Contract Renewal Rules Saudi Arabia — Complete Guide 2026

What Happens When a Fixed-Term Contract Expires?

When a fixed-term employment contract reaches its end date, there are three possible outcomes depending on what both parties decide to do:

What Is Automatic Contract Renewal?

Automatic renewal — also called implied renewal — happens when a fixed-term contract expires but both the employer and employee continue the employment relationship without signing a new contract. Under Saudi Labour Law this has important legal consequences:

• The employment is considered to have converted to an unlimited contract from the expiry date of the last fixed-term contract
• All terms and conditions of the previous contract continue to apply — salary, benefits, title
• The employer cannot later claim the person was on a temporary or informal basis — the unlimited contract protection applies
• Your total service continues to accumulate without interruption — there is no EOSB payment at the conversion point

Can Your Employer Force You to Accept Worse Renewal Terms?

No. Contract renewal is a negotiation between two parties. Your employer cannot unilaterally impose new terms that are less favorable than your current contract. Common attempts include:

• Reducing salary at renewal
• Removing housing or transport allowances
• Changing job title or responsibilities downward
• Adding restrictive clauses that were not in the original contract
• Extending notice periods without corresponding benefit

If your employer presents a renewal contract with worse terms, you have three options:

• Negotiate — push back on the changes and try to maintain your current terms
• Decline and leave — if the contract expires and you do not sign the new one, you are entitled to full EOSB for your entire service period
• Accept under protest — only if you need to stay temporarily, but document your objection to the reduced terms in writing

EOSB Across Contract Renewals — Does It Reset?

This is one of the most important points about contract renewal — and one that is frequently misunderstood.

EOSB does NOT reset when a contract is renewed. Your service is continuous across all renewals with the same employer. The EOSB calculation uses your total accumulated service from your very first day of employment — regardless of how many times the contract was renewed.

How to Handle Contract Expiry Strategically

If your contract is expiring soon, here is how to approach it strategically:

• Check your total service — are you close to a milestone like 5 years or 10 years that changes your EOSB rate? If so, it may be worth staying until you cross that milestone before deciding.
• Calculate your current EOSB — use our EOSB Calculator to know exactly what you are owed right now.
• Review renewal terms carefully — compare the new offer to your current contract. Any reduction in benefits is a negotiation point.
• Have a plan B — if you are not satisfied with the renewal offer, know your options. You are entitled to full EOSB if you do not renew.
• Do not let it expire without action — if you want to continue, sign the renewal before expiry to maintain a formal contract. If you want to leave, communicate your decision clearly in writing before the expiry date.

What If Your Employer Refuses to Renew but Also Refuses to Pay EOSB?

This situation — unfortunately not uncommon — requires immediate action:

• Document the contract expiry date and the employer's refusal to pay EOSB in writing
• File an HRSD complaint at hrsd.gov.sa immediately — do not delay
• Do not sign any document the employer presents claiming you have no EOSB entitlement
• Do not leave Saudi Arabia before this is resolved — it becomes much harder to collect from abroad
• If the employer is also blocking your Final Exit, file a second complaint for that specifically

Frequently Asked Questions