Mr Jose Manuel Simon Prestel

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Administrative Law

Hello all,

My name is Jose. My wife and myself's situation is as follows:

My employer wants to impose a penalty of two months' salary after my wife and I decided not to move forward with a renewal that we signed just 1 month ago. However, we are fully respecting the current 2024/2025 contract and are not breaking any terms. The renewal is supposed to start on 01/08/2025, and we gave them notice more than three months in advance, as we wanted to give the school enough time to find replacements for us.

They are referring to a clause in the renewal that links back to the original contract (2024/2025), which states that a probationary period started on 01/08/2024 and expired after three months. They backdated the new 25/26 contract to as our first date of employment for the 25/26 contract was dated on 1/08/25. They argue that because the probationary period referenced in the renewal is already expired, we are not allowed to leave, and if we do, we must therefore pay a two-month salary penalty. Initially, we believed that the renewal included a new probationary period starting from 01/08/2025, allowing us to resign within the first three months if needed.

Additionally, I must mention that the renewed contract and our current contract (24/25) are not registered in Qiwa. We have screenshots as proof that no new contract has been uploaded. We will be leaving in June 2025, although our current contract officially finishes on 31st July 2025. Apart from this, they haven't replied in formal writing to our resignation or they have not sent anything in formal writing regarding the penalties or anything, they just arranged video calls.

What do you think about this situation?

Also:

- What are my rights regarding the absence of a registered renewal in Qiwa?
- What are my rights if I don't receive the penalty in formal writing?
- Can my employer apply any financial penalty if no official renewed contract or this year's contract exists in the system?

This inquiry concerns both me and my wife, who works at the same place and is facing the same situation. Her contracts are also not registered in Qiwa.

I hope to hear from you soon, thank you very much.

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Mahkamaty AI
Mahkamaty AI
last year15975 إجابة

Dear Mr. Jose,

Based on your description, it seems like there could be potential for a breach of contract claim. However, employer and employee rights in Saudi Arabia are governed by Saudi Labor Law.

In your case, the context falls under the penalty clause indicated in your work contract, if it's stated that an employee must bear a penalty of two months' salary in cases of non-renewal of the contract, it applies. This is as per Article 74 of the Saudi Labor Law states that “the work contract shall include the wage, the type and amount of work, the duration and validity of the contract.” (Saudi Labor Law, Article 74)

However, if the clause is not clearly stated in the original contract, it can be interpreted as an unfair term and therefore, can potentially be considered null and void. Article 77 of the Saudi Labor Law indicates that “the work contract shall not include a provision requiring the worker to purchase products made by the employer or the products it deals with.” and it can be concluded that any unfair term, including penalties for non-renewal, might be disallowed. (Saudi Labor Law, Article 77)

Regarding your question about the absence of a registered renewal in Qiwa, Article 26 of the Ministerial Decision No. (1982) dated 16/10/1440H about Regulations of Work Permits in the Private Sector states that employers need to register work contracts to the Ministry of Human Resources and Social Development. Failing to do this could potentially be a violation of the employment law, which can lead to sanctions. (Ministerial Decision No. (1982), Article 26)

As for the requirement to receive the penalty in formal writing, the Saudi Labor Law in Article 13 states that if the worker has committed a violation, the employer has to give him a written warning. If it is agreed upon the application of a financial sanction on the worker in the contract, the employer shall specify the amount in a written warning note and deliver it to the worker or send it to his permanent residence address by registered mail. (Saudi Labor Law, Article 13)

I recommend seeking advice from the local Labour Office or an attorney to discuss your situation in greater detail before making any decisions. Please note that this advice is general in nature and may not suit your particular circumstances.

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