Saudi Labor Law Guide: Contract Termination Rules and Notice Periods for Construction Workers

Understanding Saudi labor law contract termination rules is one of the most important things any construction worker in the Kingdom can do. Whether you are pouring concrete on a Riyadh high-rise, welding steel at a NEOM site, or working as a site engineer in Jeddah, the way your contract ends decides how much money you walk away with, whether you can change jobs, and whether you can leave the country without problems.

Saudi Arabia introduced its most significant labor law reform in a decade in February 2025. The amendments changed notice periods, defined resignation for the first time, extended probation, and reorganised the rules on dismissal. This guide explains what those rules mean for construction workers in 2026, in plain language, so you know your rights before a dispute ever starts.

Why Saudi Labor Law Contract Termination Matters for Construction Workers

Construction is the largest employer of expatriate labor in Saudi Arabia. Giga-projects such as NEOM, Qiddiya, the Red Sea Project, Diriyah Gate, and the 2034 FIFA World Cup infrastructure programme employ hundreds of thousands of workers from Bangladesh, India, Pakistan, Nepal, Egypt, and the Philippines.

Construction work also has features that make contract termination more complicated than in an office job:

• Project-based employment. Many contracts are tied to a single site or project phase. When the project ends, the contract may end too.
• Subcontracting chains. Your legal employer is often a subcontractor, not the main developer whose logo is on the site gate.
• Frequent transfers. Workers are moved between sites, cities, and sometimes between company entities.
• Wage disputes. Late or unpaid wages are the most common construction complaint in the Kingdom, and they directly affect your termination rights.

Because of this, every construction worker should know four things: how their contract can legally end, how much notice each side must give, what compensation applies, and what to do when an employer breaks the rules.

The 2025 Saudi Labor Law Amendments: What Changed

The amendments were approved by the Council of Ministers in August 2024 under Royal Decree M/44 and came into force in February 2025. The changes most relevant to contract termination are:

The main takeaway for a construction worker: you now need to give only 30 days’ notice to resign from an open-ended contract, but your employer still owes you 60 days’ notice if they end it.

Types of Employment Contracts in Saudi Construction

Before looking at termination rules, you need to know which type of contract you have. The Saudi Labor Law treats fixed-term and indefinite contracts differently.

Fixed-term contracts

A fixed-term contract has a clear start and end date, for example “24 months from 1 March 2026”. Most construction workers recruited from abroad are on fixed-term contracts, and the term often matches the project schedule.

Under Article 74, a fixed-term contract ends automatically when its term expires. No notice period applies at expiry. If you continue working after the end date without a new contract, it is treated as renewed for the same period.

Indefinite (open-ended) contracts

An indefinite contract has no end date. For Saudi nationals this is common. For non-Saudi workers, Article 37 (as amended) treats a contract with no end date as a one-year fixed-term contract that renews automatically. In practice this means an expatriate construction worker on an “open-ended” contract is legally on rolling one-year terms.

Project or task-based contracts

Article 74 also allows a contract to end when the specific work it was made for is completed. Construction companies use this for defined scopes such as “finishing works on Tower B”. Read your contract carefully: if it says the contract ends on completion of a project, your employer may lawfully end it when that project finishes, provided the completion is genuine.

How to check your contract

All employment contracts in Saudi Arabia must be documented on the Qiwa platform. Log into Qiwa with your Absher or Nafath credentials and review your registered contract. If the Qiwa contract differs from the paper you signed, raise it with your employer immediately, because the Qiwa version is what the Labor Office will rely on.

Lawful Grounds for Saudi Labor Law Contract Termination (Article 74)

Article 74 of the Labor Law lists the ways an employment contract can lawfully end:

1. Mutual agreement between employer and worker, documented in writing.
2. Expiry of a fixed term, unless the contract has been renewed.
3. Either party’s decision in an indefinite contract, with proper notice under Article 75.
4. Retirement age, unless both parties agree to continue.
5. Force majeure (events beyond either party’s control).
6. Permanent closure of the establishment.
7. Termination of the activity the worker was employed for.
8. Bankruptcy of the employer (added in 2025).
9. Resignation by the worker, now formally defined in the law.

Any termination outside these grounds, or one that uses a lawful ground as a pretext, can be challenged as unfair, and Article 77 compensation may apply.

Notice Periods for Construction Workers in Saudi Arabia

Notice periods are where most workers get confused. The rules depend on who is ending the contract and whether it is fixed-term or indefinite.

Notice periods on indefinite contracts (Article 75)

• Employer ends the contract: at least 60 days’ written notice.
• Worker resigns: at least 30 days’ written notice.

The notice must be in writing. A verbal message from a site supervisor is not valid notice. Keep a copy of any notice letter you send or receive, and ask for acknowledgement on Qiwa or by email.

Notice periods on fixed-term contracts

A fixed-term contract has no statutory notice period at expiry; it simply ends on the agreed date. However:

• If the contract contains a renewal clause, either side must give notice of non-renewal within the period stated in the contract.
• If either party wants to end the contract before the end date, the compensation rules under Article 77 apply (explained below), unless the contract includes its own early-termination clause.

Pay in lieu of notice (Article 76)

If either side fails to give the required notice, they must pay the other party an amount equal to the wage for the notice period. For example, if your employer dismisses you from an indefinite contract with no notice, you are entitled to 60 days’ wages on top of your end-of-service benefits.

Time off to look for work (Article 78)

If your employer gives notice, you are entitled to paid time off during the notice period to search for a new job. The law allows one full day or eight hours per week, and you choose the day with reasonable notice to your employer. This right applies only when the employer initiates termination, not when you resign.

Notice during probation

The probation period can now last up to 180 days (six months). During probation, either party can end the contract without notice and without end-of-service benefits, unless the contract gives one party a different right. Check your Qiwa contract for the probation length; if it is blank, you are not on probation.

Compensation for Unfair Termination (Article 77)

Article 77 is the most powerful protection in the Saudi Labor Law for construction workers. It sets compensation when a contract is ended without a legitimate reason.

If your contract states the compensation

Since 2025, the law expects contracts to specify the compensation for unlawful termination. If your contract does so, that figure applies, provided it is not lower than the statutory minimum.

If your contract is silent

• Fixed-term contract: the wronged party receives the wages for the remaining period of the contract.
• Indefinite contract: the wronged party receives 15 days’ wages for each year of service.
• In both cases, compensation must be at least two months’ wages.

Example

A mason earns SAR 2,500 per month on a two-year fixed-term contract. The employer dismisses him after eight months with no valid reason. He is owed wages for the remaining 16 months (SAR 40,000), plus his end-of-service benefits, plus any unpaid wages and leave.

What counts as a “legitimate reason”

The law does not list every legitimate reason, but Labor Courts generally accept:

• Genuine completion of the project the worker was hired for
• Documented poor performance after written warnings
• Repeated breaches of safety rules
• Genuine redundancy or closure

Courts generally reject:

• Dismissal because the worker filed a wage complaint
• Dismissal to avoid paying end-of-service benefits
• Dismissal after a workplace injury
• “Project completion” when the worker is simply replaced by cheaper labor on the same site

Dismissal Without Notice or Benefits (Article 80)

Article 80 lists the only situations in which an employer may dismiss a worker without notice, without compensation, and without end-of-service benefits. The employer must give the worker a chance to explain, and the reason must be stated in writing. The grounds include:

1. Assaulting the employer, a manager, or a supervisor during or because of work.
2. Failing to perform essential duties or disobeying lawful orders, after a written warning.
3. Serious misconduct or dishonesty.
4. Deliberately causing material loss, provided the employer reports it to authorities within 24 hours.
5. Using forged documents to get the job.
6. Dismissal during the probation period.
7. Absence without a valid reason for more than 30 days in one contract year, or more than 15 consecutive days, after a written warning.
8. Exploiting the position for personal gain.
9. Disclosing the employer’s trade secrets.

On a construction site, the most common Article 80 claims are unauthorised absence and disobeying safety instructions. Protect yourself by:

• Never leaving site for more than a few days without written leave approval.
• Keeping copies of sick notes from a recognised clinic.
• Asking for all warnings in writing and responding in writing.

Importantly, Article 80 is an exhaustive list. An employer cannot add new grounds for dismissal without benefits in the contract or company policy.

When a Worker Can Leave Without Notice (Article 81)

The law also protects workers who leave because of their employer’s behaviour. Under Article 81, a worker may end the contract without notice and still receive full end-of-service benefits and compensation if:

1. The employer fails to fulfil essential contractual or legal obligations toward the worker (for example, not paying wages).
2. The employer or a representative deceived the worker about working conditions at the time of signing.
3. The employer or a family member or manager commits violence or immoral acts against the worker.
4. The employer treats the worker cruelly or unjustly.
5. The workplace presents a serious danger to the worker’s health or safety that the employer knew about and failed to remove.
6. The employer, through unfair treatment, makes the worker appear to be the party terminating the contract.

For construction workers, the two most relevant grounds are unpaid wages and unsafe conditions. If your employer is more than a month behind on salary, you can file a complaint through the MHRSD and end the contract under Article 81 without losing your benefits.

Resignation Rules Since 2025 (Article 79)

Resignation was never defined in the Saudi Labor Law until the 2025 amendments. It is now a written declaration by the worker, free of coercion, expressing the wish to end the contract. The new process under Article 79 works like this:

1. The worker submits a written resignation.
2. The employer has 30 days to accept it. If the employer does not respond within 30 days, the resignation is deemed accepted.
3. The employer may delay acceptance by up to 60 days for work-related reasons, but must inform the worker in writing with the reason.
4. The worker may withdraw the resignation within seven days of submitting it, unless the employer has already accepted.
5. The employment contract continues until the resignation takes effect, and the worker keeps all rights during this time.

This protects construction workers from employers who previously ignored resignations to keep workers tied to a site, and from employers who treated a resignation as “absconding”.

End-of-Service Benefits (EOSB) on Termination

End-of-service benefits are owed on almost every termination except an Article 80 dismissal. Under Article 84, the employer pays:

• Half a month’s wage for each of the first five years of service.
• One full month’s wage for each year after five years.

The calculation uses the last wage and includes basic salary plus regular allowances such as housing and transport, if these are paid as part of the wage. Partial years are paid pro rata.

EOSB on resignation (Article 85)

If you resign, the benefit is reduced depending on your length of service:

However, you receive the full benefit if you resign under Article 81 (employer’s fault), or, for women, within six months of marriage or three months of childbirth.

Example calculation

A carpenter earning SAR 3,000 per month is dismissed after seven years for project completion. EOSB = (5 years × SAR 1,500) + (2 years × SAR 3,000) = SAR 7,500 + SAR 6,000 = SAR 13,500.

Final Settlement, Exit Visas, and Transfer Rights

Final settlement timeline

Once a contract ends, the employer must pay the final settlement, including wages, EOSB, unused leave, and any Article 76 or 77 amounts, within one week if the employer terminated, or within two weeks if the worker resigned. Ask for a written settlement statement and check it against your Qiwa wage records.

Return ticket

Under Article 40, the employer pays the cost of the worker’s return ticket to their home country at the end of the contract, unless the worker resigns before the end of a fixed term or is dismissed under Article 80.

Final exit vs. transfer

Since the labor reform initiative of 2021, expatriate workers can transfer to a new employer without the old employer’s consent when:

• The contract has expired, or
• The worker has completed one year with the employer and gives the proper notice, or
• The employer has failed to pay wages for three consecutive months, failed to renew the work permit, or has a pending labor case.

If you want to leave the Kingdom instead, you can request a final exit visa through Absher without employer approval in the same situations. A construction worker whose project has ended therefore has a real choice: stay and transfer to another contractor, or leave with a paid ticket and EOSB.

Step-by-Step: What to Do If You Are Terminated

1. Get it in writing. Ask for a termination letter stating the date and reason. If the employer refuses, send a message on Qiwa or email and keep a screenshot.
2. Check your contract type on Qiwa to know which notice and compensation rules apply.
3. Calculate what you are owed. Unpaid wages, notice pay, EOSB, leave balance, Article 77 compensation if applicable, and return ticket.
4. Request the final settlement in writing and note the one-week or two-week deadline.
5. Collect your documents. Request a service certificate under Article 64; the employer must issue it free of charge.
6. If unpaid, file a complaint. Use the MHRSD “Amicable Settlement” service through the Musaned or Labor Office portal. Complaints go to a settlement committee first, then to the Labor Court if unresolved.
7. Do not sign a waiver you do not understand. Signing a “no claims” letter in exchange for your passport or ticket can be challenged, but it makes recovery slower.
8. Keep your residence permit (iqama) valid. You generally keep your legal status while a labor case is pending.

Common Contract Termination Problems on Saudi Construction Sites

“The project is finished” dismissals

Employers sometimes dismiss workers claiming the project ended, when in reality the worker is being replaced or the same company has other sites. If you are on an indefinite or multi-year contract that does not mention a specific project, “project completion” is not an automatic lawful ground. You are entitled to notice and, if the reason is not genuine, Article 77 compensation.

Withheld passports

Passport confiscation is illegal under Saudi law. An employer cannot condition your final settlement or exit on surrendering your passport. Report it to the MHRSD hotline (19911).

Forced “resignation” letters

If you are told to sign a resignation letter or lose your benefits, do not sign under pressure. A resignation obtained by coercion is not valid under the 2025 definition. Report the incident and keep evidence of the pressure.

Wages not paid during the notice period

You must be paid your full wage during the notice period, and you cannot be forced to take unpaid leave to “serve” notice. Any unpaid days can be claimed through the Wage Protection System records.

Transfers between group companies

If you are moved from one company entity to another, make sure your Qiwa contract is updated and that your service years are carried over. Otherwise, your EOSB may be calculated from the transfer date rather than your original start date.

Rights Checklist for Construction Workers in 2026

• ✅ Written contract registered on Qiwa
• ✅ Wages paid through the Wage Protection System, on time
• ✅ 60 days’ notice from employer on an indefinite contract
• ✅ 30 days’ notice from you if you resign
• ✅ Pay in lieu if notice is not given
• ✅ EOSB after one year of service, calculated on last wage
• ✅ Full benefits if you leave under Article 81
• ✅ Compensation of at least two months’ wages for unfair dismissal
• ✅ Paid return ticket at the end of a fixed-term contract
• ✅ Right to transfer or final exit without employer consent in the permitted cases
• ✅ Free service certificate on leaving

Frequently Asked Questions

Can my employer terminate my fixed-term contract early? Yes, but unless there is an Article 80 ground, the employer must pay compensation under Article 77: wages for the remaining contract period, or the amount set in the contract, with a minimum of two months’ wages.

Do I lose my end-of-service benefits if I resign? Partly. You receive nothing if you resign with under two years of service, one third from two to five years, two thirds from five to ten years, and the full amount after ten years. Resignation under Article 81 (employer’s fault) gives you the full amount.

What is the notice period for construction workers in Saudi Arabia? On an indefinite contract, the employer must give 60 days and the worker 30 days since the February 2025 amendments. Fixed-term contracts end at expiry without notice.

Can I change jobs after my construction contract ends? Yes. When a fixed-term contract expires, you can transfer to a new employer through Qiwa without the previous employer’s consent.

How long can probation last? Up to 180 days under the 2025 amendments. Either party can end the contract during probation without notice or benefits.

Who pays my ticket home? The employer, at the end of the contract or on employer-initiated termination. If you resign before a fixed term ends, or are dismissed under Article 80, the employer is not obliged to pay.

What if the employer ignores my resignation? Under Article 79, if the employer does not respond within 30 days, your resignation is automatically accepted.

Conclusion

The February 2025 amendments made Saudi labor law contract termination rules clearer and, in several ways, fairer for construction workers. Notice periods are now asymmetric in the worker’s favour, resignation is a defined legal right, and the grounds for dismissal without benefits remain a closed list.

The rules only help you if you know them. Register your contract on Qiwa, keep every warning and notice in writing, track your wages through the Wage Protection System, and calculate your own end-of-service benefits before you sign any settlement. If an employer breaks the rules, the MHRSD complaint system and the Labor Courts are accessible to expatriate workers, and thousands of construction workers successfully recover unpaid benefits each year.