Job offer in Saudi Arabia: Court ruling rejects compensation for candidate

In a landmark ruling that reinforces the legal principles governing the Saudi labor market, the Labor Court of Appeal issued a final judgment upholding the lower court's decision to dismiss a compensation claim filed by a job candidate against a private company. The claim stemmed from the company's reneging on its promise to hire the candidate despite his having presented him with a job offer. The ruling emphasized that a contractual relationship is not established merely by a job offer, but requires a fully-fledged employment contract and the actual commencement of job duties.

The case stems from a lawsuit filed by a candidate against a private company, seeking financial compensation based on Article 77 of the Saudi Labor Law, in addition to compensation for his accrued vacation days. The plaintiff claimed that the company unlawfully terminated the employment contract before he began working as a "Human Resources and Public Relations Specialist," considering the job offer a binding contract. However, the company argued that no employment relationship existed in the first place, as the candidate had not signed a formal contract nor commenced his duties.

Legal context and importance of the Saudi labor system

This ruling comes within the framework of the ongoing efforts of the Kingdom of Saudi Arabia, represented by the Ministry of Human Resources and Social Development, to develop the legislative environment for the labor market in line with the goals of Vision 2030. The Saudi Labor Law aims to regulate the relationship between employers and employees in a way that guarantees the rights of both parties and achieves justice and stability, thereby enhancing the attractiveness of the Saudi market for local and foreign investment. The Labor Courts, launched in 2018, are a cornerstone of this system, specializing in adjudicating all disputes related to employment contracts, wages, and the rights of both parties, thus ensuring the transparent and swift application of the law.

The implications of the ruling and its impact on the labor market

This ruling is of paramount importance as it clearly delineates the distinction between the negotiation and nomination phase (represented by the job offer) and the actual contractual relationship. The job offer, as interpreted by the ruling, is a preliminary step expressing the employer's intention to hire, but it does not constitute a binding employment contract that gives rise to employee rights and obligations such as wages, leave entitlements, and end-of-service benefits.

The court based its decision on the incompleteness of the contract, most notably the failure to actually commence work, which precludes any claim for termination compensation. The Court of Appeal accepted the plaintiff's objection in form but rejected it on its merits, affirming the validity of the initial ruling and the soundness of the reasoning upon which it was based. This decision sets an important legal precedent that contributes to raising legal awareness among both job seekers and employers

• For job seekers: The ruling emphasizes the need to avoid making fateful decisions, such as resigning from a current job, based solely on a job offer, and to wait until a formal and binding employment contract is signed.
• For employers: The ruling provides flexibility in the selection and recruitment process, while emphasizing the importance of clear and formal contractual procedures to protect the rights of the establishment.

In conclusion, this ruling reinforces the principle of legal certainty in the labor market, and clarifies that the protection provided by the labor system begins from the moment the contract is activated and the worker begins to perform his duties, and not from the stage of promises or initial offers.