These are tough times. The entire world is reeling under a severe economic depression and Saudi Arabia is no exception. Businesses folding up, bankruptcy and mergers during any recession are quite common, but the human cost involved is enormous. Expatriates working in Saudi Arabia simply cannot be insulated from what is happening around them, particularly in these tough times. Fortunately, certain rights have been inculcated in the Labor Law precisely to protect the workers against such calamities.
Articles 17, 18 and 19 of the Labor Law go at length to describe the situation and also to protect the rights of the workers. It is not uncommon to see workers of a company left to fend for themselves, when their sponsor simply winds up his business or sells it to some other sponsor. When the ownership of a firm is transferred to a new owner, or there is a change in the legal status of a firm through merger or partition, the Labor Law is clear on one thing - the work contracts of the workers would remain in force and service would be deemed as continuous. To put it simple, you cannot sack an expatriate worker simply because the new sponsor doesn't want you. All the rights of the worker including his pay as well as End of Service benefits remain the responsibility of both the predecessor and successor owners, in case of mergers.
In case of ownership transfer, if there is any change in the condition, the written approval of the employee must be taken. In case the employee is unwilling for any of the conditions, then the previous sponsor is legally bound to give the employee all his dues. He should also not object to the employee seeking employment with any other sponsor in the kingdom.
The Labor Law also throws some interesting insights if a firm becomes bankrupt. Amounts due to the workers are deemed as "first rate privileged debts". To unwind the legal jargon, what this means in simple language is that when a firm becomes bankrupt, the first right of the amounts from the sale of the firm is to the employee. Article 19 of the Labor Law is very explicit on this. The worker is supposed to be paid one month's salary as "expedited amount" to keep him going. This amount takes precedence over all other expenses including judiciary, legal, banking or liquidation expenses. In short, the law simply says to pay up the employee first before settling the bills of the debtors, lawyer fees, banks, etc.
Ignorance isn't bliss, it is dangerous. It is always helpful if you know what you are rightfully due. Hope this post was interesting.