Saudi Arabia allows 40% reduction in salaries in the private sector or layoffs (details)


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The Ministry of Human Resources and Social Development in the Kingdom of Saudi Arabia has started to implement a new article of the Labor Law to reduce the salaries of workers in the private sector by up to 40% due to the Corona virus.

The explanatory note to the new article No. 41, which the ministry published on its website, said it aims to regulate the contractual relationship between workers and employers in the face of exceptional circumstances and force majeure.

She added that this article came in line with the events in the Kingdom and the world at large, and the accompanying preventive measures and precautionary measures to confront an exceptional event described as force majeure – in reference to the Corona virus.

The new article allowed the employer to decide to reduce the worker’s wages during the next 6 months to take special measures regarding the exceptional circumstances, in proportion to the actual daily or weekly work hours, provided that the reduction does not exceed 40%.

According to the ministry, the worker may not object to the application of the salary reduction decision.

The article allowed business owners to terminate the work contract for workers after a period of 6 months following the taking of actions after the fulfillment of 3 basic conditions, namely:

1- A period of 6 months has passed since the measures taken in a circumstance or condition that result in precautionary or preventive measures and which necessitate reducing or stopping work hours, and in return this circumstance or situation persists.

2- Exhausting the application of all procedures related to the reduction of wages, annual leave and all or some exceptional leave.

3- It is proven that the employers did not benefit from any subsidy from the state, regardless of the type of benefit that is used from it to meet this circumstance or situation.

The new article grants the employer the right to grant annual or exceptional leave to the worker at the time specified by him.

The article granted the worker the right to receive the full wage during the annual leave period, and his approval was stipulated first before obtaining an exceptional leave from the employer.

Saudi Arabia has taken measures to limit the spread of the Corona virus, including a total curfew in some cities, and it has granted leave to workers in the country and imposed leave on workers in the private sector.

The Ministry of Human Resources and Social Development in Saudi Arabia said that Article 41 added to the executive regulations of the labor system permits granting the worker leave with pay for a certain period, then applying the other option to reduce the wage by no more than 40%, then in the event of his approval, he may be granted leave without pay.

In response to the most prominent inquiries regarding the article, the ministry added that the facility can arrange what it sees about those options according to the work requirements and according to its needs.

The Ministry said that the facility that was not affected by the current conditions is not entitled to invoke the provisions of Article 41 in any action it takes against its workers.

She explained that the application of Article 41 continues throughout the 6-month period starting from the state’s announcement of taking measures regarding a situation or circumstance that requires a reduction in working hours or precautionary measures that limit the aggravation of that situation or circumstance, unless the state announces the suspension of those measures or measures.

The decision to regulate the contractual relationship … by Bassam Mharan on Scribd

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