The end of an employment relationship is not an administrative step completed after the exit: it is the day all of an employee's data is tested at once, from their start date to their recorded wage to their leave balance to any advances outstanding.
This settlement has a deadline fixed by law with no discretion in it, contents that may not be reduced, and a document the employee leaves with, being the certificate of service.
A signed release does not protect the establishment where the figure the employee signed for rested on a wrong calculation, because a release of a right one did not know of does not stand.
Before you rely on this guide: This content is general information and is not binding legal advice, rules vary with contract type and the circumstances of each case, and provisions may have changed since the last-updated date shown above, so before any decision affecting an employee, check the article in its official source or consult a specialist.
The deadline: one week or two
Article 88 provides that the employer pay the employee's wage and other entitlements within no more than one week from the date the relationship ends where the employer terminated it, and within no more than two weeks where the employee did.
This is an outer limit rather than a target, so exceeding it is a breach in its own right regardless of whether the amounts were correct.
The employer may set off what the employee owes them against these entitlements, such as the remaining instalments of an advance or unreturned custody, provided the set-off is documented rather than estimated.
What the settlement contains
The final settlement is not one figure but a set of items on a statement, and any item dropped from it returns later as a claim:
- 1Pay for days actually worked up to the end date.
- 2End-of-service gratuity computed on the last wage and at the proportion set by the reason for ending.
- 3A cash allowance for the unused annual leave balance, a separate entitlement paid alongside the gratuity.
- 4Payment in lieu of notice where termination occurred without notice.
- 5Any allowances or entitlements the contract provides for the period elapsed.
- 6A set-off for what the employee owes in advances or custody, documented item by item.
The release and when it fails
A release is the employee's acknowledgement of having received their entitlements, and its value lies in being itemised rather than stated as one lump figure, because a release of a right never explained to the employee carries no weight.
A release signed on a total with no statement of how the gratuity was computed or how many leave days were paid remains open to challenge, and the establishment may be held to the difference.
A statement setting out each item with its amount and the basis of its calculation, signed and dated, is therefore stronger for the establishment than a general release however tightly drafted.
The certificate of service
Article 64 obliges the employer to give the employee, on request and at no charge, a certificate of service stating the date they joined, the date the relationship ended, their profession, and their last wage.
The article prohibits the certificate from containing anything that harms the employee's reputation or reduces their employment prospects, so it is proof of service rather than a performance appraisal.
It also obliges the employer to return the certificates and documents the employee deposited with the establishment, a clause frequently overlooked and frequently the basis of complaints.
Why exit day goes wrong
Settlements go wrong when their data is assembled on exit day, so the leave balance is computed in haste, advance instalments are estimated, and the wage used is taken from the last payroll run instead of the contract.
An establishment where the start date, recorded wage, leave balance, and advance balances are current every day needs no assembling, because the settlement comes out of the same data it works with every month.
That is the difference between an exit that closes in a day and one that stays open for weeks and then turns into a claim.
Official sources
Article numbers cited refer to the Saudi Labor Law and its Executive Regulations. Rules and rates are subject to change, so refer to the official source whenever in doubt.
- Saudi Labor Law, Bureau of Experts at the Council of Ministers
- Ministry of Human Resources and Social Development
This content is general information and is not binding legal advice, rules vary with contract type and the circumstances of each case, and provisions may have changed since the last-updated date shown above, so before any decision affecting an employee, check the article in its official source or consult a specialist.