Business Glossary /

Saudi Labor Law

Constructive Dismissal

Constructive Dismissal

When an employer's conduct makes working conditions so intolerable that an employee is effectively forced to resign.

Constructive dismissal occurs when an employer — through unilateral changes to employment terms, excessive workload changes, hostile management conduct or deliberate creation of intolerable conditions — effectively forces an employee to resign. Under Saudi Labor Law, if a court or MHRSD finds that an employee was constructively dismissed, the employee retains the same rights as if they had been formally terminated — including EOSB, notice pay and additional compensation. Saudi employers undertaking organizational restructuring, role changes or compensation adjustments must follow proper consultation and notice procedures to avoid constructive dismissal claims.