JEDDAH, 11 August 2004 — Labor Minister Dr. Ghazi Al-Gosaibi yesterday denied press reports that the ministry had plans to cancel end-of-service benefits (ESB). “The ministry has no plan to abrogate ESB and the new draft labor law does not carry any text indicating such a plan,” the Saudi Press Agency quoted the minister as saying.
The minister said the labor law in fact insisted that employers who terminate the service of an employee pay a gratuity equal to one month’s salary for each of the first five years as well as for the consecutive years.
“If the period of the limited work contract ends or if the termination comes from the employer in case of contracts for an unspecified period, the employer must pay to the worker an ESB calculated on the basis of one month’s salary for each of the first five years and one month’s salary for each of the following years and it will be calculated on the basis of the final salary,” Gosaibi said quoting Article 87 of the labor law.
“Article 88 of the law states that an employee working in an unspecified period contract is entitled to one third of the ESB mentioned in the previous article if he resigns after a service period of not less than two consecutive years and not more than five years, and he is entitled to two-thirds of the ESB mentioned above if the service exceeds five consecutive years but is less than 10 years.
“He will deserve the full ESB if he resigns after 10 years of service on condition that the worker notify his employer of his desire to resign 30 days before doing so.”
The report on ESB, originally published by Al-Madinah newspaper last week, sent shockwaves among expatriates and many of them approached their employers seeking clarification.
According to the report, the ministry had submitted a draft law on reducing ESB to three months salary to the social committee of the Shoura Council.
The draft law, according to the Arabic daily, also gives the employer the right to fire an employee if the employee is not up to the mark or productive.
