What the article says
Article 55 deals with what happens to a fixed-term contract when its term runs out, in two situations: a contract with no renewal clause, and a contract with a clause providing for its renewal.
Situation 1: the term ends and there is no renewal clause
The fixed-term contract ends when its term expires. If both parties carry on performing it afterwards, it is deemed renewed for an indefinite term, subject to Article 37 as regards non-Saudis.
"A fixed-term employment contract ends when its term expires. If both parties continue to perform it, the contract is deemed renewed for an indefinite term, subject to Article 37 of this Law as regards non-Saudis."
Article 55, paragraph 1, Saudi Labor Law. Unofficial working translation for awareness only; the official text is the Arabic published by the Bureau of Experts at the Council of Ministers.
Situation 2: the contract has a renewal clause
If the contract provides for renewal for a similar or a specified term, it renews for the agreed term. If renewal happens three consecutive times, or the original term plus the renewal term reaches four years, whichever is less, and the parties carry on performing it, the contract becomes an open-ended (indefinite-term) contract.
"If a fixed-term contract contains a clause providing for its renewal for a similar or a specified term, it is renewed for the agreed term. If renewal happens three consecutive times, or the original term plus the renewal term reaches four years, whichever is less, and the parties continue to perform it, the contract becomes an indefinite-term contract."
Article 55, paragraph 2, Saudi Labor Law. Unofficial working translation for awareness only; the official text is the Arabic published by the Bureau of Experts at the Council of Ministers.
Why the contract type matters
- Notice: the notice periods in Article 75 apply to open-ended contracts only.
- Compensation: under Article 77, unless the contract sets an amount, compensation for termination for an illegitimate reason is fifteen days' wage per year of service for an open-ended contract and the wage for the remaining term for a fixed-term contract, and in both cases not less than two months' wage.
- Resignation: since the 2025 amendments, Article 2 defines resignation as the worker's written expression, without coercion, of the wish to end a fixed-term employment contract, not made subject to any restriction or condition, and the employer's acceptance of it. More on the Article 74 page.
Non-Saudis and Article 37
Article 37 requires a non-Saudi's employment contract to be written and for a fixed term. Since its amendment by Royal Decree M/44, a contract that does not state its term runs for one year from the date the worker actually starts, and if work continues after that it is deemed renewed for a similar term. Before the amendment, the term of the work permit was the term of the contract. How Articles 55 and 37 combine for a particular contract is a question of interpretation that depends on its facts.
Who it applies to
The Labor Law applies to every employment contract under which a person works for an employer, under the employer's management or supervision, for a wage (Article 5). That covers private-sector employees, men and women, Saudi and non-Saudi, with Article 37 applying to non-Saudis.
It does not cover the groups excluded by Article 7, among them domestic workers and those in a similar position, agricultural workers and private shepherds, and players and coaches of sports clubs and federations; some of these groups have special regulations. This explainer does not cover civil servants or military personnel, who have their own systems.
A hypothetical example with round numbers
Three hypothetical contracts for a Saudi worker:
- A one-year contract with no renewal clause: the term ends and both parties keep working without a new contract, so the contract is deemed renewed for an indefinite term (paragraph 1).
- A two-year contract with a clause renewing it for a similar term: with the first renewal the total reaches four years, one of the two limits in paragraph 2, so if the parties carry on performing it, it becomes open-ended.
- A six-month contract with a clause renewing it for six months: the third consecutive renewal comes when the total is only two years, so here the lower limit is the number of renewals, and with continued performance the contract becomes open-ended.
Hypothetical examples for illustration only. How the article applies to a particular contract depends on its terms and facts.
Common misconceptions
- "A fixed-term contract stays fixed-term however often it is renewed." Paragraph 2 turns it into an open-ended contract after three consecutive renewals or four years, whichever is less, if performance continues.
- "If the term ends and work continues, the contract renews for the same term." Where there is no renewal clause, paragraph 1 deems it renewed for an indefinite term once the parties carry on performing it, subject to Article 37 for non-Saudis.
- "The 2025 amendments changed the four-year rule." Royal Decree M/44 did not include Article 55. Its current wording comes from Royal Decree M/46 of 1436H, which raised the limit from two renewals or three years to three renewals or four years.
- "A non-Saudi's contract with no written term follows the work permit." That was the rule before 19 February 2025. The current Article 37 sets the term at one year from the actual start date.
Related articles
- Article 37: a non-Saudi's contract is written and fixed-term, and runs for one year if it does not state its term.
- Article 51: the contract is written in two copies and documented. The practical steps are in the Qiwa contract documentation guide.
- Article 74: the contract ends when its set term expires, unless it has been expressly renewed under the Law, in which case it continues to its end (paragraph 2).
- Article 75: the notice period for open-ended contracts.
- Article 77: compensation for termination for an illegitimate reason, by contract type.
Official source
The full text of the Labor Law and its amendments is published on the Bureau of Experts at the Council of Ministers portal. The Arabic text published there is the official reference. Text checked on 28 September 2026.