The Coronavirus pandemic has been declared force majeure, and the Ministry of Human Resources and Social Development has given permission for the contractual relationship between employees and employers to be varied, with the aim of helping all parties to labor contracts overcome this difficult and challenging time.
If working hours are required to be reduced as a result of the pandemic, and with the consent of the employee, an employer may cut wages so that they match the actual number of hours worked. An employee may also be given paid leave, which will be deducted from their annual leave. Or they may take unpaid leave, with the employer’s consent, for a length of time to be agreed with the employer. If the unpaid leave exceeds 20 days, the employment contract will be suspended, unless the parties agree otherwise.
Any such exceptional changes to a contract must be implemented within six months of the state taking any measures that cause a reduction in working hours, or any other precautionary action to limit the damage caused by the force majeure, in this case the pandemic.
Obviously, concerns have been raised about the broad scope of these changes, and their interpretation and application, with the opportunity for unscrupulous employers to exploit their staff. Both employers and employees should note, however, that any decision that violates the law will be deemed void, and any measures that alter an employee’s rights or working conditions will be revoked, unless it benefits the employee.
In addition, none of these measures may be invoked by a company that cannot prove its business has been affected by the pandemic. Any company that does so will be deemed to have unlawfully terminated a contract, and the employee concerned will receive their full wages and entitlements.
Thanks to another major development last week, companies affected by the pandemic have another alternative to terminating the contracts of any Saudi employees. Instead, they may apply to a new SR9 billion compensation fund that will pay 60 percent of the salaries of qualifying staff, up to SR9,000 a month, for three months. Businesses subsidized in this way must resume payment of wages when the compensation period ends, and they must continue to pay the wages of employees, Saudi or non-Saudi, who are not covered by this scheme. In general, unlawful use of state support will not be tolerated. All these measures are exceptional, but so is the challenge the world is currently facing.
