Fixed Term Contract in Saudi Arabia vs Indefinite: Renewal

Three years ago you signed a one-year contract. Nobody talked about renewal, and you are still working and your salary arrives every month. Now the company says your contract has “ended” and will not be renewed. Are you still on a fixed-term contract?

The direct answer: if you are Saudi and the contract period ended while both parties continued to perform it without a renewal clause, the contract is treated as renewed for an indefinite period (Article 55). The employer can then end it only for a valid reason and with sixty days' notice if your wage is monthly (Article 75). A non-Saudi worker's contract is always fixed-term; if it states no period, it is treated as one year, renewed for the same period (Article 37).

What is the difference between a fixed-term and an indefinite contract?

Can an expat have an indefinite contract in Saudi Arabia?

Article 37 provides that a non-Saudi worker's contract must be written and for a fixed term. After its amendment in force in 2025, it added a practical rule: if the contract does not state its length, its term is one year from the date the worker actually started, and if work continues after that, the contract is treated as renewed for the same period. So an expatriate's contract does not become indefinite, however long he serves.

When is a fixed-term contract renewed?

The basic rule in Article 55 is that a fixed-term contract ends when its term ends. If the term ends and both parties continue to perform it, you working and the employer paying your wage, the contract is treated as renewed for an indefinite period, subject to Article 37 for non-Saudis. If the contract has a clause renewing it for the same or a specific period, it is renewed for the agreed period.

A Saudi worker has an extra rule where there is a renewal clause: if the contract is renewed three times in a row, or the original term plus the renewals reach four years, whichever is less, and both parties continue to perform it, it becomes an indefinite contract. This changes how it can be ended and how compensation is calculated if it is ended without a valid reason.

A fixed-term contract ending on its date without renewal is not unfair dismissal. If the employer tells you he will not renew and the term ends, there is no compensation for termination, but you keep your end-of-service award under Article 84 for your whole service, because the end of the term is not a resignation, and you keep payment for unused leave (Article 111).

What is the notice period for ending an indefinite contract?

Article 75 was amended in the amendments in force since 2025. If your wage is monthly and you want to end the contract, you must give the employer written notice at least 30 days before the termination date. If the employer ends it, the notice is at least 60 days. If the wage is not monthly, the written notice is at least 30 days from the party ending the contract. Termination by either party must be based on a valid reason, which may be examined by the court in a dispute.

How do you resign from a fixed-term contract?

After the amendment, Article 2 defines resignation as the worker's written statement, without pressure, of his wish to end a fixed-term employment contract, without making it subject to any restriction or condition, with the employer's acceptance. Article 79 bis sets clear deadlines for it:

1. You submit your resignation in writing without setting a later effective date, which the law does not allow, and keep proof of the date you submitted it.
2. If 30 days pass without a reply from the employer, the resignation is treated as accepted.
3. The employer may postpone acceptance for up to 60 days if work needs require it, with a written reasoned explanation given to you before the thirty days end; the postponement is counted from the date you receive the explanation.
4. You may withdraw your resignation within seven days of submitting it, unless the employer accepted it before you withdrew. The contract remains in force during the request period, with all its obligations on both parties.

Resignation ends the contract from the date it is accepted, when thirty days pass without a reply, or when the postponement period ends. The law provides that a worker whose contract ends by resignation is entitled to all his rights, so you do not lose the wages and leave you have earned. The end-of-service award on resignation, however, is calculated under different rules from termination by the employer, depending on your years of service.

How much compensation if the contract is ended without a valid reason?

If the contract is ended for an invalid reason, the harmed party is entitled to compensation set by Article 77, unless the contract sets a specific amount. In a fixed-term contract, the compensation is the wage for the remaining period of the contract. In an indefinite contract, it is fifteen days' wage for each year of service. In both cases it is no less than two months' wage.

Your contract is for two years and is ended without a valid reason after 8 months: your compensation is the wage for the remaining 16 months.

Your contract is indefinite, you served 6 years, and it is ended without a valid reason: 15 days × 6 years = 90 days, that is three months' wage.

If you served only two years on an indefinite contract, the calculation gives 30 days, but you receive two months' wage because that is the minimum.

Which type suits you?

If you are Saudi and are offered a choice, an indefinite contract gives you more stability, because the employer can end it only for a valid reason and with sixty days' notice if your wage is monthly. A fixed-term contract gives you a clear end date, and increases compensation if it is ended early without a valid reason and the remaining period is long. An expatriate has no choice of type; what matters for him is that the term and renewal dates are clearly written in a contract documented on Qiwa (the Ministry's labour services platform).

This compensation is separate from the end-of-service award; the award is due under both types according to length of service and the reason the relationship ended.

This is general information based on the official Arabic texts of Saudi laws, which prevail over any translation. It is not legal advice for your specific case.

Practical solutions for both sides

If you are the employee:

• Read the contract type, its term and how it is renewed before signing.
• If your fixed-term contract is ended before its term without a valid reason, claim compensation for the remaining period as the law provides.
• If the contract ends and is not renewed, ask for full settlement of your rights.
• If you are Saudi and your contract has been renewed three times or its term with renewals has reached four years, keep the contracts, because they prove it became indefinite.

If you are the employer:

• Choose the contract type that suits the nature of the work, and write how it is renewed and ended.
• Send the non-renewal notice on time if the contract requires it.
• Do not end the contract before its term without a valid reason; compensation is the wage for the remaining period and no less than two months' wage.

The contract type decides compensation, notice and the award. Send us on WhatsApp your contract and the renewal annexes, and we will explain your current contract type and what follows from it.