6 Types of Penalties which an employer can impose under Saudi Labor Law

It has been generally seen that employers exploit employees in Saudi Arabia. Most of the exploitation is due to ignorance of Saudi Labor Law at the part of both employee and employer’s perspective. In order to create awareness in the expatriates about their rights, we have published an article regarding “Rights of Employees in Saudi Arabia”.

Many fellow expatriates are generating queries regarding the legitimacy of different kinds of penalties imposed by employers on employees. Many employees face suspension from work from the employer for numerous days due to any reason. In this article, I will be giving specific references to the Saudi Labor Law regarding these kinds of penalties.

An employer can only apply 6 kinds of penalties to an employee under Article 66 and 67 of Saudi Labor Law which includes;

  1. Warning Notices
  2. Fines
  3. Deprivation of Allowances for not more than one year
  4. Postponement of promotion for a period not more than one year
  5. Suspension from work and withholding wages and dismissal from the work as specified under Article 80 of Saudi Labor Law. Recommended: Termination without Notice Period under Article 81 of Saudi Labor Law

Can an employer extend the penalty? The employer cannot make a penalty stricter merely due to the fact that the employee has committed the violation for the second time or third time if the second violation is committed after 180 days of first violation – Article 68 of Saudi Labor Law.

No Legal Action after 30 days: If an offense is discovered within a workplace, the employer can accuse an employee or take disciplinary actions against him within 30 days of such discovery. Once this period is elapsed, the employer cannot take any action against the employees involved – Article 69 of Saudi Labor Law.

No Action for the act committed outside the workplace: An employee cannot be subjected to a disciplinary penalty for an act committed outside the workplace unless such action is related to the job. – Article 70 of Saudi Labor Law

The suspension cannot exceed 5 days: Suspension from work of an employee without pay cannot exceed 5 days in a month, it also means that the employer cannot deduct more than 5 days salary of an employee in one month – Article 70 of Saudi Labor Law

The employer cannot apply more than one penalty for one violation committed by the employee. It means that he cannot apply a combination of two penalties as discussed in the first bullet above nor apply the same penalty two times for the same violation – Article 70 of Saudi Labor Law

Right to defend: Any of the above disciplinary action can only be applied to the employee after written notification of the accusation, interrogation, defense and establishment of the guilt is produced in the employee’s file – Article 71 of Saudi Labor Law

The interrogation may be verbal in minor infringements but in such cases, the penalty cannot go beyond a warning or deduction of one day salary which shall also be documented in the employee file – Article 71 of Saudi Labor Law

The penalty decision shall be communicated to the employee in writing and the employee will have 15 days’ time to object to the notice excluding official public holidays – Article 72 of Saudi Labor Law