Saudi private-sector employers given green light to reduce staff Wages, or grant them leave

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Saudi private-sector employers whose businesses have been crippled by the covid-19 pandemic have been told they can cut their employees wages and working hours.

According to the decision, once the government has taken measures to deal with a certain case or circumstance necessitating reducing working hours, or taking precautionary measures to prevent the aggravation of that case or situation, then the ministry permits considering this condition or circumstance as a force majeure, as stipulated in Paragraph 5 of Article 74 of the Labor Law.

If the legal concept, known as “force majeure take effect:

Once “force majeure” takes effect, the ministry allows the employer to, first of all, agree with the employee, within 6 months to reduce the worker’s vages to be commensurate with his actual working hours, or the worker can be granted a local leave that will be counted within his entitled annual leave balance, or the worker can be granted an exceptional leave, in line with Article 116 of the Labor Law.

After that, terminating the work contract is illegal if it is proved that the employer benefited from any support from the state to deal with the situation. Additionally, the worker reserves the right to terminate the work contract.

The ministry has allowed the possibility of benefiting temporarily from the services of the surplus expatriate workers via “Ajeer” portal, as an alternative for recruiting workers from abroad.

By this decision, the Ministry of Human Resources and Social Development aims to protect employes during such circumstances from being terminated or losing their contractual benefits. The portal will soon offer the businesses to publish names of their excess workers.

Through this decision, the ministry is striving to achieve sustainability of the labor market in the Kingdom by urging the concerned parties to reduce operational costs temporarily for the impacted companies.

In addition, employers who have benefited from state subsidies, such as the SR 9 billion ($2.4 billion) fund created last week to compensate Saudi workers for the effects of the pandemic, may not terminate employment contracts. Employees, however, retain the right to do so.

It is noteworthy that this decision is part of the initiatives of the Ministry in regulating the labor market and mitigating the economic impacts on the private sector and to achieve the interests of both parties to the labor relationship, amid the exigencies of the cornavirus pandemic.

News reported in local news on Monday April 6, 2020.

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