Resignation Related Labor Laws & the calculation basis for End of Service Allowance

1-Does the fixed term contract terminated by the employee's resignation?

The fixed-term contract shall terminate in the following cases:

• As per article (55) of the Saudi Labor Law, the fixed-term contract shall terminate upon expiration of its term 
•  As per article (74) of the Saudi Labor Law, if both parties agree to terminate it, provided that the worker’s consent be in a written format 

Therefore, in case of resignation for employees with a fixed-term contract prior to the end of the agreed-upon contract period, the employer is entitled to accept OR reject the resignation. Based on that, the contract will NOT be terminated unless the resignation approval is granted from the employer.

Under such circumstances, the potential conditions to be encountered are hereunder listed in detail: 

1. Accepting/ Approving of the resignation by the employer where mutual consent is granted to terminate the contract; therefore, the contract termination status would be labelled as " Mutual consent of both parties" reflected in the system as: "The worker and the employer to terminate the contract agreement" under End of service reason field as shown in the below video: 

2.  In case of rejecting the resignation by the employer, the employee is obliged to commit to work as per the remaining contract period originally agreed upon 

3. The employee determination to proceed with the resignation despite the employer's rejection, and their absence from work: 

This is considered illegitimate termination of the contract by the employee that would oblige him to pay compensation to the employer as stated by Article (77) of the Saudi Labor Law

As per article (80) of the Saudi Labor Law, an employer may terminate the contract without an award, advance notice or indemnity provided that he gives the worker a chance to state his reasons for objecting to the termination: 

The specific reason under article (80) will be chosen based on the actual end-of-service reason that took place between both parties; titled "The secondary reason" on the Jisr system. The main reason for the Jisr system would be stated as follows: 

• For one of the cases stated under article (80)
• Terminating the employee of the contract for none of the cases stated under article (81) 

2-Does the employee's resignation stand as the reason behind terminating the employee's indefinite-term contract

• As per article (75) of Saudi Labor Law, if the contract is of an indefinite term, either party may terminate it for a valid reason to be specified in  written notice to be served to the other party at least 60 days prior to the termination date if the worker is paid monthly and not less than 30 days for others
• If the party terminating the contract does not observe the period provided for in Article (75) of this Law,  such party shall be required to pay the other party compensation equal to the worker’s wage
  for the duration of the notice or the balance thereof unless both parties agree on a higher  compensation amount as per article (76) of the Saudi Labor Law

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How to calculate End of Service Allowance for resigned employees? 

1- Fixed-term contracts: 

Upon terminating the contract by mutual consent of both parties, the employee is entitled to the full end-of-service allowance based on the actual service period he fulfilled. As stated in article (84) of the Saudi Labor Law, all calculation details are hereunder listed for your reference: 

• Half-month wage for each of the first five years 
• One-month wage for each of the following years.
• The end-of-service allowance shall be calculated on the basis of the last wage and the worker shall be entitled to an end-of-service allowance for the portions of the year in proportion to the time spent on the job.

In order to calculate EOS on Jisr as stated in article (85), if the work relation ends due to the worker’s resignation, You have to select the Resignation factor as a reason,

So, in this case, Jisr will calculate the EOS entitled to an allowance as clarified hereunder:

1. Not entitled to the end-of-service allowance for a service that is less than 2 years 
2. One-third of the allowance after a service of not less than two consecutive years and not more than five years
3. Two-thirds of his service is in excess of five successive years but less than ten years 
4. The full allowance if his service amounts to ten or more years.

2- Indefinite-term Contracts: 

As stated in article (85), if the work relation ends due to the worker’s resignation, he shall, in this case, be entitled to an allowance as clarified hereunder:

1. Not entitled to the end-of-service allowance for a service that is less than 2 years 
2. One-third of the allowance after a service of not less than two consecutive years and not more than five years
3. Two-thirds if his service is in excess of five successive years but less than ten years 
4. The full allowance if his service amounts to ten or more years.

 

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• As an exception to the provisions of Article (85) of this Law, the worker shall be entitled to the full allowance if he leaves the work due to a force majeure beyond his control. A female worker shall
  likewise be entitled to the full award if she ends her contract within six months from the date of her marriage or three months from the date of giving birth as stated in article (87) 

You can always verify the accuracy of end of service calculation by visiting the hereunder listed websites: 

Labor Education Website: 

https://laboreducation.mlsd.gov.sa/ar/calc

Qiwa Platform: 

https://www.qiwa.sa/ar/end-service