Coronavirus: Saudi Arabia ministerial decision to cut private sector salaries by 40%

Coronavirus: Saudi Arabia ministerial decision to cut private sector salaries by 40%

A ministerial decision in Saudi Arabia is set to allow private sector companies to cut salaries by up to 40 percent with the possibility of terminating contracts given the difficult economic circumstances surrounding the coronavirus pandemic, pan-Arab daily Asharq al-Awsat reported.

Citing a copy of the decision, Asharq al-Awsat reported on Monday that Saudi Arabia’s Ministry of Human Resources and Social Development agreed to changes to the Kingdom’s labor system that would include allowing an employer to reduce an employee’s salary by up to 40 percent of the actual wage for a period of six months.

The new regulations would also allow companies to terminate employee contracts after 6 months of the coronavirus pandemic period.

A man withdraws money from an ATM outside the Saudi National Commercial Bank (NCB), after an outbreak of coronavirus, in Riyadh, Saudi Arabia, March 18, 2020. (Reuters)A man withdraws money from an ATM outside the Saudi National Commercial Bank (NCB), after an outbreak of coronavirus, in Riyadh, Saudi Arabia, March 18, 2020. (Reuters)

“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.

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.

The decision also specified that employees will receive their salaries if they are on annual leave within the stipulated six-month period.

Asharq al-Awsat reported that the ministerial decision would come into effect once it is confirmed by the Saudi Arabian government and published in its official newspaper.

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