Gulf EOSB

Article 77 compensation: what unfair dismissal pays in Saudi Arabia

3 min read Published: By the Gulf EOSB team

Quick answer: if your employer ends your contract without a valid reason, Article 77 entitles you to compensation in addition to your full end-of-service benefit: 15 days’ wage per year of service on an open-ended contract, or the wage of the remaining term on a fixed-term contract — never less than two months’ wage either way.

When Article 77 applies

The Labor Law lets either party end an employment contract, but ending it without a valid reason has a price. For you as a worker, the common scenario is dismissal that is not based on:

“We no longer need you”, restructurings done without proper grounds, or dismissals meant to avoid obligations are the classic Article 77 territory. Whether a given reason is “valid” is ultimately for the labor authorities and courts to decide — document everything.

How much it pays

Contract typeCompensationMinimum
Open-ended15 days’ wage for each year of service (pro rata)2 months’ wage
Fixed-termThe wage for the remaining period of the contract2 months’ wage

The wage is your actual wage — basic plus regular allowances (see what counts as wage). And this comes on top of the full Article 84 benefit, your leave-day payout and notice-period rights.

One more thing many people miss: Article 77 is the default. If your contract itself specifies a compensation amount for early termination, the contractual clause applies instead — read your contract first.

Worked examples (10,000 SAR wage)

ScenarioBenefitArticle 77 compensationTotal
Open-ended, 7 years45,00015 days × 7 = 3.5 months → 35,00080,000 SAR
Open-ended, 1 year5,000minimum applies → 20,00025,000 SAR
Fixed-term, 7 years served, 4 months left45,0004 months → 40,00085,000 SAR
Fixed-term, 7 years served, 1 month left45,000minimum applies → 20,00065,000 SAR

Pick “Employer ended my contract” and answer “No” to the valid-reason question in the calculator to reproduce any of these with your own numbers — the breakdown shows the compensation as its own line.

It cuts both ways

The same article works in the employer’s favour too: a worker who walks away from a fixed-term contract before its end, without an Article 81 reason, can face a compensation claim for the remaining term. If that is your situation, read EOSB on fixed-term contracts before resigning.

If you believe your dismissal was unfair

  1. Keep the termination letter, your contract, payslips and any correspondence about the reason.
  2. Check your contract for an early-termination compensation clause.
  3. Calculate what you believe you are owed — benefit, Article 77 compensation, leave pay — with the calculator, and keep the breakdown.
  4. Raise it first with the employer in writing; unresolved disputes go through the Ministry of Human Resources’ amicable settlement process and then the labor courts. Claims have time limits, so don’t sit on them.

The exact rules we apply, with 20 worked examples, are on the How we calculate page.

Work out your own numbers Enter your wage and service in the free calculator and see your estimated settlement step by step.

Related guides

An estimate only, not legal advice. Confirm with your employer or on Qiwa.

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