Fixed-Term vs Unlimited-Term Contracts in Saudi Arabia

Published: July 2026 | 6 min read

The classification of employment contracts into fixed-term or unlimited-term is one of the most important factors determining the rights and obligations of both employees and employers. This article explains the key differences under Saudi Labor Law.

Fixed-Term Contracts

A fixed-term contract is an employment agreement with a specified end date. The contract automatically expires at the end of its term. If both parties continue working after the expiry date without renewing the contract in writing, it automatically converts to an unlimited-term contract.

Unlimited-Term Contracts

An unlimited-term contract has no specified end date and continues until terminated by either party according to the law. This type offers greater job stability as the employee does not need to worry about periodic contract renewal.

Key Differences

Duration: Fixed-term has a set duration; unlimited-term has no set duration.
Termination: Fixed-term cannot be terminated early without cause; unlimited-term requires 30-60 days notice.
EOS Benefit: Same calculation formula applies to both types. However, for fixed-term contracts ending by expiry, the employee receives full benefit regardless of service length.

Which is Better?

Unlimited-term contracts generally offer more job security. Fixed-term contracts may be suitable for temporary projects or seasonal work.

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