Prepared by: Meshaal Sulaiman Alrubaysh Law Firm & Legal Consultancy
Professional Profile: Meshaal Sulaiman Alrubaysh
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Illustrative photograph by Luke Heibert Unsplash
A stock count may differ from the system balance, but the number alone identifies neither the responsible person nor a debt owed by an employee. Unrecorded issues, transfers, damage or measurement errors may explain it. The professional starting point is to establish and explain the shortage, then assess responsibility and the proper recovery route while preserving evidence and employee rights.
Verify the shortage first
Reconcile opening balances, purchases, receipts, returns, transfers, sales and damaged stock. Check the movement cutoff date and counting method. Recording a package as one unit in one system and its contents as separate units elsewhere can produce a misleading discrepancy. A documented recount with relevant staff and recorded objections is preferable to treating an initial result as a final accusation.
Define custody and access
Identify who received the stock, could enter the warehouse, issue goods or amend records, and the period covered. Working in the warehouse does not establish responsibility for every discrepancy. Where access is shared, handover and movement records and controls help determine each person’s role. Job titles cannot fill gaps in documentation.
Liability and deductions have conditions
Article 91 of the Saudi Labor Law addresses loss or damage to employer property arising from employee fault or breach of instructions, excluding third-party fault and force majeure, with deduction limits and challenge procedures. A shortage should therefore not become an automatic deduction. Articles 92–94 also govern deductions, limits and repayment of unjustified amounts, depending on the case.
For this purpose, deductions are limited to five days’ wages per month. Article 91 provides a 15-working-day challenge period, starting with discovery or employee notification according to the party, requiring prompt review where applicable.
Separate investigation from financial settlement
Where misconduct is suspected, hear the employee and check their explanation before deciding discipline. Distinguish a disciplinary sanction from a compensation claim, each requiring its own basis. Signing a stock-count record does not necessarily admit fault or accept a sum. Review any settlement and applicable challenge deadlines before taking financial action or closing the file.
Repair the control failure
Recovering money from an individual may not prevent recurrence if the system is defective. Review separation of duties, movement documents, shift handovers, damaged stock and periodic reconciliation, with a clear exception process. Better controls and preserved evidence support decisions and protect both the company and employees following published procedures.
- Verifiable count record and calculation
- Stock movements, custody and defined permissions
- Established cause and deduction-rule review
Fictional example
A shortage was initially attributed to the warehouse custodian. Reconciliation revealed goods transferred to another branch without a recorded transfer. Correct documentation explained the balance and exposed the process failure. Any remaining genuine loss would still require identifying its cause and responsible person before assessing liability.
Treat a stock discrepancy as a fact requiring explanation and proof, then review liability, recovery methods and statutory deadlines. A considered process protects wages and company assets.
Official Sources
General educational content, not a substitute for advice on your facts and documents, and not a guarantee of any outcome.
Translations refer to Saudi law, consult the official legal text when applying it.
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