Quick Summary
- Article 77 provides compensation when either party terminates a contract arbitrarily
- Arbitrary termination = termination without a valid legal reason
- Compensation is up to 2 months salary per year of service
- This is paid in addition to EOSB — not instead of it
- Both employer and employee can claim under Article 77
- Must be claimed through HRSD or Labour Court — not automatically paid
What Is Article 77 of Saudi Labour Law?
Article 77 of Saudi Labour Law deals with arbitrary termination — when either an employer or employee ends an employment contract without a valid legal reason. It provides a remedy for the affected party in the form of financial compensation.
In simple terms: if your employer fires you without a valid reason, you are entitled to compensation beyond your standard EOSB. And if you resign without a valid reason, your employer can claim compensation from you under the same article.
Most expats only know about EOSB. Article 77 is the additional protection that many workers are completely unaware of — and employers rarely volunteer to pay it. You must claim it actively.
What Is Arbitrary Termination?
Arbitrary termination means ending employment without a legitimate reason recognized by Saudi Labour Law. Examples of arbitrary termination by an employer include:
- Terminating an employee because they filed a labour complaint
- Terminating without any stated reason
- Terminating for reasons not listed in Article 80 as valid grounds
- Terminating because of the employee's nationality, religion or personal characteristics
- Terminating a pregnant employee or one on maternity leave
- Terminating an employee on sick leave without following proper procedure
- Terminating because the employee reported a workplace safety issue
- Constructive dismissal — making conditions so unbearable the employee is forced to resign
How Much Compensation Does Article 77 Provide?
The law states that compensation shall not exceed wages for a period of two months for each year of service. The exact amount is determined by the Labour Court based on the circumstances — there is no fixed formula.
In practice, courts consider:
- The severity of the arbitrary nature of the termination
- Your total years of service
- Your monthly salary at time of termination
- The difficulty you will face finding new employment
- Any damages you suffered as a direct result of the termination
Article 77 vs EOSB — What Is the Difference?
| Feature | EOSB (Article 84) | Article 77 Compensation |
|---|---|---|
| What It Is | Gratuity for years of service | Compensation for unfair dismissal |
| When It Applies | All employment endings | Only when termination is arbitrary |
| How It Is Paid | Automatically by employer | Must be claimed — not automatic |
| Amount | Fixed formula (15 or 30 days/year) | Up to 2 months salary per year |
| Paid Together? | Yes — both are paid | Yes — in addition to EOSB |
How To Claim Article 77 Compensation
Document Everything
Gather all evidence that shows the termination was arbitrary — termination letter, emails, WhatsApp messages, witness statements, HR communications, performance reviews showing no issues. The stronger your documentation, the stronger your claim.
File a Complaint at HRSD
Go to hrsd.gov.sa or visit the nearest HRSD office. File a complaint stating you were arbitrarily terminated and claiming compensation under Article 77. Include your evidence and the amount you are claiming.
HRSD Mediation Session
HRSD will call both parties to a mediation session. Many cases are settled here. If your employer agrees to a settlement amount, you can accept it or push for more. You are not obligated to accept the first offer.
Labour Court If Unresolved
If mediation fails, HRSD refers the case to the Labour Court. The court will examine evidence from both sides and issue a binding judgment on the compensation amount. This process typically takes 3–6 months.
Enforcement of Judgment
Once the court issues a judgment in your favour, the employer must pay within the specified timeframe. If they refuse, the court can enforce payment through bank account freezing or other legal measures.
Article 77 When the Employee Resigns Arbitrarily
Article 77 works both ways. If an employee resigns from an unlimited contract without a valid reason — and causes financial harm to the employer as a result — the employer can claim compensation under Article 77.
In practice this is much less common and harder for employers to prove. They must show actual financial damage caused by the sudden resignation. Simply being inconvenienced is not enough for an Article 77 claim by an employer.
Article 77 and Fixed-Term Contracts
For fixed-term contracts, the situation is slightly different:
- If the employer terminates a fixed-term contract early without a valid reason, the employee is entitled to compensation for the remaining contract period — this is in addition to EOSB
- If the employee breaks a fixed-term contract early without a valid reason, the employer can claim compensation for the remaining period — often limited to 45 days salary maximum
- The Labour Court has discretion in both cases to award what it considers fair and proportionate
Real Scenarios Where Article 77 Applies
Scenario 1: Terminated after filing a salary complaint
Worker files an HRSD complaint about unpaid overtime. Two weeks later employer terminates them citing "restructuring." This is a classic retaliatory dismissal — highly likely to succeed as an Article 77 claim with proper documentation.
Scenario 2: Terminated with no reason given
Employer hands a termination letter with no reason stated. Employee has clean performance record and no disciplinary issues. Strong Article 77 case — employer cannot simply terminate without cause.
Scenario 3: Forced to resign through unbearable conditions
Employer demotes worker, reduces salary and assigns humiliating tasks to force resignation. This is constructive dismissal — treated as arbitrary termination. Employee can claim Article 77 even though they technically resigned.
Scenario 4: Terminated for reporting a safety issue
Worker reports a workplace safety violation. Shortly after they are terminated. Clear retaliation — strong Article 77 case that courts typically rule heavily in the employee's favour.
Frequently Asked Questions
Can I claim Article 77 if I already left Saudi Arabia?
Yes but it is harder. You need a Saudi-based legal representative to file and attend hearings on your behalf. Act within one year of your termination — this is the statute of limitations for labour claims.
My employer said the termination was for performance. Can I still claim?
Yes — if you believe the performance reason is a pretext. The Labour Court will look at evidence including your performance reviews, whether you received warnings, and whether proper disciplinary procedure was followed. A sudden termination with no prior warnings is very difficult for employers to justify.
Do I get Article 77 compensation automatically?
No. You must actively claim it through HRSD or the Labour Court. Employers never pay it voluntarily. File your complaint as soon as possible after termination.
What is the time limit to file an Article 77 claim?
One year from the date of termination. Do not delay. File as soon as you are terminated — do not wait to see if the employer pays voluntarily.
Terminated Unfairly? Claim What You Are Owed.
An Article 77 claim can significantly increase your total payout beyond EOSB. Book a consultation to assess your case and understand exactly what you are entitled to claim — based on 20 years of Saudi Arabia experience.