Permanent Layoff Letter Template for Saudi Arabia

When your business faces restructuring or economic challenges in Saudi Arabia, issuing a permanent layoff letter requires strict adherence to Saudi Labor Law provisions. This document formally communicates employment termination while ensuring compliance with Royal Decree No. M/51 and protecting both parties' legal rights throughout the process.

When do you need this document?

You need a permanent layoff letter when implementing workforce reductions due to business downsizing, departmental closures, or economic restructuring. This document is mandatory when terminating employment contracts for reasons beyond employee performance, such as company-wide cost reduction measures or technological changes that eliminate positions. Unlike resignation letters or termination for cause, permanent layoffs require specific justifications related to business necessity rather than employee conduct. The letter becomes crucial when multiple employees are affected simultaneously or when restructuring entire departments or divisions within your organization.

Key legal considerations

Under Saudi Labor Law, permanent layoffs must include clear business justification and cannot be used to circumvent employee protections. The letter must specify the exact termination reason, ensuring it aligns with Article 74's valid termination grounds. You must calculate and clearly state end-of-service benefits according to Articles 84-88, including unused vacation days, notice period compensation, and gratuity payments. The document should reference the employee's service certificate issuance and final settlement timeline as required by Article 89. Additionally, ensure the layoff doesn't discriminate against protected employee categories or violate any collective bargaining agreements that may apply to your organization.

Legal requirements in Saudi Arabia

Saudi Labor Law mandates a 30-day notice period for monthly paid employees and 15 days for others, as specified in Article 75. Your letter must include precise effective dates, last working day calculations, and compensation details for the notice period. End-of-service benefit calculations must follow the statutory formula: half a month's salary for each of the first five years and one month's salary for each subsequent year. The letter must be issued on company letterhead with proper authorization signatures and include the employee's complete details, including ID number and position. You're also required to provide a service certificate detailing employment duration, position held, and final salary, ensuring compliance with Ministry of Human Resources and Social Development regulations governing employment documentation.