Fixed-term employment contract
In one sentenceAn employment contract that sets a start date and an end date for the relationship between the business and the employee, so it ends when its term expires unless both parties agree to renew it.
Simply put
When you write in the contract “one year starting from…”, this is a fixed-term contract: both parties know from the start when the relationship ends.
Before the term ends you decide: renew the contract or let it end? When it ends, the employee's entitlements are calculated, including the end-of-service benefit and the leave balance. Check the Saudi Labor Law and its regulations for the rules on renewal and its effect.
Example
A contracting business hired a site engineer for two years for a specific project. At the end of the project the contract was not renewed, so the accountant prepared the final settlement with the end-of-service benefit and pay for the remaining leave.
Don't confuse it with
Indefinite-term employment contractAn indefinite-term contract has no end date and continues until one party ends it in line with the law.