Labor Law

Introduction

Under the Saudi Arabian labor law, many employees and employers are safe enough to keep their rights related to work, business and labor issues. The KSA labor law is usually updated in order to cope with the needs of labor market and to meet the new market and labor requirements. This ensures continuous updating to the different articles of the law and adding or omitting from them based on the public benefits of Saudi Arabia and its citizens and the workers working in it. The current paper is discussing the Article 84 from the Saudi labor law and how it is made for The reforms follow the Saudi Ministry of Labor’s continuous efforts for striking a balance between the creation of a dynamic marketplace for foreign businesses and protecting and developing the workforce. There will also be discussion for Article 85 and how far they are important and to compare them with the Labor law in Oman regarding the two articles.

Body

The Saudi Labor law includes many articles among which are Article 84 and 85 that state the following:

Article 84

Upon the end of the work relation, the employer shall pay the worker an end-ofservice award of a half-month wage for each of the first five years and a one-month wage for each of the following years. The end-of-service award shall be calculated on the basis of the last wage and the worker shall be entitled to an end-of-service award for the portions of the year in proportion to the time spent on the job.

Article 85

If the work relation ends due to the worker’s resignation, he shall, in this case, be entitled to one third of the award after a service of not less than two consecutive years and not more than five years, to two thirds if his service is in excess of five successive years but less than ten years and to the full award if his service amounts to ten or more years.

These two articles are very important for ensuring workers' rights when they are seeking end of service benefits. The law articles should be applied in the organizations with regard to the vaccances systems in each organization, the time periods spent atwork by the worker and the overtime spent in the job too. End of service award should be well calculated in each business organization based on many measurements and calculation. Resignation of the employees also is regarded as the resigned employee is dealt with by using the Article 85 of the Saudi labor law and then the Article 84 should be used with the employees who ends his service but not due to resignation. Some companies include the end of service benefits within the monthly salary as a package and this should be very clear from the very beginning of working with the company and should be clear in the contract as the employee should be aware of the items of the salary and how it is divided and about the strategy followed by the company to include end of service benefits as some employees may be shocked at the end of service when they find that they were used to receive the end of service benefits included anddivided to portions in the monthly salary as a package which may be a great shock to them and they may complain and ask for the end of service benefits. This all depends on the contract of work they had made with the employer at the very beginning of work. All terms and conditions sould be clear in the contract and the employee should be aware of the way the final reward is bening delivered to him and how it is divided orwhat portions are given to the employee of it within the salary or not. The labor law articles 84 and 85 are clear and should be well understood by the business organization in order to deal with the issue of end of services properly and not to cause problems with employees when they end their services.

Calculation of the end of service benefit should rely on the law article 85 and it should depend on the real period spent by the employee wworking and this can be calculated using different Excel programs or manually.

According to the Saudi labor law Articles 84 and 85 the award or the end of service benefit is given to the employee who completed work period that is minimum of two years service in any company that is located in Saudi Arabia. If the service of the employee is low than two years, the employee is not legible for receiving the award or benefits of end of service.

Based on the Article 84 and 85 of the Saudi labor law, the calculation of the end of service benefits of the employees in Saudi companies must be calculated at the end of working period of the employee in the Saudi company either the employee is leaving the company as his own choce or is terminated by the company in regard to the differences of the benefit in each cases. Calculations depend on many factors such as the salary, the number of years the employee spent in work and the case if the employee is terminated by the company or resigned. If the employee is resigned after two years of service but not finished all five years of service, the employee then is legible to one third of the end of service benefit award. If the employee is resigned from his job in Saudi Arabia after five years of service but less than ten years, the employee then is eligible for two thirds of the end of benefits service award and the salary's percentage will be that full salary of that employee.

If the employee's leaving is due to resignation from the job or due to being terminated after ten years of service, then he is illigible for receiving two thirds of the end of service award which is the full salary percentage here.

If the employee completed ten years or more in the job then he is illigible for receving the full end of service award. The salary percentage here will be full salary of the employee.

If an employer decides terminating an employee from his service before completion of his five years service, the employee then is eleigible for half salary.

If an employer decides terminating an employee from his service after the completion of his five years service. The employee then is eligible for half of the salary for the five first years and full salary to be calculated after five years.

Regarding the women employee when she resigns the job within six months of marriage, she is eleigible to receive the reward as full end of service benefit. This also applies to the woman who resigns the job after three months of giving birth to her child as she also recieves full end of service benefit award.

There are important government websites for Saudi employees to check for claculating their end of service benefit. All calculations are made on a basis that the employee has finished consecutive years in the company where he works in Saudi Arabia.

End of service benefit should be calculated and given to the employee based on the latest salary the employee received really and written in his papers based on the Saudi Labor law Articles 84 and 85.

There should also be regard to the contract termination conditions as:

 If the employee resigned after the contract period completion, it is dealt with as termination.

If the employee has resigned after the completeion of the extension of the contract, this is treated as resignation.

If the employer doesn't need tht employee to complete his his service at any time, this is treated as termination.

Claiming the end of service benefit is an easy task that each employee should be aware of and able to apply and ask for. The deceased employee should follow terms of death copmensation procedures.  

Regarding the compensation of employees at termination, Unless the parties agree in advance and in writing on the amount of compensation payable upon termination without “valid reason”, the party terminating the contract will have to compensate the other with either:

A wage equivalent to 15 days for each completed year of employment, in indefinite term contracts.

The balance of wages for the remaining employment term, in the fixed-term contract.

In each case, the minimum amount of compensation may not be less than two months’ wages. This was mentioned in the new changes of the law articles in 2016.

The labor law in Oman

Article 39

If the employment relationship is terminated, the employer, shall, in respect of the employees who do not benefit from the rules of the Social Insurance Law, pay to the employee an end of service gratuity equal to the salary of fifteen days for each year of service for the first three years and a one month salary for each year for the following years and the employee will be entitled to gratuity for the fractions of the year in respect of the period he spent in service and the last basic salary shall be the basis of calculating the gratuity. The duration of continuous service which began before the commencement of this law shall be counted within the period of service which will be considered for determining the payable gratuity period.   

Article 39 of the Labor Law (Royal Decree 35 of 2003) states that expatriate employees are generally entitled to an end-of-service gratuity payment on the termination of their employment contract and provides the calculation for the gratuity. The gratuity is calculated as follows:

Length of Employment:
1 to 3 years
Gratuity :15 days basic salary for each year of service
Length of Employment: 3 years or more
Gratuity :1 month basic salary for each year of service
The gratuities are calculated based on the final basic salary, and any fraction of a full year is paid on a pro rata basis. No end of service benefit applies to employees who have been employed for less than a year. This is different from the articles of the Saudi law 84 and 85 as it is the final basic salary that the employee's award is calculated by in the Omani law but it is the full salary that is applied in the Saudi law.

There are cases in the Omani labor law that the employee may not receive an end of service benefits according to :

Article 40:     

The employer may dismiss the employee without notice and without paying end of service gratuity in any of the following cases:-

1. If the employee assumes a false identity or resorts to forgery to obtain the employment.
2. If the employee commits a mistake which results in grave material loss to the employer, provided that the latter reports the incident to the concerned Directorate within three days from the date of his knowledge of such incident.
3. If the employee does not abide by the instructions which must be followed for the safety of the employees and the place of work despite being warned in writing, provided that such instructions are made in writing and displayed in a conspicuous place.
4. If the employee is absent from his work without reasonable justification for more than ten days in one year or more than seven consecutive days, provided that the employer gives the employee a written warning after being absent for five days in the first instance.
5. If the employee discloses the secrets of the establishment in which he works.
6. If the employee is finally convicted of a crime or misdemeanour involving breach of honour or trust or a misdemeanour committed in the place of work or while the work is being performed.
7. If during the working hours the employee is found drunk or intoxicated by a narcotic substance or a mind stimulant. If the employee assaults the employer or the manager in charge or gravely assaults any of his superiors during the work or because of the work or if he beats one of his fellow employees in the place of work and such beating results in illness or discontinuation of work for a period which exceeds ten days.
8. If the employee gravely breaches his obligations to perform the work agreed upon in his contract of employment.