The HRSD Ministry has clarified that as per Saudi Labor Law an employer cannot reduce a worker's salary without his written approval.
How to reduce worker's salaries?
If an employer wants to reduce the salary of a worker, he will have to adopt the following procedure as per Saudi Labor Law.
- Wait for the employment contract to complete.
- Give a 2 months notice to terminate the contract.
- Pay the End of Service Benefits calculated with the current salary.
- Sign a new contract with the worker with the reduced salary.
- Update the new salary in the GOSI records.
Salary Reduction v/s Salary Deduction
The salary reduction is different from the salary deduction.
- Salary reduction means reducing the salary of the employee on a permanent basis.
- The salary deduction is one time or recurring deduction for a limited time.
- 6 cases when salary deduction is allowed
How to report a violation?
Article 41 of Saudi Labor Law
In April 2021, the Saudi government introduced Article 41 of Saudi Labor Law according to which employers were allowed to reduce employee's salaries for a period of 6 months without their approval.
However, in October 2021, article 41 has been repealed which means that employer cannot reduce workers' salaries anymore.