Discontinuing Service Letter Template for Saudi Arabia

A Discontinuing Service Letter is a formal document that employers in Saudi Arabia must use when terminating an employment relationship. This letter serves as official notification to the employee and ensures compliance with Saudi Labor Law requirements. Under Saudi employment regulations, proper documentation of service termination is not optional—it's a legal requirement that protects both employers and employees while establishing a clear record of the employment end.

When do you need this document?

You need a Discontinuing Service Letter whenever you're ending an employment contract in Saudi Arabia. This includes situations where you're terminating an employee for performance issues, conducting layoffs due to business restructuring, or ending contracts upon project completion. The letter is also required when employees resign and you need to formally acknowledge their departure and document final settlement terms. Additionally, you'll need this document during company mergers or acquisitions where employment transfers or terminations occur, and when temporary or fixed-term contracts reach their natural expiration date.

Key legal considerations

Several critical legal elements must be included in your Discontinuing Service Letter to ensure compliance with Saudi Labor Law. You must clearly state the specific reason for termination, as Article 75 requires legitimate grounds for service discontinuation. The notice period specified in Article 74 must be properly calculated and documented—typically 30 days for monthly-paid employees or 60 days for annual contracts. Your letter must reference end-of-service benefits calculations under Articles 84-88, including gratuity payments and unused vacation entitlements. Additionally, you should include details about final settlement procedures, return of company property, and any post-employment obligations such as confidentiality or non-compete clauses that remain in effect.

Legal requirements in Saudi Arabia

Saudi Labor Law (Royal Decree No. M/51) establishes specific formatting and content requirements for service discontinuation letters. The document must be written in Arabic or include an Arabic translation, and should be issued on official company letterhead with proper authorization signatures. You must provide the employee's full details including Saudi ID or Iqama number, position, and department. The Ministry of Human Resources and Social Development (MHRSD) requires that termination letters include reference numbers for tracking purposes and specify the effective termination date clearly. The letter must also comply with Saudi Commercial Documents Law regarding official business correspondence standards. Furthermore, you should retain copies for your records as MHRSD may request documentation during labor inspections or dispute resolution proceedings.