Letter For Not Renewing Contract Template for Saudi Arabia

When your fixed-term employment contract approaches its expiration date in Saudi Arabia, your employer may decide not to renew it for various business or performance reasons. A Letter For Not Renewing Contract serves as the formal legal notification required under Saudi Labor Law to inform you of this decision while ensuring compliance with mandatory notice periods and procedural requirements.

When do you need this document?

You'll encounter this document when your employer decides not to extend your fixed-term contract beyond its current expiration date. This commonly occurs when companies are restructuring, reducing workforce, or when your performance doesn't meet renewal standards. Employers must issue this letter when budget constraints prevent contract renewal, when your position is being eliminated, or when business needs have changed. The document is also necessary when you're on a project-based contract that's reaching completion, or when your employer wants to modify employment terms that require a new contract rather than renewal.

Key legal considerations

The letter must contain specific information to be legally valid under Saudi Labor Law. It should clearly reference your existing contract details, including start date and reference number, and explicitly state the non-renewal decision with the exact end date. The notice must be delivered within the timeframes specified by Article 75 - at least 30 days before contract expiration for monthly-paid employees. Your employer must include information about final settlement calculations, including any outstanding salary, vacation pay, and end-of-service benefits. The document should specify your last working day and any handover requirements. Additionally, it must be issued on official company letterhead with proper authorization signatures to ensure legal validity.

Legal requirements in Saudi Arabia

Saudi Labor Law under Royal Decree No. M/51 establishes strict requirements for contract non-renewal notifications. Article 74 specifies that if a fixed-term contract isn't explicitly renewed or terminated, it continues under the same terms, making this formal notice crucial. Ministerial Resolution No. 70273 of 1440 H provides detailed procedures for non-renewal documentation that employers must follow. The notice period varies by salary payment frequency - 30 days for monthly-paid employees and shorter periods for weekly or daily-paid workers. Your employer must calculate and provide final settlements including end-of-service gratuity based on your years of service, as mandated by Saudi Labor Law. The letter becomes part of your official employment record and may be required for future visa applications or employment verification. Failure to provide proper notice can result in the contract being deemed automatically renewed, creating legal obligations for your employer.