Unpaid Leave

What is unpaid leave?

Unpaid leave is a temporary period of absence requested by an employee for emergency or personal reasons, during which no salary or other financial benefits are paid. This leave is granted outside the legally mandated or human resources policy-defined paid leave allowance and is often granted when other types of leave have been exhausted or during economic crises to temporarily reduce the workforce. It is not counted toward annual or sick leave, and requires prior approval from the employer.

What is the legal framework governing unpaid leave in the Saudi private sector?

The Saudi Labor Law regulates unpaid leave in Article 116, which states: “An employee may, with the employer’s consent, take unpaid leave, the duration of which shall be agreed upon by both parties. The employment contract shall be deemed suspended during the period of leave exceeding twenty days, unless the parties agree otherwise.” 

Furthermore, Article 151 of the Saudi Labor Law grants women the right to request unpaid leave following maternity leave. The article states: “Under no circumstances may a woman be required to work during the six weeks following childbirth, and she has the right to extend her leave for one month without pay. A working woman—in the event of giving birth to a child who is ill or has special needs and whose health condition requires constant care—has the right to one month of leave with full pay beginning after the end of her maternity leave, and she has the right to extend the leave for one month without pay.”

Why is it important to grant an employee unpaid leave upon request?

Unpaid leave plays a pivotal role in fostering a balanced and sustainable work environment, as it allows employees the opportunity to address urgent personal or professional circumstances without sacrificing their job. Among the most notable benefits for both the employee and the employer when implementing this type of leave are:

• Achieving a work-life balance: Leave gives employees the opportunity to address personal or family circumstances without losing their jobs, providing them with the flexibility to care for their families, pursue their education, or resolve any urgent health or social issues.
• Improving employee satisfaction and psychological well-being: When an employee feels that their employer supports their personal needs, it enhances their loyalty and job satisfaction and helps reduce the psychological stress resulting from having to choose between their job and their personal needs.
• Providing flexibility in the employer-employee relationship: This type of leave allows for greater flexibility in the relationship between the employee and the employer; the employee can take a break or focus on personal matters without losing their job, which helps build a relationship based on mutual understanding and trust between both parties.
• Supporting professional development: An employee may request unpaid leave to complete studies or professional training that could benefit their career, which enhances the employee’s skills and contributes to improving their performance upon returning to work.
• Consideration for Working Women After Childbirth: The Saudi labor system grants working women the right to extend their maternity leave or leave to care for a newborn if the child is born ill or has special needs. This reflects the flexibility of labor law in promoting a balance between women’s family and professional lives, while ensuring the continuity of the employment contract and protecting it from unjustified termination.
• Maintaining Employee Productivity: Unpaid leave helps employees recharge and increase their productivity upon returning to work, especially after shedding the burdens and pressures of daily life. It also gives them an opportunity for reflection and creativity, which benefits their professional performance.
• Reducing employee turnover: Allowing unpaid leave can reduce resignations among employees facing temporary circumstances that require their full attention; rather than losing a skilled employee, the company gives them the opportunity to return to work once their leave ends.
• Avoiding Unfair Dismissal: In some cases, unpaid leave may be a better alternative to dismissing an employee, especially if there are special circumstances that warrant it. It also helps companies temporarily reduce operating costs, particularly during economic crises or when the company is short on financial resources.

What are the conditions for unpaid leave in Saudi Arabia?

Unpaid leave in the Kingdom of Saudi Arabia is subject to a set of regulations designed to ensure a balance between the interests of the employee and the employer, with the aim of protecting rights and preventing any potential exploitation or misuse of this type of leave. Among the most important of these conditions are:

Employer Approval

To take unpaid leave, an employee must obtain explicit consent from the employer. This requirement is essential to ensure business continuity and prevent any impact on productivity. Therefore, the employee must submit a written request explaining the reasons for requesting this leave. The employer may approve or deny the request based on business needs and company circumstances.

Determining the Duration in Advance

The Saudi Labor Law requires that the duration of the leave be determined in advance by mutual agreement between the parties. This provides clarity for both parties, ensures that the employment relationship returns to normal after the leave ends, and helps avoid any legal issues related to the employment relationship and the continuity of the contract.

Suspension of the Employment Contract 20 Days After the Leave

If unpaid leave exceeds 20 days, the contract is temporarily suspended during the leave period. If the contract is for a fixed term, it is automatically extended by the number of days the employee was absent.

Does the manager have the right to deny unpaid leave?

Yes, a manager has the right to deny a request for unpaid leave, as the Saudi Labor Law makes the granting of such leave optional and subject to the employer’s approval. An employee may request unpaid leave for personal reasons, provided that the duration is agreed upon by both parties, taking into account the needs of the business and its operational circumstances. Therefore, the manager has the authority to approve or deny the request based on these criteria—for example, if the leave would negatively impact workflow, if the nature of the work requires the employee’s presence during the requested period, if there are no valid reasons, or if the leave or the reasons for it conflict with the company’s or establishment’s internal regulations.

However, a working woman’s request to extend her maternity leave or to extend her leave entitlement in the event of giving birth to a sick child or a child with special needs is a right granted to her under the Labor Law, and the employer must approve her request for unpaid leave in these circumstances pursuant to Article 151 of the Saudi Labor Law.

What are the implications for an employee during a period of unpaid leave?

Taking unpaid leave entails a number of financial and legal consequences that affect the employee’s employment status and rights during the leave period, including the following:

• Suspension of pay: The employee does not receive any salary or other financial benefits during the leave period.
• Leave Period Not Counted Toward Length of Service: In open-ended contracts, the leave period is not counted toward the length of service used to calculate end-of-service benefits or any other entitlements.
• Annual Leave Entitlement: The entitlement to paid annual leave may be deferred if the employee’s absence affects business needs.
• Social Security: The employer ceases to pay the employee’s social security contributions during the leave, and the employee becomes responsible for paying them if they wish to maintain social security coverage.
• Suspension of the Employment Contract in Fixed-Term Contracts: If unpaid leave exceeds 20 days, the employment contract is suspended and extended by the duration of the leave, as confirmed by Article 25 of the Executive Regulations of the Saudi Labor Law, which states: “If the duration of the agreed-upon unpaid leave exceeds twenty days and the employment contract is suspended, all effects arising from the employment contract shall be suspended accordingly, unless the parties agree otherwise. If the employment contract is for a fixed term, it shall be extended by the duration of the suspension, unless the parties agree otherwise.”