paragraphs (1) and (2) of this Article shall not be less than the worker's wage for two months.
Four points decide the figure:
- "Wage" means the actual wage. Article 2 defines the wage as basic pay plus allowances, so Article 77 runs on the whole package divided by 30.
- The two-month floor bites early. At 15 days a year, an indefinite contract only passes two months' wage after four years. Below that, the floor is the answer.
- It runs both ways. "The party affected" can be the employer: a worker who walks out of a fixed-term contract without a legitimate reason can owe the wage for the remaining term.
- The contract can override it. If your contract names a compensation figure, that figure applies instead.
| Contract and service | Formula | Article 77 amount |
|---|---|---|
| Indefinite, 8 years, SAR 12,000 wage | 400 × 15 × 8 | SAR 48,000 |
| Indefinite, 18 months, SAR 6,000 wage | 200 × 15 × 1.5 ≈ 4,500 | SAR 12,000 (floor) |
| Fixed-term, 150 days left, SAR 9,000 wage | 300 × 150 | SAR 45,000 |
All three come from the Article 77 line in the Saudi final settlement calculator, embedded above, with the option ticked. Part-years count pro rata, an assumption the calculator states in its result.
What it adds up to in one settlement
Take a worker on an indefinite contract, SAR 9,000 basic plus 3,000 allowances, dismissed after exactly eight years without a legitimate reason and without the 60 days' notice:
- End-of-service award: half a month for five years plus a full month for three = 5.5 months = SAR 66,000 (Article 84)
- Pay in lieu of the 60 days' notice: SAR 24,000 (Article 76)
- Article 77 compensation: 15 days × 8 years = 120 days = SAR 48,000
- Total before any unused leave: SAR 138,000
Those three lines are separate entitlements. An employer who pays the end-of-service award and calls the matter settled has paid less than half of it.
Article 80: dismissal without award, notice or compensation
Article 80 is the only route by which an employer can end a contract and pay none of the three. It lists nine grounds:
- Assaulting the employer, a manager, a superior or a subordinate during or because of work.
- Failing to perform essential contractual obligations, obey lawful orders or follow posted safety instructions despite a written warning.
- Proven misconduct or an act breaching honour or trust.
- A deliberate act or omission meant to cause the employer material loss, reported to the authorities within 24 hours.
- Obtaining the job by forgery.
- Being appointed on probation.
- Unexcused absence of more than 30 days in a contract year, or more than 15 consecutive days, after a written warning at 20 and 10 days respectively.
- Using the position unlawfully for personal gain.
- Disclosing the employer's industrial or commercial secrets.
The employer must give the worker the chance to state their objections before dismissing. "Poor performance" is not on the list. A dismissal that fails to fit one of the grounds is a termination without a legitimate reason, which brings back the end-of-service award, the notice pay and Article 77. The end of service guide covers Article 80 forfeiture of the award in more detail, including why the employer must prove the ground.
Saudi Labor Law Article 81: leaving without notice and keeping your rights
Article 81 is the worker's mirror of Article 80. A worker may leave without notice, "without prejudice to all of his statutory rights", where:
- The employer fails to meet essential contractual or statutory obligations towards the worker.
- The employer or its representative deceived the worker about the terms of work when the contract was made.
- The worker is assigned, without consent, work essentially different from what was agreed, outside what Article 60 allows.
- The employer, a family member or the responsible manager commits violence or an indecent act against the worker or the worker's family.
- The employer or manager treats the worker with cruelty, injustice or insult.
- A serious danger at the workplace threatens the worker's safety or health and the employer, knowing of it, has done nothing.
- The employer's conduct, above all unfair treatment or breach of the contract, pushed the worker into appearing to be the one who ended it.
The money question is whether leaving under Article 81 counts as resignation. Article 85 reduces the award only where employment ends "due to the worker's resignation", and Article 81 says you keep all your statutory rights, so the usual reading is that an Article 81 departure is paid in full rather than at the resignation tier. On SAR 8,000 basic plus 2,000 allowances after four years, that is the difference between SAR 20,000 (full award) and SAR 6,666.67 (one-third under Article 85). A court settles it if the employer disputes the ground, so document the breach before you leave.
Protected situations: illness, pregnancy and probation
- Illness (Article 82). An employer may not end a contract because of illness until the worker has used up the sick leave in Article 117, and the worker may ask to attach annual leave to sick leave. The guide to sick leave in Saudi Arabia has the pay ladder.
- Pregnancy and maternity (Article 155). No dismissal, or warning of dismissal, during pregnancy or maternity leave, including related illness of up to 180 days a year.
- Probation (Articles 53 and 54). Either side may end the contract during probation, which is a single period of up to 180 days, and neither is owed compensation or an end-of-service award for it.
Deadlines once the contract has ended
Article 88 requires the employer to pay wages and settle every due within one week of the end of the relationship, or two weeks where the worker ended it. If that does not happen, Article 234 gives you twelve months from the end of the relationship to bring the claim before the labour courts, unless you have an excuse the court accepts or the employer acknowledges the debt.
Frequently Asked Questions
What is Article 77 of the Saudi Labor Law?
It sets the compensation for a contract ended without a legitimate reason, unless the contract fixes its own amount: 15 days' wage for each year of service on an indefinite contract, the wage for the rest of the term on a fixed-term contract, and never less than two months' wage in either case.
Is Article 77 compensation paid on top of end of service?
Yes. The end-of-service award under Article 84 is owed however the job ends, and Article 77 compensation is a separate entitlement for an unlawful termination. Pay in lieu of notice under Article 76 is separate again.
How is Article 77 compensation calculated?
On the actual wage, basic pay plus allowances, divided by 30. On an indefinite contract multiply the daily wage by 15 and by your years of service; on a fixed-term contract multiply it by the days left on the term. If the result is below two months' wage, the two months apply.
Can an employer claim Article 77 compensation from a worker?
Yes. The article protects 'the party affected by termination', so a worker who leaves a fixed-term contract early without a legitimate reason can owe the employer the wage for the remaining term, subject to the same two-month minimum.
What does Article 81 allow?
It lets a worker leave without notice while keeping all statutory rights, for example when the employer fails essential obligations, deceived the worker at hiring, changes the job without consent, mistreats the worker or ignores a serious workplace danger.
What is the difference between Article 80 and Article 81?
Article 80 lists the grounds on which an employer may dismiss without award, notice or compensation, after hearing the worker. Article 81 lists the grounds on which a worker may leave without notice and keep every right. One protects the employer from serious misconduct, the other protects the worker from it.
What is the meaning of an indefinite contract in Saudi Arabia?
A contract with no end date. Either side may end it for a legitimate reason with written notice under Article 75: at least 60 days from the employer and 30 from the worker where pay is monthly. A fixed-term contract that both sides keep performing after it expires becomes indefinite, subject to the special rule for non-Saudis in Article 37.
How long do I have to claim compensation?
Twelve months from the end of the employment relationship under Article 234, unless you have an excuse the court accepts or the employer acknowledges the debt.
Work out the whole settlement
Article 77 is one line of what you may be owed. The Saudi final settlement calculator adds it to the end-of-service award, unused leave, notice pay and unpaid salary, each on the actual wage. For the end-of-service rules themselves, see Saudi Labor Law end of service benefits: Articles 84 to 87, and the Saudi end of service calculator for the award on its own.
Sources: Saudi Labor Law (Royal Decree M/51), consolidated Arabic text as amended to 1446 AH, Ministry of Human Resources and Social Development. This guide is for general guidance, not legal advice. Whether a termination was lawful is decided by the labour courts; confirm your position with a qualified lawyer before acting.