Termination Compensation — Article 77 Saudi Arabia 2026

If your employer terminates you without a valid legal reason, you are entitled to more than just EOSB. Article 77 of Saudi Labour Law provides additional compensation for arbitrary dismissal. Here is exactly what you are owed and how to claim it.

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:

📌 What Is NOT Arbitrary Termination: Termination for genuine redundancy, company closure, documented poor performance after warnings, or any reason listed in Article 80 as a valid dismissal ground is not considered arbitrary under Article 77.

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:

Article 77 — Maximum Compensation Formula
Maximum Compensation = Monthly Salary × 2 × Years of Service
Example — SAR 6,000 salary, 5 years SAR 6,000 × 2 × 5 = SAR 60,000 maximum
⚠️ Important: This is the maximum — not a guaranteed amount. The Labour Court decides the actual compensation based on the specific circumstances of your case. Having strong evidence of the arbitrary nature of the termination increases your compensation.

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

1

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.

2

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.

3

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.

4

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.

5

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:

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.

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