Letter For Non Renewal Of Work Contract Template for Saudi Arabia

When your fixed-term employment contract approaches its expiry date in Saudi Arabia, you need a Letter For Non Renewal Of Work Contract to formally notify your employee that the contract will not be extended. This document ensures compliance with Saudi Labor Law while protecting your business from potential disputes and regulatory penalties.

When do you need this document?

You must issue this letter when deciding not to renew a fixed-term employment contract, particularly for expatriate workers whose contracts are tied to specific project durations or seasonal work. The notice is required for all employment relationships governed by Saudi Labor Law, including those with domestic and foreign employees. You'll need this document when your employee's contract is approaching its natural expiry date and you've decided not to offer renewal, whether due to business restructuring, performance issues, or completion of the specific role. The letter is also essential when transitioning from fixed-term to indefinite contracts requires formal documentation of the previous arrangement's conclusion.

Key legal considerations

The timing of your notice is crucial under Saudi Labor Law. Article 75 requires that you provide adequate notice before the contract's expiry date, typically 30-60 days depending on your original contract terms. Your letter must clearly reference the existing contract details, including start date, end date, and position, to avoid any confusion about which agreement is not being renewed. You must also consider end-of-service benefits calculations under Article 84, as non-renewal triggers final settlement obligations including unused vacation pay, gratuity payments, and any outstanding compensation. The letter should coordinate with the issuance of service certificates and final documentation as required by Article 85, ensuring all regulatory requirements are met simultaneously.

Legal requirements in Saudi Arabia

Saudi Labor Law mandates specific procedural requirements for contract non-renewal that your letter must address. Under Royal Decree No. M/51, you must provide written notice that clearly states your intention not to renew the contract, avoiding any language that could be interpreted as constructive dismissal. The notice period must comply with the minimum requirements established in your original contract or Saudi labor regulations, whichever is greater. Ministerial Decision No. 70273 of 1440 H provides implementing regulations requiring proper documentation of all termination procedures, making this letter a critical component of your compliance strategy. You must ensure the letter coordinates with final settlement calculations, work permit cancellation procedures for expatriate employees, and any required notifications to the Ministry of Human Resources and Social Development. The letter should also reference your employee's obligation to return company property and complete any necessary handover procedures before the contract's expiry date.