Article 77 of the Saudi Labor Law sets the compensation owed when a contract is ended without a valid reason. Unless the contract fixes its own amount, the harmed party receives 15 days’ wage for each year of service on an open-ended contract, or the wage for the remaining term on a fixed-term contract, and never less than two months’ wage.
That compensation is separate from your end-of-service award under Article 84, which you can work out with the Saudi gratuity calculator. Below are the rules, the two-month floor, and worked examples for both contract types.
What Article 77 says
Article 77 applies when one side ends the contract for a reason the law does not accept as legitimate. In plain English, unless the contract includes a specific compensation for this situation, the harmed party is entitled to:
- Open-ended contract: 15 days’ wage for each year of the worker’s service.
- Fixed-term contract: the wage for the remaining period of the contract.
- In both cases: the compensation must not be less than two months’ wage.
The current wording comes from the amendment made by Royal Decree M/46 of 1436H. The consolidated text on the Bureau of Experts site shows no 2025 amendment note on Article 77, so the February 2025 changes did not alter it. You can read it in the official Saudi Labor Law on laws.boe.gov.sa.
“Harmed party” works both ways
The article does not say “the worker”. It says the party harmed by the unlawful ending. If a worker leaves a contract without a legitimate reason, the employer can claim compensation on the same basis. This matters most for fixed-term contracts: walking out with eight months left can expose the worker to a claim for up to eight months’ wage.
Open-ended contracts: 15 days’ wage per year
For an open-ended contract, compensation is half a month’s wage for every year of service: 15 days out of a 30-day month.
| Wage | Years of service | 15 days × years | Two-month floor | Compensation |
|---|---|---|---|---|
| SAR 10,000 | 2 | SAR 10,000 | SAR 20,000 | SAR 20,000 |
| SAR 10,000 | 4 | SAR 20,000 | SAR 20,000 | SAR 20,000 |
| SAR 10,000 | 7 | SAR 35,000 | SAR 20,000 | SAR 35,000 |
| SAR 10,000 | 12 | SAR 60,000 | SAR 20,000 | SAR 60,000 |
Up to four years of service, the two-month minimum is what you actually receive. The 15-day rate only overtakes it from the fifth year.
The law does not spell out how part-years are treated for Article 77. Many advisers pro-rate them, but check how the labour court or HRSD applies it to your dates before relying on a figure.
Fixed-term contracts: wage for the remaining term
For a fixed-term contract the measure is different: you are compensated for the wage you would have earned until the contract’s end date.
If your two-year contract ends unlawfully after 14 months, 10 months remain. At SAR 10,000 a month the compensation is 10 × 10,000 = SAR 100,000. Length of service plays no role here, only the time left.
The two-month floor still applies. If only three weeks remained, you would still be owed two months’ wage.
The two-month minimum
The floor protects short-service workers. Without it, someone dismissed unlawfully after one year on an open-ended contract would receive only half a month’s wage. With it, they receive two full months.
| Situation | Formula result | Paid |
|---|---|---|
| Open-ended, 1 year, SAR 8,000 | SAR 4,000 | SAR 16,000 |
| Fixed-term, 1 month left, SAR 8,000 | SAR 8,000 | SAR 16,000 |
| Open-ended, 6 years, SAR 8,000 | SAR 24,000 | SAR 24,000 |
Article 77 is separate from your end-of-service award
Article 77 compensates the unlawful way the contract ended. Article 84 rewards the years you served, however the contract ends. They sit in different articles, have different formulas, and Article 77 does not say it replaces the award.
Because of that structure, Article 77 compensation is generally treated as payable in addition to the end-of-service award. We have not found an HRSD statement that says so in terms, so treat the combined figure as a strong expectation rather than a guarantee, and confirm it if your case goes to the labour court.
When your employer ends the contract unlawfully, you also receive the full Article 84 award, because Article 85’s resignation cuts do not apply. Our guide to Articles 84 and 85 explains how that award is built.
When your contract sets its own compensation
Article 77 opens with “unless the contract includes a specific compensation”. If your contract names an amount for termination without a valid reason, that amount is what the article points to first, so read the termination clause before you calculate.
If the contract is silent, the statutory formula above applies. If you are unsure whether a clause counts as “specific compensation”, ask HRSD or a labour lawyer, because the answer decides which figure you can claim.
Worked examples
All three use a last actual wage of SAR 10,000 a month and a last working day of 31 March 2026. The end-of-service figures are exactly what our calculator returns for a termination by the employer.
Example 1: open-ended, 7 years
Service from 1 April 2019 to 31 March 2026, dismissed without a valid reason.
| Item | Calculation | Amount |
|---|---|---|
| Article 77 compensation | 7 × 15 days × (10,000 ÷ 30) | SAR 35,000.00 |
| End-of-service award, years 1 to 5 | 5 × 5,000 | SAR 25,000.00 |
| End-of-service award, years 5 to 7.0055 | 2.0055 × 10,000 | SAR 20,054.79 |
| Expected total | SAR 80,054.79 |
Example 2: open-ended, 2 years
Service from 1 April 2024 to 31 March 2026. Fifteen days per year gives only SAR 10,000, so the two-month floor of SAR 20,000 applies. The end-of-service award for two years is SAR 10,000, giving an expected total of SAR 30,000.
Example 3: fixed-term, 10 months left
A two-year contract from 1 February 2025, ended unlawfully on 31 March 2026 with 10 months remaining.
| Item | Calculation | Amount |
|---|---|---|
| Article 77 compensation | 10 months × 10,000 | SAR 100,000.00 |
| End-of-service award | 1.1616 years × 5,000 | SAR 5,808.22 |
| Expected total | SAR 105,808.22 |
What does not count as “without a valid reason”
Article 77 does not apply when the employer dismisses you under Article 80, which lists serious misconduct such as assault, fraud, or prolonged unexplained absence. In that case there is no Article 77 compensation and the end-of-service award itself can be lost. Equally, if you resign properly with notice, nothing is owed under Article 77 on either side. See the Saudi labour law guide for how the termination articles fit together, and notice periods in Saudi Arabia for the notice rules.
Calculate your award
Article 77 compensation is simple arithmetic once you know your wage and contract type. The end-of-service award takes more care, because it depends on exact dates and bands. Enter your dates in the Saudi end-of-service calculator, choose “Terminated by employer”, and add the Article 77 figure from the table above to see the full amount to claim.
Frequently asked questions
How is Article 77 compensation calculated in Saudi Arabia?
Unless your contract sets a specific amount, you receive 15 days' wage for each year of service if your contract is open-ended, or the wage for the remaining period if it is fixed-term. Either way, the compensation cannot be less than two months' wage.
Is Article 77 compensation paid on top of the end-of-service award?
The two come from different articles: Article 77 compensates an unlawful ending, while Article 84 rewards years of service. They are generally treated as separate entitlements, but confirm the figures with HRSD or the labour court in your case.
Does Article 77 apply if the employee leaves without a valid reason?
Yes. The article protects whichever party is harmed, so a worker who walks out of a contract without a legitimate reason can owe the employer compensation on the same basis.
What is the minimum compensation under Article 77?
Two months' wage. If 15 days per year or the remaining contract term would give less, the two-month floor applies.
Did the 2025 amendments change Article 77?
No. The consolidated Labor Law on the Bureau of Experts site shows no 2025 amendment note on Article 77. Its current wording dates from the Royal Decree M/46 amendment of 1436H.