JEDDAH, 11 May 2006 — The labor office here held the first session yesterday with the lawyer of Saudia Dairy and Foodstuff Company (SADAFCO) and the former employees of the company who filed a complaint of wrongful dismissal against their employer.

The committee assigned by the labor office to investigate the case visited the company on Tuesday and talked with the employees there.

A number of Saudi employees filed a group complaint with the labor office last week alleging that SADAFCO terminated their services without prior notification and is thus guilty of discrimination.

SADAFCO issued a statement explaining the reasons behind the terminations, saying they connected to financial losses incurred due to a boycott of Danish goods in the region earlier this year. The boycott was staged as a response to the controversy surrounding the depiction of the Prophet Muhammad (peace be upon him) in a Danish paper in September that boiled over earlier this year. Participants of the boycott targeted SADAFCO due to a mistaken belief that the company has commercial relations with Danish dairy manufacturers.

“The labor office regularly visits all businesses to check on the conditions of the employees. However, its visit yesterday was related to the complaint filed. The committee talked with the employees and noted their numbers and nationalities,” said Talal Al-Nunu, public relations director of SADAFCO.

The 12 employees who filed the complaint allege that the company’s financial affairs officer, a foreigner, terminated more than 94 Saudi employees while some 1,000 expatriate employees were retained even though many of them were doing similar jobs.

Al-Nunu said 30 Saudis, representing 30 percent of the Saudi employees, and 73 expatriates were terminated.

According to the SADAFCO statement, the boycott cost the company SR25 million in losses in addition to a drop in its share price. Coupled with an increase in the price of raw materials and a decrease in its share of the dairy and food market, the company allegedly had to consider ways of protecting itself and the interests of its shareholders.

After consultations with experts, the board of directors decided to stop production of some items and cut expenses by improving competitiveness and reducing the labor force, the company’s statement said.

The company has already stopped production of around 100 of its products and has a plan to lower operating expenses and costs to SR37 million. “This was a difficult decision, but it was aimed at protecting shareholders, who number about 80,000,” Al-Nunu said, adding that the employees were notified before the decision not to renew their contracts was made.

“Each employee was either given a reward if his contract had ended or given his salary until the end of his contract, even though some of the contracts have seven months to run,” he added.

Labor officials are trying to resolve the problem before it reaches the courts.

“The issue depends on documented proof,” said legal consultant and Arab News labor advice columnist Muhammad Jaber Nader. The company should have a record of the employees’ performance, any notifications or warnings to support its claim and documents about its employment policies.

“The judge will look at documents regardless of whether the plaintiffs are Saudi or not,” he said. However, he added that the problem is that many private companies are lenient in documenting shortfalls by their Saudi employees, which might backfire in court.