How to renew contract in Saudi Arabia?

If you want to renew your contract in Saudi Arabia, know the rules and requirements for the renewal as per Saudi Labor Law.

Types of Contract

As per Saudi Labor Law, there are two kinds of contracts, and the requirements for renewal largely differ depending on the type of contract.

• Fixed-Term Contract.
• Indefinite Contract.

Every employee, whether a Saudi or an expat, initially signs a fixed-term contract with his employer in Saudi Arabia. If a contract does not mention any time period, it is valid for one year from the joining date.

A contract with a Saudi employee becomes an indefinite contract after some time. 

However, a contract with a non-Saudi employee will always remain a fixed-term contract as per Article 37 of Saudi Labor Law.

• Expatriate Employees = Fixed Term Contract.
• Saudi Employees = Fixed-term or indefinite contract.

Requirements for renewal of contract

There are only 3 requirements for the renewal of a fixed-term contract in Saudi Arabia;

• The employee has completed the initial contract.
• The employer has not terminated the contract.
• The employee has not resigned from the contract.

Renew – Fixed Term Contract

If the fixed-term contract has a renewal clause, it will be renewed for the time period mentioned in the contract, as per Article 55 (2) of Saudi Labor Law.

If there is no renewal clause in the fixed-term contract in Saudi Arabia,

• Non-Saudis: The contract will be renewed for one year for expatriate employees as per Article 37 of Saudi Labor Law.
• Saudis: If the employer does not terminate a Saudi employee, the contract will be renewed and become an indefinite contract.

Renew – Indefinite Contract

For Saudi employees, a fixed-term contract becomes an indefinite contract under the following 2 conditions;

1. If there is no renewal clause in the fixed-term contract and the employer does not terminate the employee at the contract completion, it will become an indefinite contract in Saudi Arabia.
2. A fixed-term contract becomes an indefinite contract after 3 consecutive renewals, or after 4 years of service as per article 55 (2) of Saudi Labor Law.

There is no need to renew an indefinite contract in Saudi Arabia as it continues forever until an employee resigns or the employer terminates.

• Source: Saudi Labor Law