Letter Of Intent For Not Renewing Contract Template for Saudi Arabia

When your company needs to formally notify an employee that their fixed-term contract will not be renewed in Saudi Arabia, you must use a Letter Of Intent For Not Renewing Contract. This document is not merely a courtesy but a legal requirement under Saudi Labor Law that protects both your business and provides proper notice to your employee.

When do you need this document?

You need this letter when any fixed-term employment contract is approaching its expiration date and you've decided not to offer renewal. This applies to all temporary positions, project-based roles, seasonal employment, and probationary contracts that have specific end dates. The letter is essential for foreign workers whose visas are tied to their employment contracts, as it helps them understand their timeline for securing new employment or preparing to leave Saudi Arabia. You'll also need it when downsizing operations, completing specific projects, or when an employee's performance doesn't meet renewal standards.

Key legal considerations

Your letter must clearly reference the original employment contract details including dates, position, and contract reference numbers. The document should explicitly state your intention not to renew while avoiding language that could be interpreted as termination for cause, which carries different legal implications. You must address any outstanding obligations such as end-of-service benefits, final salary payments, and unused vacation time as required by Article 84 of Saudi Labor Law. The letter should maintain a professional tone that complies with Islamic business ethics principles, avoiding any discriminatory language or references that could create legal liability.

Legal requirements in Saudi Arabia

Saudi Labor Law Article 74 requires employers to provide notice of non-renewal typically 60 days before contract expiration, unless your contract specifies a different notice period. The document must be issued on official company letterhead and include all mandatory elements such as employee identification details, contract reference information, and clear statement of intent. You must ensure the letter complies with Ministry of Human Resources and Social Development guidelines for employment documentation. The communication must align with Sharia Law principles that govern all business transactions in Saudi Arabia, ensuring fairness and transparency in the employment relationship termination. Failure to provide proper notice can result in penalties and may require you to pay compensation equivalent to the notice period wages.