Article 111 of the Saudi Labor Law: Workers’ Rights, Compensation, and Calculation of Wages and Unused Leave

Article 111 of the Saudi Labor Law preserves the worker’s right to receive wages for the days of leave they are entitled to if they leave their job without having used them. This is in addition to being entitled to wages for the leave proportionate to the time they worked during the year.
Article 111 is one of the fundamental pillars of the Saudi Labor Law, as it regulates the worker’s right to receive compensation for unused leave balance. It specifies the worker’s wage for any remaining leave when they leave their job or if the employer terminates their employment.

This article, presented by Al Othman Lawyers and Consultants, will provide an overview of Saudi Labor Law, explain the text of Article 111 in detail, and cover its key provisions, scope, and practical applications. You can also contact a labor law attorney in Saudi Arabia.

Overview of the Saudi Labor Law

This system was issued on 23/08/1426 AH (corresponding to 27/09/2005 CE) and published on 25/09/1426 AH (corresponding to 28/10/2005 CE). It is one of the most significant legislations as it aims to regulate the relationship between employers and workers, ensuring balance between the two parties and clarifying their respective rights and duties. This contributes to developing the labor market and enhancing national economic growth.

The system includes the following sections:

• Definitions and general provisions
• Regulation of employment processes
• Employment of non-Saudis
• Training and qualification
• Labor relations
• Working conditions and terms
• Part-time work
• Workplace safety and protection from major accidents and occupational injuries, along with health and social services
• Employment of women
• Employment of minors
• Maritime labor contracts
• Work in mines and quarries
• Labor inspections
• Labor dispute resolution bodies
• Penalties
• Final provisions

Today, we will focus specifically on Article 111.

Also read: Article 109 of Saudi Labor Law.

Text of Article 111:

A worker is entitled to receive wages for the days of leave they are entitled to if they leave the job before using them. This applies to the duration for which they did not take leave. Additionally, the worker is entitled to wages for portions of the year in proportion to the time they spent working.

Purpose of the Article:

The article aims to protect the worker’s right to fair compensation for their remaining annual leave days upon leaving their job. It also seeks to preserve this right even if the termination is initiated by the worker rather than the employer.

Also read: Saudi Labor Law Article 83

What does Article 111 cover?

Article 111 of the Saudi Labor Law regulates the worker’s right to compensation for unused annual leave in the event of employment termination, regardless of whether the termination is initiated by the worker or the employer. This is done without affecting the worker’s entitlement to compensation or end-of-service benefits. The compensation is calculated based on the worker’s wage at the time the leave entitlement arose.

Key Provisions:

1. Ensuring Workers’ Rights: Preserving the worker’s right to fair compensation for their remaining leave.
2. Equality with the Employer: If termination is initiated by the worker, they still retain the right to compensation for unused leave.
3. Fair Compensation: Workers receive fair compensation for unused leave days before leaving their job.

Also read: Article 70 of Saudi Labor Law.

What is the importance of Article 111?

The importance of Article 111 of the Saudi Labor Law lies in safeguarding the worker’s right to fair compensation for their remaining leave balance upon leaving their job. The article strengthens the worker’s position in relation to the employer, making it legally permissible for the worker to claim their rightful compensation.

What are the rights of the worker and the obligations of the employer?

Worker’s Rights under Article 111:

• The worker is entitled to financial compensation for any unused leave days.
• The method for calculating this compensation will be explained in detail later.
• This compensation is mandatory for the employer to provide and cannot be waived by the worker.
• The compensation must be documented in the worker’s end-of-service certificate.

Employer’s Obligations under Article 111:

• The employer is required to pay the worker the due compensation for unused leave immediately upon the termination of the employment relationship.
• Delaying this payment is considered a legal violation that subjects the employer to legal accountability.
• The end-of-service certificate must include a statement of the leave compensation.

Also read: Article 98 of Saudi Labor Law

How to Calculate Compensation for Unused Leave:

1. Calculating Daily Wage:
   The daily wage is calculated by dividing the worker’s monthly salary by the number of working days in a month (typically 30 days).
2. Determining Unused Leave Days:
   Identify the number of annual leave days the worker did not utilize during their employment period. To determine the entitled days, refer to Article 109 of the Saudi Labor Law: Rights to Paid Annual Leave and Employer Obligations.
3. Calculating the Compensation:
   Compensation = Daily Wage × Number of Unused Leave Days.

Practical Example:
If a worker’s monthly salary is 6,000 SAR and the number of unused leave days is 10, the calculation would be:

• Daily Wage = 6,000 ÷ 30 = 200 SAR.
• Compensation = 200 × 10 = 2,000 SAR.

Tip:
In case of disputes, the worker and employer can use the Wudi platform for resolution.

Frequently Asked Questions:

Sources:

• The Ministry of Human Resources and Social Development
• The Bureau of Experts at the Council of Ministers (Labor Law)
• The Executive Regulations of the Labor Law and its annexes