Ministry to allow the private sector to cut salaries by 40%

Ministry to allow the private sector to cut salaries by 40% as per the new article published by Al Arabiya English. The initial report was published by pan-Arab daily Asharq al-Awsat around the current difficult time globally. More details below.

Ministry to allow the private sector to cut salaries by 40%

Ministry of Human Resources and Social Development agreed to bring some changes in Labor System. The new changes will allow employers to cut salaries of employees by 40% for a period of six months. After six months, companies will have a choice to terminate the contract. However, there are three conditions that should be met before terminating the contract.

Update: However, it is also been said that working hours must be reduced to cut the salary. Salary Reduction can be between 1-40 % depending on hours reduced.

Ministry advice companies to reduce hours as salary cut condition

Below is the quote from Al Arabiya.

Al Arabiya Report

“The new regulations also include a provision that will allow employers to continue benefiting from state subsidies to the private sector of any kind, such as helping to pay workers’ wages or exemption from government fees, stressing not to resort to the termination of the employment contract, except after three conditions are met to consider the conditions within the description the majeure force,” Asharq al-Awsat reported citing the document.
Al Arabiya English, 2020

According to the report on the impending ministerial decision, the three conditions set to terminate contracts as the following: The passing of six months since a salary cut has come into effect, the reduction of pay, annual leave and exceptional leave have all been spent and if a company proves that it is facing financial difficulties given the economic circumstances as a result of the COVID-19 pandemic.
Al Arabiya English, 2020

Your Employers will release more information, so don’t panic and wait for the information. Your Employer may not even take this route.

Private sector employers in #SaudiArabia can cut salaries by 40% with the possibility of terminating contracts due to the difficult circumstances as a result of #coronavirus, pan-Arab daily Asharq al-Awsat reports citing an impending ministerial decision.https://t.co/y2oGu6tI2a
— Al Arabiya English (@AlArabiya_Eng) May 5, 2020

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