By Bernd Debusmann Jr
After six months with reduced salaries, employee contracts can be terminated
Companies in Saudi Arabia can now reduce salaries by 40 percent and terminate contracts as a result of the conditions caused by the Covid-19 pandemic, according to local media reports.
According to the Al Sharq Awsat, the decision was part of a document issued by the Saudi Ministry of Human Resources and Social Development, which noted that salaries can be reduced for a period of 6 months, in accordance with the hours of work complete.
After six months, employee contracts can be terminated.
The ministry’s decision includes a provision noting that companies can cut wages if the employees benefit from government assistance, such as those that that help with wages or exemptions from various government fees.
To terminate an employee, companies must first ensure that six months has passed since salary cuts were enforced, all annual leave and exceptional leave days were utilised, and that the company can show that it is facing financial issues as a result of the pandemic.
The newspaper added that the decision will come into effect once the decision is published in the government’s official newspaper.