Article 40 of the Saudi Labor Law establishes the definitive financial liabilities regarding expatriate employment. This statute mandates that the employer bears the costs of the Iqama, the Final Exit Visa, and the return flight ticket, protecting the worker’s End of Service Benefit (EOSB) from unlawful administrative deductions.
Under Article 40, the Saudi Labor Law explicitly forces the employer to pay all government fees related to the worker’s residency and exit. Employers cannot legally transfer these financial burdens to the employee or subtract them from the final settlement payout.
The Legal Framework of Employer Financial Liabilities (Article 40)
The Saudi Labor Law assigns the financial responsibility for government processing directly to the employer. Article 40 dictates that the employer must bear the fees pertaining to the recruitment of non-Saudi workers. This includes the issuance and renewal of the Iqama (residence permit), the work permit, and any associated government fines resulting from delayed renewals.
Illegal Deductions from the Final Settlement
During the employment exit process, companies sometimes attempt to subtract government fees from the worker’s accrued financial dues. This practice violates the law. The End of Service Benefit (EOSB) is a protected financial right. Subtracting visa costs or residency fees constitutes a direct violation of the Maximum Legal Deductions from Saudi Final Settlement Dues. Saudi Labor Courts reject any final settlement calculation that illegally transfers Article 40 liabilities onto the worker.
The 4 Primary Government Fees Paid by the Employer
The four primary government fees paid by the employer under Article 40 are listed below:
1. Iqama Issuance and Renewal Fees
The employer legally bears all costs associated with issuing and renewing the worker’s Iqama and work permit throughout the duration of the employment contract.
2. Final Exit Visa and Re-Entry Visas
The employer must pay the government fees required to issue the Final Exit Visa (Khurooj Nihai) and any exit and re-entry visas mandated by the work requirements.
3. Repatriation Flight Tickets
At the end of the employment relationship, the employer bears the cost of the return ticket to the worker’s home country, provided the contract ends naturally or via employer termination.
4. Fines for Processing Delays
The employer absorbs all financial penalties and fines imposed by the government if the company delays the renewal of the Iqama or work permit.
The Exception: When Does the Worker Pay for the Return Ticket?
While the employer generally pays for the Repatriation Ticket, Article 40 specifies strict exceptions. The worker bears the costs of returning to their home country if they are legally unfit for work or if they terminate the employment contract without a legitimate reason.
Securing the Final Dues and Return Ticket
Expatriate workers must separate their government fee liabilities from their labor entitlements. The employer must finalize the visa processing and disburse the full financial payout within the strict Saudi Final Settlement: Timeline (Art 88). To prevent employers from obscuring illegal deductions within complex accounting, employees must compute their exact gross entitlement independently. Users can determine their precise, legally protected financial dues utilizing the Saudi EOSB Calculator.
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