Compensation of 74,000 riyals for a worker unfairly dismissed: Labor Court ruling
In a new victory for workers' rights and a reaffirmation of the principles of swift justice, the Labor Court brought to a close a complex legal dispute between a worker and his employer, issuing a final ruling ordering the employer to compensate the worker with more than 74,000 Saudi Riyals. This ruling came after it was proven that the employer had manipulated the system by terminating the worker's contract without legitimate cause and removing him from the social insurance system under the guise of "resignation" without his knowledge, in an attempt to circumvent the system and force him to sign a new contract with different terms.
Details of the dispute and legal proceedings
The case stems from the employer's unilateral termination of the employment contract and his attempt to impose a new reality on the employee by changing the job title and start date through a subsidiary company, a move the court rejected outright. The court, in its ruling, established that the employment relationship actually commenced on December 1, 2016, with a monthly salary of 6,550 riyals, relying on the employee's salary statement from the Social Insurance Authority and bank statements, which refuted the employer's claims regarding the salary amount.
The court affirmed in its ruling that the employer’s attempt to transfer the worker’s services or contract with him through another legal entity (an independent company) is not a legitimate justification for terminating the first contract without following the procedures stipulated in the labor law, considering what the employer did to be an arbitrary dismissal that warrants compensation.
Legal context and wage protection in the Kingdom
This ruling comes within the context of significant legislative developments in the Saudi labor market, where the Ministry of Human Resources and Social Development, supported by the judicial system, places great importance on protecting the rights of parties to contractual relationships. Article (77) of the Saudi Labor Law is the cornerstone for assessing compensation in cases of wrongful termination of employment, aiming to redress the harm suffered by the worker as a result of the sudden loss of their job.
The ruling also reflects the strictness of the regulations in dealing with manipulation of social security data, as recording the reason for exclusion in a manner contrary to reality (such as recording a resignation instead of termination of services) is considered a clear violation that requires correction and accountability, in order to ensure the accuracy of the data on which future retirement and insurance rights for citizens and residents depend.
The wording of the judgment and details of the compensation
Based on Articles 77, 84, and 111 of the Labor Law, the court ordered the employer to pay the following financial entitlements:
– SAR 27,417.28: Compensation for wrongful termination of the contract.
– SAR 38,459.57: End-of-service gratuity due for the period of employment.
– SAR 8,438.73: Compensation for unused leave balance.
The ruling acquired the status of final and conclusive after the expiry of the statutory period for objection, which is set at 30 days according to Article “187” of the Sharia Procedures Law, without the defendant submitting an objection, so the ruling became enforceable immediately.
The importance of governance and its impact on the labor market
This ruling carries significant implications for both employers and employees; it sends a clear message that circumventing regulations through sham contracts or manipulating insurance data will not go unpunished. It also reinforces confidence in the Saudi work environment as an attractive and well-regulated one, governed by clear laws that protect rights, thus contributing to market stability and increased productivity, in line with the goals of the Kingdom's Vision 2030 to regulate the labor market and govern contractual relationships.
