Saudi Arabia: “Force Majeure” opens the door for salary cuts


Saudi Arabia: “Force Majeure” opens the door for salary cuts

Ministerial decision that allows a 40% reduction in the private sector and termination of contracts within 6 months

Monday – 11 Ramadan 1441 AH – 04 May 2020 AD No. number [

Riyadh: {Middle East}

A ministerial decision issued in Saudi Arabia yesterday, to regulate the labor contract in the current period, allowed the force majeure of the Corona virus to reduce salaries in the private sector to 40 percent with the possibility of terminating the contracts.
The decision was issued in a document that Al-Sharq Al-Awsat obtained a copy of which indicated that the Ministry of Human Resources and Social Development agreed to the explanatory memorandum of the Saudi labor system that included allowing the employer to reduce the employees ’salaries 40 percent of the actual full wage for a period of 6 months, in proportion to the hours of work and making available Termination of employee contracts after 6 months of force majeure.
The regulation defines force majeure as the state taking, as it deems appropriate or based on what is recommended by a competent international organization, measures regarding a case or circumstance that requires reduced working hours or precautionary measures that limit the aggravation of the situation.
The regulation indicated that the application of its provisions does not prevent the employer from benefiting from the subsidy provided by the state to the private sector of any kind, such as helping to pay workers wages or exemption from government fees, stressing not to resort to termination of the employment contract, except after three conditions are met to consider the conditions within the description the majeure force.
The conditions are the passage of 6 months following the measures taken and the resulting precautionary or preventive measures, and the exhaustion of the application of the procedures related to the reduction of remuneration, annual leave and exceptional leave, in addition to proving that the establishment is affected by these conditions.
These developments come with the moves made by Saudi Arabia to deal with the Corona pandemic and consider it a force majeure in the contractual relationship in the Saudi labor market, as the current conditions enter into the concept of achieving force majeure with its continuation for a period of time and damage to establishments in the private sector.
The memo, which begins work soon after publication in the government’s official gazette, provided that the worker would receive his wages in the event of taking an annual leave within a period of 6 months.


Saudi economy


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