In a landmark court ruling that strengthens the protection of workers’ rights in Saudi Arabia, the Labor Court issued a final ruling to grant justice to a worker and obligate the employer to pay financial compensation exceeding 74,000 riyals, after it was proven that the worker was subjected to arbitrary dismissal and manipulation of his data with the General Organization for Social Insurance.
Details of the conflict and circumvention of the system
The case stems from the employer's termination of the employee's contract without just cause, and even went so far as to remove him from social security records under the pretext of "resignation" without the employee's knowledge or consent. The matter didn't end there; the company attempted to force the employee to sign a new contract with another subsidiary, under a different job title and with a new start date, in a clear attempt to circumvent his acquired rights from his previous service and settle his entitlements in an irregular manner.
The grounds for the ruling and the financial compensation
The Labor Court addressed these practices, affirming in its ruling that the contractual relationship cannot be terminated or altered without following the procedures stipulated in the Saudi Labor Law. The court relied on evidence presented by the worker, including bank statements and insurance certificates, which proved that the worker's actual wage was 6,550 riyals, thus refuting the company's claims.
Based on Articles (77), (84) and (111) of the Labor Law, the court ruled that the termination was illegal, and obligated the establishment to pay the following amounts:
- 27,417.28 Riyals: Compensation for wrongful (arbitrary) dismissal.
- 38,459.57 Riyals: End-of-service bonus.
- 8,438.73 Riyals: Unused vacation balance.
Legal context and importance of the ruling
This ruling comes amidst significant transformations in the Saudi labor market, where the Ministry of Human Resources and Social Development, supported by a specialized judicial system, prioritizes the protection of contractual parties. This ruling serves as a warning to employers who might resort to legal loopholes such as "sham resignations" or "employee shuffling" between different companies to deprive workers of their end-of-service benefits or reduce their wages.
This ruling is significant because it emphasizes that digital records (such as insurance records) must accurately reflect reality, and that any alteration to them without the employee's explicit consent is invalid. It also highlights the role of Article 77 of the Labor Law, which, despite occasional controversy, establishes a clear standard for compensation in cases where there is no legitimate reason for termination, thus providing a financial safety net for the affected employee.
Definitive ruling
It is worth noting that the ruling acquired the final and conclusive character after the expiry of the statutory period for objection, which is set at 30 days according to Article (187) of the Sharia Procedures Law, as the defendant did not submit any objection during the allowed period, which makes the ruling enforceable immediately.
