Quick Summary
- Two main contract types in Saudi Arabia: Fixed-term and Unlimited
- Fixed-term has a specific end date — unlimited has no end date
- Both types provide full EOSB rights — calculation method differs slightly
- Fixed-term contract that expires naturally = full EOSB like termination
- Unlimited contract renewed twice becomes an unlimited contract automatically
- Always check your Qiwa contract to confirm which type you have
The Two Main Contract Types in Saudi Arabia
Saudi Labour Law recognizes two primary types of employment contracts. Understanding which type you have is essential because it affects your notice period obligations, EOSB calculation, termination rights and renewal rules.
Fixed-Term Contract (Limited Contract)
A fixed-term contract — also called a limited contract — specifies a clear start date and end date. Employment automatically ends on the contract end date unless both parties agree to renew.
Fixed-term contracts are very common in Saudi Arabia for project-based work, government contracts and roles tied to specific assignments. Most expats joining Saudi companies for the first time are given fixed-term contracts.
- Has a defined start and end date in the contract
- Automatically ends on the expiry date without notice from either party
- Can be renewed by mutual agreement before expiry
- Early termination by either party requires 30 days notice or pay in lieu
- If renewed more than twice it may convert to an unlimited contract
Unlimited Contract (Open-Ended Contract)
An unlimited contract — also called an open-ended contract — has a start date but no end date. Employment continues indefinitely until either party gives notice to end it.
Unlimited contracts offer greater job security and are generally more favorable for employees because termination requires notice and full EOSB is easier to accumulate over long service.
- Has a start date but no end date
- Continues until either party gives notice to terminate
- Notice period: 30 days under 2 years, 60 days for 2+ years
- Provides stronger job security than fixed-term contracts
- EOSB accumulates continuously with no interruption
Side-by-Side Comparison
| Feature | Fixed-Term Contract | Unlimited Contract |
|---|---|---|
| End Date | Specified in contract | No end date |
| Notice Period | 30 days for early termination | 30 days (under 2 yrs) / 60 days (2+ yrs) |
| EOSB on Natural Expiry | Full EOSB (like termination) | N/A — no natural expiry |
| EOSB on Resignation | Depends on service length | Depends on service length |
| EOSB on Termination | Full EOSB always | Full EOSB always |
| Job Security | Lower — ends on expiry | Higher — notice required |
| Common For | Project work, new hires, government contracts | Long-term roles, senior positions |
EOSB Differences Between Contract Types
Both contract types provide EOSB — but the triggering events differ. Here is exactly how EOSB works for each:
Fixed-Term Contract EOSB
- Contract expires naturally — Full EOSB is owed as if you were terminated. This is the best outcome — you get full EOSB without it being reduced for resignation.
- Employer terminates early — Full EOSB plus compensation for remaining contract period or notice pay.
- Employee resigns early — Reduced EOSB based on service length (same rules as unlimited contract resignation) plus possible notice pay obligation.
Unlimited Contract EOSB
- Employer terminates — Full EOSB always owed regardless of reason (except Article 80 gross misconduct cases).
- Employee resigns — Reduced EOSB: under 2 years = none, 2–5 years = 1/3, 5–10 years = 2/3, 10+ years = full EOSB.
What Happens When a Fixed-Term Contract Is Renewed?
Contract renewal is an important area that affects your long-term rights. Here are the key rules:
- Each time a fixed-term contract is renewed, the new period adds to your total service for EOSB purposes
- Service is continuous across renewals — there is no EOSB reset between renewals unless you actually leave and return
- If a fixed-term contract is renewed and the combined service exceeds what was originally contracted, the courts may treat it as an unlimited contract
- Many Saudi companies renew fixed-term contracts repeatedly — after multiple renewals courts often view the employment as de facto unlimited
When Does a Fixed-Term Contract Become Unlimited?
Saudi Labour Law and court precedent suggest that repeated renewal of fixed-term contracts without genuine project-based justification can cause the contract to be reclassified as unlimited. Signs that a court may reclassify:
- Same role renewed multiple times without change
- No specific project or time-bound reason for the fixed term
- Employee treated the same as permanent staff in practice
- Company policy treats long-term fixed contract employees as permanent
How to Check Your Contract Type on Qiwa
- Visit qiwa.sa and log in with your Iqama number
- Go to "My Contracts" section
- Open your active employment contract
- Look for "Contract Type" — it will say either Fixed-Term or Unlimited
- Check the contract end date if fixed-term — mark this in your calendar
Which Contract Type Is Better for Expats?
It depends on your situation:
- For long-term stability — Unlimited contract is better. More security, clearer notice period rights and continuous EOSB accumulation.
- For maximum EOSB on leaving — Fixed-term can be better if you plan to leave when the contract expires naturally. You get full EOSB without the resignation reduction penalty.
- For project-based work — Fixed-term is standard and expected. Both parties understand the relationship has a defined timeline.
- For negotiating power — Unlimited contracts can be harder for employers to end without valid reason, giving you more leverage.
Frequently Asked Questions
My fixed-term contract ended but my employer did not give me EOSB. What do I do?
A fixed-term contract ending naturally is treated as termination for EOSB purposes. Your employer must pay your full EOSB within 7 days of the contract end date. If they have not paid, file an HRSD complaint immediately at hrsd.gov.sa.
Can my employer change my contract from unlimited to fixed-term?
Only with your written consent. Your employer cannot unilaterally downgrade your contract from unlimited to fixed-term. This would be a significant reduction in your employment rights and requires your agreement. Refuse in writing and seek HRSD guidance if pressured.
I have been on a fixed-term contract for 8 years with annual renewals. Am I actually on unlimited?
Quite possibly — and Saudi courts have ruled in favor of employees in exactly this situation. After repeated renewals for the same role without genuine project-based justification, the employment may be reclassified as unlimited. This could significantly improve your termination rights. This is worth a consultation to assess properly.
Does my air ticket benefit depend on contract type?
No — air ticket entitlement depends on your employment contract terms, not the contract type. Both fixed-term and unlimited contract employees can have air ticket benefits if stated in their contract. Check your specific contract terms.
Contract Type Question or Dispute?
Not sure whether your contract is truly fixed-term or unlimited? Employer changed your contract type? Get expert guidance on your exact situation and rights.