The reason I said that you are confused is because you are mixing up the nature of the different visas and what they legally allow you to do. I attempted to clarify but from your response, I see that you didn't understand what I was saying. Your points may be valid common sense wise but from the type of the visa and applicable laws, they are incorrect. I will try to explain in detail.
Simple facts:
1) You are NOT supposed to work on a business visit visa. There is no such thing as a mix of business and work visa. Whatever your employer is telling you is a lie. See below for guidelines for business and work visas
2) There is NO transfer of business visit visa and it CANNOT be converted to an Iqama
3) Renewal of a business visit visa is not possible while you are inside Saudi. You have to leave prior to expiry, apply for a new one and get it stamped
4) Since you are not supposed to work on this visa, NO ONE will employ you on it. Only dodgy companies who don't have work visa quotas use this route and lie / make false promises to people which end up landing them in trouble. And even if you find such a company, nothing can be done with your current visa re: point #2/#3 (you have to leave and then apply for a new one)
Guidelines for a business visa:
This Visa is issued for a business visit to a company in the Kingdom of Saudi Arabia for technical and professional purposes
It is for technical and professional purpose Only for executives and professionals traveling on invitation from a company in the Kingdom of Saudi Arabia.
This visa does not grant the applicant a resident or work permit for the Kingdom of Saudi Arabia.
So simply, it is meant for executives and professionals to be able to come for meetings and support - it is not meant to employ people. People on this visa have no right to "work" - for that you need a work permit.
Guidelines for a work visa:
A work visa is issued for 90 days after labor and immigration approval, you come in, do medical, insurance is uploaded and Iqama is issued. See below.
This long term visa is for employees/ workers of companies based in the Kingdom of Saudi Arabia. The work permit and authorizations must necessarily be issued by the employer prior to the visa application being submitted at the country of origin of the Applicant. It is mandatory for applicants to complete a medical examination at an authorized hospital/ clinic and provide a copy of the Medical Report during the visa application process. This visa category is available only with a single entry option.
Simply, you ENTER on a work visa. There is no conversion.
I am commenting on the basis of seeing cases such as yours come up over the years. The lawyer is advising you somewhat incorrectly i.e. he is only partly right. The correct part is that you are considered as a "deemed employee" despite the visa for contesting your salary, end of service benefits and having the employer right to provide you a visa. The incorrect part is that he is saying that you have no liability - "Labor court wise" you may not but immigration wise, YOU DO. Forget the courts, Immigration can take matters into their own hands (and has in other cases) e.g. refusing to issue you ANY visa for Saudi in the future due to your overstay & violating the terms / conditions of your visa (i.e. working on it).
Now to your point as to how you can be fined (by a court). Again, it is back to nature of visas. You are NOT supposed to work on a business visit visa. Working on that visa is a violation of the law. If you file a case, you are admitting to a violation of the law and that puts you at risk also - they may or may not go after you but that doesn't change the fact that you are at risk. Furthermore, you have overstayed your visa - that comes with fines as well (overstaying is deemed as YOUR responsibility, not employer).
Your only options now are:
1) Lock down a new job, in principle, with someone who will be willing to sponsor a work visa/Iqama for you, then exit the country and get that visa stamped in your home country
2) Exit the country, have someone sponsor a business visit visa for you, come back, fight for your rights and try to utilize option 1 again
3) Find someone super connected or at high levels who can make all of these processes go away and sort out the situation. The wasta angle
The longer your overstay, the chances of you getting any type of Saudi visa ever again, start declining day by day.