Labor Law and mass termination of Saudis

Labor Law and mass termination of Saudis

February 12, 2017
Omar Abdullah Khayyat
Omar Abdullah Khayyat

Abdullah Omar Khayyat

Labor and Social Development Minister Dr. Ali Bin Nasser Al-Ghafees has issued a ministerial decision that bans companies from mass termination of Saudi employees, whatever be the reason. He warned that the ministry would stop its services to companies that violate this instruction.

Okaz Arabic newspaper published the minister’s decision on 1/5/1438H (Jan. 28).

Another report published by Al-Hayat Arabic daily on 3/5/1438H (Jan. 30) said the minister’s decision came after mass termination of Saudis by some firms including banks and mega companies citing financial reasons, thus hundreds of Saudi workers lost their jobs.

Khaled Abalkhail, spokesman of the ministry said the decision, banning termination of Saudis, would cover big and medium companies unless declared bankrupt or closed once and for all.

He said companies are not allowed to terminate Saudi workers enmass without informing the labor office 60 days before implementing the termination decision.

At the same time, electronic newspaper disclosed that a major company had terminated services of 1,200 Saudi workers. It raises a number of question marks, as mass termination of Saudis by companies would create a lot of social and security problems.

Economists have stated that mass termination would have a negative impact on the Saudi economy and would increase unemployment and crimes in the society.

Experts have questioned the reason for retrenchment of Saudi employees in the private sector where they represent only 14 percent of total employees while expats represent 86 percent.

Economist Abdulhameed Al-Amry said the ministerial decision that bans mass termination of Saudis would allow companies to terminate them one by one. Because of this loophole the minister’s decision would not solve the problem but facilitate termination of Saudis.

If the ministry really wants to solve the problem it has to suspend Articles 74, 75, 76 and 77 of the Labor Law, and ask higher authorities to make necessary alterations to make them Saudi-friendly. A joint committee should be formed to review all these articles immediately.

It was the Labor and Social Development Ministry that gave the private sector the green light to terminate Saudis.

The Labor Ministry’s statement will not have any impact as long as these four articles remain in the law without change because these articles allow private companies to terminate eight million Saudis whenever they wish.

Now the question is whether the Labor and Social Development Ministry would prevent private companies from circumventing its prohibition to terminate Saudis?

February 12, 2017