Employment law risks employers in Saudi Arabia are overlooking

Many employment disputes arise not because the underlying management decision was unreasonable, but because an employer failed to follow the correct process or maintain the necessary evidence to support its decision. These procedural shortcomings can lead to costly litigation, compensation claims, disputes relating to end-of-service benefits, and significant operational disruption.

As organisations navigate the current employment law landscape, there are five areas where employers continue to underestimate their legal exposure.

Poor documentation of performance management is one area of weakness. In many cases, managers have genuine concerns regarding an employee’s performance. However, those concerns are often communicated informally, inconsistently recorded, or supported by limited evidence. When a termination decision is subsequently challenged, employers may struggle to demonstrate that the employee was aware of the concerns, received appropriate feedback, or was given an opportunity to improve.

The issue is rarely the existence of a performance problem itself, but rather the inability to produce a coherent documentary record showing how the issue was managed over time.

Performance reviews, warning letters, improvement plans and meeting notes are just some of the ways the evidence can be recorded, with this evidence potentially critical in any future dispute. Without this, employers may face difficulty when trying to justify employment decisions, even when these decisions appeared entirely reasonable from a business perspective.

Some employers assume that employee misconduct automatically entitles them to dismiss that employee under article 80 of the Labour Law without notice or end-of-service benefits. In practice, article 80 dismissals present significant legal risk.

The challenge is not simply establishing that misconduct occurred. Instead, employers must also satisfy the evidential and procedural requirements necessary to support reliance on article 80. Allegations may fail if investigations are incomplete, evidence is not adequately preserved, witness accounts are not properly recorded, or where the disciplinary processes were not conducted in accordance with legal requirements.

In practice, when assessing the validity of an article 80 dismissal, the courts tend to focus primarily on whether the employer has complied with the prescribed timelines and procedural requirements under the Labour Law, rather than examining the substantive merits of the dismissal itself. The merits of the underlying conduct are typically addressed through separate proceedings, which may include criminal proceedings where applicable.

It is also important for employers to understand the types of conduct likely to justify dismissal under article 80. Behaviour that may be viewed internally as serious misconduct does not necessarily meet the statutory threshold.

Where an employer incorrectly relies on article 80, the consequences can be severe. A dismissal intended to avoid compensation, or benefit payments may instead result in additional financial exposure and litigation costs.

Another recurring issue is the misconception that employment can only be lawfully terminated in cases involving misconduct or clear resignation cases and looking past alternative agreements.

In reality, employers often have a wider range of termination rights. However, each option carries different procedural requirements and potential financial consequences. Problems arise when organisations either assume they have no termination flexibility or fail to fully understand the legal implications of the route they select.

A misunderstanding of these rights can result in avoidable disputes and unexpected compensation liabilities. Employers should therefore assess proposed terminations carefully, considering not only whether a termination is possible, but also which legal mechanism is most appropriate and defensible in the circumstances.

Workplace investigations remain one of the most overlooked aspects of employment risk management in the KSA.

When concerns relating to misconduct, policy breaches or employee grievances arise, organisations frequently focus on reaching a decision quickly rather than ensuring the investigative process is robust.

Common weaknesses include failure to comply with statutory timelines, inadequate witness interviews, poor evidence gathering practices, inconsistent disciplinary decision making and incomplete record keeping. These procedural deficiencies can undermine an otherwise legitimate employment decision. Even where misconduct has occurred, employers may struggle to defend a dismissal if the supporting investigation cannot demonstrate that the matter was handled fairly and appropriately.

As employment administration becomes increasingly digitised, employers face growing risks arising from inconsistencies between contractual documentation and information recorded on the Qiwa platform.

Qiwa is Saudi’s official digital labour market platform, operated under the supervision of the Ministry of Human Resources and Social Development. It is the central online system through which employers, employees and government authorities manage a wide range of employment-related processes. Services provided through Qiwa include employment contract creation, management and termination, employee data and workforce management, work permit services, employee transfers between employers, establishment compliance monitoring, nationalisation reporting and certificates as well as labour office interaction and regulatory filings.

Many organisations continue to focus primarily on paper-based employment contracts and internal HR records without regularly verifying that the corresponding information maintained on Qiwa accurately reflects current employment arrangements. Discrepancies may emerge in relation to salary information, job titles, contractual terms, working arrangements or employment status. While these inconsistencies may appear administrative in nature, they can create significant complications when disputes arise.

Regular alignment between contractual documents and Qiwa records should therefore be viewed as a compliance priority rather than an administrative task.

Given the evolving regulatory environment, employers should take proactive steps to identify and mitigate risk before disputes arise.

Employers should conduct a workforce compliance health check of employment contracts and related documentation, review internal HR policies and procedures to ensure they remain legally compliant and reflect current Saudi employment law requirements, and audit termination practices, particularly where they anticipate relying on misconduct-based dismissal grounds. They should also verify that information recorded on the Qiwa platform is accurate and ensure that any decisions made are supported by appropriate documentation, clear records and a defensible decision-making process.