What Rights Does an Employee Have Under Article 77?
One of the most misunderstood provisions of the Saudi Labor Law is Article 77. Many employees believe it applies whenever a company terminates their employment. However, Article 77 specifically deals with compensation when an employment contract is terminated without a lawful reason and the contract does not already specify the compensation payable for such termination.
Let’s understand it in simple language.
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✅ What Is Article 77?
Article 77 protects the party that suffers because of an unlawful termination. This could be either the employee or the employer, depending on who ended the contract without a valid legal reason.
If the employment contract already contains a valid compensation clause, that clause generally applies. If it does not, Article 77 provides the default compensation rules.
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👨💼 Example 1 – Employee Is Dismissed Without a Valid Reason
Ahmed has worked for a company for 5 years.
One day, the company tells him not to return to work, without relying on a lawful ground under the Labor Law.
If Article 77 applies, Ahmed may be entitled to financial compensation in addition to any other legal entitlements, depending on the circumstances of his case.
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🏢 Example 2 – Fixed-Term Contract Ends Early
Sarah has a one-year fixed-term contract, but the employer ends it 6 months before its expiry without a lawful reason.
If the contract does not specify compensation, Article 77 may require compensation based on the remaining contract period, subject to the minimum compensation provided by law.
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⚠️ Example 3 – Employee Leaves Without a Lawful Reason
An employee signs a fixed-term contract but resigns early without a lawful reason and without any contractual basis allowing it.
If Article 77 applies, the employer may also have the right to claim compensation because Article 77 protects the party harmed by the unlawful termination—not only employees.
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💰 How Is Compensation Calculated?
If the contract does not specify compensation:
✅ Unlimited (Indefinite) Contract
- Compensation is generally 15 days’ wages for each year of service.
- The compensation must not be less than two months’ wages.
✅ Fixed-Term Contract
- Compensation is generally equal to the wages for the remaining contract period.
- It must not be less than two months’ wages.
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✅ Employee Rights Under Article 77
✔️ The right to claim compensation when terminated without a lawful reason, if Article 77 applies.
✔️ The right to receive any unpaid salary, accrued leave, and other legal dues separately from Article 77 compensation.
✔️ The right to seek legal remedies through the competent labor dispute process if there is disagreement over the termination.
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⚠️ Important Difference
Article 74 → Explains when an employment contract legally ends.
Article 75 → Explains how an unlimited contract may be terminated through proper notice.
Article 77 → Explains compensation when an employment contract is terminated without a lawful reason and no valid contractual compensation clause applies.
Article 80 → Allows an employer to dismiss an employee without compensation only in specific cases of serious misconduct defined by law.
Article 81 → Allows an employee to leave work without notice while preserving legal rights in specific situations where the employer seriously breaches the law.
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📌 Key Takeaway
Article 77 is not an automatic payout whenever someone loses a job. Whether it applies depends on:
- the reason for termination,
- the type of employment contract,
- and whether the contract already contains a lawful compensation clause.
Understanding these conditions can help both employers and employees protect their legal rights and avoid unnecessary disputes.
💬 Have a question about Saudi Labor Law? Leave it in the comments, and we’ll explain it in simple language.
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