Termination of the contract
Article 74 of the Saudi Labour Law:when an employment contract ends
Article 74 lists every ground on which an employment contract ends, including resignation and bankruptcy rulings, both added in 1446H. The ground decides what the employee is owed, so settle it first.
- Article 74
- Explanatory guidance
Article 74 lists the grounds on which a contract can end. No other ground counts. Before working out what an employee is owed, find the paragraph that applies, because the answer depends on it.
Royal Decree M/44 of 1446H added two paragraphs: resignation as a standalone ground, and a final court ruling terminating the contract within bankruptcy proceedings.
The text of the article
An employment contract shall end in any of the following cases:
- 01If both parties agree to end it, provided the worker's consent is in writing.
- 02If the term specified in the contract expires, unless the contract has been expressly renewed under this Law, in which case it continues to its new term.
- 03At the will of either party in contracts of indefinite term, in accordance with Article 75.
- 04Resignation (paragraph 3-bis, added by Royal Decree M/44).
- 05The worker reaching retirement age as determined by the Social Insurance Law, unless the parties agree to continue working beyond that age.
- 06Force majeure.
- 07Permanent closure of the establishment.
- 08Discontinuation of the activity in which the worker is engaged, unless otherwise agreed.
- 09A final decision or judgment from the competent court terminating the worker's contract in bankruptcy proceedings opened under the Bankruptcy Law (paragraph 7-bis, added by Royal Decree M/44).
- 10Any other case provided for in another law.
Status of the text: Amended by Royal Decree M/46 dated 5/6/1436H; paragraph 4 further amended by Royal Decree M/134 dated 27/11/1440H; paragraphs 3-bis and 7-bis added by Royal Decree M/44 dated 8/2/1446H, effective 20/8/1446H.
The official reference is the Arabic text published by the Bureau of Experts at the Council of Ministers.
The English above is a working translation.
The ground decides the entitlements
Employers often ask "how much do we pay" before asking "how did this contract end". Mutual agreement, expiry of the term and retirement leave end-of-service pay intact. Resignation follows the sliding scale in Article 85. Dismissal under Article 80 removes it entirely.
Record the ground by its paragraph number. "Left the job" is too vague to be a legal ground. "Written mutual agreement" or "expiry of a fixed term" is specific enough.
Consent must be in writing
Paragraph 1 requires the employee's consent in writing. If an agreed exit is not documented, a court treats it as termination by the employer, and Article 77 compensation can then apply.
Retirement age now follows social insurance rules
The pre-2019 text fixed 60 years for men and 55 for women. The current text refers to the Social Insurance Law instead, so update any internal policy that still quotes the old ages.
Before recording a termination
- Find the paragraph of Article 74 that applies and record it as the reason.
- If the exit is by agreement, get the employee's signed written consent.
- Calculate end-of-service pay from that ground: in full, on the resignation scale, or forfeited under Article 80.
- Settle all dues within one week if the employer terminated, two weeks if the employee did (Article 88).
- Close the GOSI registration and complete the exit steps on Qiwa.
Common mistakes
Amicable exit with no paperwork
Paragraph 1 requires written consent. A verbal agreement is treated as termination by the employer, so Article 77 compensation applies.
Confusing expiry with tacit renewal
If the employee keeps working after a fixed term ends, the contract is renewed. The employer cannot later end it by saying the term has expired.
Relying on a fixed retirement age
The current text refers to the Social Insurance Law. The article itself gives no age.
How Barez applies this article
Reason is a required field
When you end an employee's service in Barez, the system asks for the ground first and calculates end-of-service pay from it. Nobody types the amount in.
The settlement is assembled for you
Once the ground is set, the system builds the settlement: gratuity, untaken leave under Article 111, dues and debts.
Nothing accrues after the end date
Attendance and violations stop on the last day, so no absences are recorded after the employee leaves.
Sources
This page is explanatory guidance, not legal advice. In a dispute, rely on the official text and consult the Ministry of Human Resources and Social Development or a licensed lawyer.
Article 74
Frequently asked questions
Is resignation now a separate ground for ending a contract?
Yes. The 1446H amendment added resignation as paragraph 3-bis of Article 74. Article 79-bis sets out the process. A resignation is treated as accepted if the employer does not reply within thirty days. The employer can postpone acceptance by up to sixty days, with written reasons. The employee can withdraw it within seven days.
Does closing the business cancel entitlements?
No. Permanent closure ends the contract, but the employee keeps their entitlements. Gratuity and other dues must be paid within the period set by Article 88.
How does Article 74 differ from Article 80?
Article 74 lists the ordinary ways a contract ends, and end-of-service pay stays payable under them, reduced on resignation by the Article 85 scale. Article 80 is a narrow exception. It allows dismissal without gratuity, notice or compensation in nine specific cases.
Labour law articles
Continue from here
Article 77: compensation for unlawful termination
What the injured party is owed when the ending has no lawful ground.
Article 80: dismissal without gratuity
The nine cases and the hearing required before dismissal.
End-of-service calculator
Compute the gratuity for the ground that applies.
The probation period
Ending the contract during probation, and its conditions.
Experience certificate template
The certificate handed over when the contract ends.
Article 77 of the Saudi Labour Law: compensation for unlawful termination
Article 77 sets a fixed formula for compensation: fifteen days' wage per year of service on an indefinite contract, or the wage for the remaining term on a fixed one, and never less than two months' wage.
Article 80Article 80 of the Saudi Labour Law: nine cases for dismissal without gratuity
Article 80 is a narrow exception to employee protection. It lists nine cases that allow termination without gratuity, notice or compensation. In every case, the employee must first be given the chance to object.
Article 81Article 81 of the Saudi Labour Law: leaving the job with full entitlements
Article 81 is the employee's counterpart to Article 80. It lists seven cases in which an employee can leave without notice and lose nothing, including when the employer's conduct pushed them into appearing to end the contract themselves.
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