COVID-19: Saudi Arabia sets rules for implementing salary cuts
Move follows Monday's announcement about wage cut of up to 40%
Cairo: The Saudi Ministry of Human Resources and Social Development has linked salary cuts to a proportional reduction in working hours provided that the wage cut should not exceed 40 per cent, Saudi newspaper Okaz said Tuesday.
The guidelines come a day after media reports said that a Saudi ministerial decision was issued allowing private sector companies to reduce salaries by 40 per cent and to terminate contracts due to economic fallout from the COVID-19 pandemic.
According to Okaz, the ministry has set two conditions for the wage cut; first the institution has been harmed by impact of the COVID-19; second, the wage cut should be commensurate with a cut in working hours.
The ministry pointed out that there is no minimum limit for reducing working hours while the capping for wage cut is 40 per cent.
No right
The employer has no right to terminate the worker’s contract invoking the principle of force majeure in case the institution has not benefited from the government subsidy until after fulfilling three basic conditions. These conditions are the lapse of six months after measures have been taken due to an event or a circumstance requiring a cut in working hours or halting work for a certain period with the continuation of this event; exhausting measures pertaining to reducing the wage, giving the annual leave and all or part of the exceptional leave; and proving that the employer has not benefited from any kind of state aid to address this situation.
Exceptional leave Regarding exceptional leave, the ministry said the employer has no right to oblige the worker to obtain such a holiday without pay without his/her consent.
The contract is considered suspended during the exceptional leave if it exceeds 20 days unless both parties have agreed to otherwise.
The ministry, meanwhile, pointed out that the worker has no right to refuse to comply with the choices mentioned in the article No 41 of the executive regulations in the kingdom’s labour system, except that related to going on an exceptional leave.
Three options
The ministry elaborated that the employer is allowed to apply three options to the same workers according to dictates of work in the institution. The employer has the right to give the worker a paid leave for a certain period, then cut his/her salary by a maximum 40 per cent and later offer an unpaid leave conditional on the worker’s consent.
The ministry has vowed to penalize violating employers of the Article No 41 stipulations.
Stimulus packages
On Monday, the daily newspaper Asharq Al Awsat reported that the Saudi Ministry of Human Resources and Social Development had signed a decision to regulate the labour contract in the current period, allowing employers to reduce the employees’ salaries by 40 per cent of the actual effective wage for a period of six months, in proportion to the working hours and allowing the termination of the employee’s contract after six months of the COVID-19 circumstances.
The decision, which goes into effect as soon as it is published in the Official Gazette, ensures that the employee will receive his/her salary if on annual leave within the period of six months, according to the paper.
Saudi Arabia has recently launched several economic stimulus packages to help cushion impact of COVID-19.