Before You Sign a Final Settlement in Saudi (Mukhlasa)
Have you ever felt pressured to sign a document just to move on to your next job? It is a common situation for many expats, but doing so could cost you more than you think. A recent case in the Dammam Labor Court serves as a vital reminder for every international professional working in the Kingdom of Saudi Arabia.
In this specific case, a physician filed a lawsuit claiming over 639,000 SAR in compensation after his contract was terminated. He argued that under Article 77 of the Saudi Labor Law, he was entitled to the wages for the remaining period of his fixed term contract. However, there was one major obstacle: he had already signed a final settlement, known as a Mukhlasa.
The physician told the court that he only signed the settlement because he was under "duress." He explained that he had been without a salary for eight months and needed the settlement to transfer his sponsorship to a new employer. Despite these difficult circumstances, the court rejected his claim. The judge ruled that as a high level professional, the physician should have understood the legal weight of his signature. Under the Saudi Civil Transactions Law, a signature is considered a binding legal commitment unless extreme, physical, or immediate "duress" is proven.
This ruling highlights a very important lesson for the expat community: your signature is your strongest piece of evidence. The Saudi judicial system is fair and highly structured, but it relies heavily on written agreements. If you sign a document stating you have received all your dues and waive your future claims, the court will likely uphold that agreement.
To protect yourself, always remember to review any settlement offer with a legal expert before signing. Never feel rushed to sign a waiver if you believe you are still owed compensation for contract termination or unpaid benefits. Understanding the rules today can save your career and your finances tomorrow.
This insight is based on a published judgment available through the Ministry of Justice Legal Portal in Saudi Arabia. If you ever need legal advice in Saudi Arabia, do not hesitate to contact us. We would be happy to support you and help guide you in the right direction!
