Article 77 is the article every dismissed employee reads, and the one many employers discover only after the fact. The difference between knowing it and not knowing it is measured in cash.
Since the 1436H amendment the compensation is a defined amount. The original text left it to the labour dispute body's discretion; today both sides can compute the exposure before a decision is taken.
One question comes first: was the termination unlawful at all? If it falls under Article 80, or under a ground in Article 74, no compensation arises. Article 77 only operates where the ending had no lawful ground.
The text of the article
Unless the contract specifies a defined compensation for its termination by either party without a lawful ground, the injured party is entitled to compensation as follows:
- 1Fifteen days' wage for each year of the worker's service, if the contract is of indefinite term.
- 2The wage for the remaining term, if the contract is of fixed term.
- 3The compensation under paragraphs 1 and 2 shall not be less than the worker's wage for two months.
Status of the text: Amended by Royal Decree M/46 dated 5/6/1436H. The text below is the operative one.
The Arabic text published by the Bureau of Experts at the Council of Ministers is the reference; the English above is a working translation.
What the article means in practice
Three different amounts, often confused
End-of-service gratuity (Article 84) pays for length of service. Notice pay (Article 76) covers a termination without the required notice. Article 77 compensation addresses the unlawfulness of the ending itself.
They accumulate. An employee on an indefinite contract dismissed abruptly and without lawful ground is owed gratuity, sixty days of notice pay, and Article 77 compensation.
A contract may raise the figure, never lower it
The opening clause allows the contract to specify compensation, but the general rule of the Law is that agreements may exceed statutory entitlements and may not fall below them. The two-month floor holds.
Worked example
Indefinite contract, monthly wage 10,000 riyals, six years of service, no lawful ground: fifteen days per year equals half a month per year, so three months' wage, that is 30,000 riyals, above the floor and therefore payable as computed.
Same wage but one year of service: half a month equals 5,000 riyals, so the two-month floor applies and the compensation becomes 20,000 riyals.
When a termination counts as unlawful
- 1Ending an indefinite contract with no ground under Article 80 and no case under Article 74.
- 2Ending a fixed-term contract before its term with no lawful ground.
- 3Dismissing under Article 80 without giving the worker the opportunity to state their objection.
- 4Dismissing for absence without the written warning required by paragraph 7 of Article 80.
- 5Dismissing because of illness before the sick-leave periods are exhausted, which Article 82 prohibits.
Mistakes that recur in practice
Paying the gratuity and stopping there
Gratuity is owed for service whether or not the ending was lawful, so paying it does not discharge Article 77.
Calling a dismissal a resignation
Pressuring an employee to resign is read as employer termination, and paragraph 7 of Article 81 addresses this scenario expressly.
Ignoring the floor
Compensation never falls below two months' wage, however short the service.
How Barez applies this article
A record that stands up
Every warning, violation and approval in Barez is stamped with its time and author in an audit trail that cannot be erased.
Warnings are documented, not verbal
A warning is issued by the system, reaches the employee and sits in their file with a date, so proof does not rest on a manager's memory.
The settlement separates the three
Gratuity, notice pay and any agreed compensation appear as distinct lines rather than one lump sum.
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.