End-of-Service Benefits in Saudi Arabia: Calculation and Employee Rights
What is an end-of-service benefit?
An end-of-service benefit is an amount payable to a worker covered by the Saudi Labour Law when the employment relationship ends, subject to the applicable rules. Article 84 sets out the basic calculation; Articles 85 to 88 address resignation tiers, exceptions and final-settlement timing. This guide explains the general Labour Law rules. Some categories, such as domestic workers, may be governed by separate regulations.
How is the benefit calculated under Article 84?
- First five years: half a month's wage for each year.
- Service beyond five years: one full month's wage for each additional year.
- Part of a year: calculated proportionally to the time worked.
- Wage basis: the last wage recognised for the statutory calculation. Article 86 allows specific agreements concerning commissions, sales percentages and similar variable wage components.
Simple calculation: half of the last recognised monthly wage × service years within the first five years, plus the full last monthly wage × service years beyond five years.
Prorate partial years. Calculate the basic award first, then check whether a separate rule changes the payable proportion because of the reason employment ended.
Worked example
Assume the last wage recognised for the calculation is SAR 5,000 and the employee has served 6 years and 3 months. This illustration does not account for any variable-pay issue requiring separate treatment:
- First five years: 5 × half a month = 2.5 months of wage.
- Next 1 year and 3 months: 1.25 years × one month = 1.25 months of wage.
- Illustrative total: 3.75 months × SAR 5,000 = SAR 18,750.
This is an illustrative Article 84 calculation before applying any resignation percentage or assessing the contract, wage components and case-specific facts. Use the official calculator and compare its result with your employment records.
How does resignation affect the benefit? — Article 85
Where the employment relationship ends because the worker resigns, Article 85 sets the following proportions based on continuous service:
| Continuous service | Proportion stated in Article 85 |
|---|---|
| Less than two years | No end-of-service award on resignation under Article 85 |
| From two years through five years, inclusive | One-third of the award |
| More than five years but less than ten years | Two-thirds of the award |
| Ten years or more | Full award |
A worker who resigns with less than two years of continuous service is not entitled to an end-of-service award under Article 85. Do not rely on a summary table alone to decide a particular claim; ask the Ministry or a qualified adviser where the contract or facts may affect the legal classification. Not every contract ending should automatically be treated as a resignation—the actual reason for termination matters.
Are there cases where the full award applies? — Article 87
Article 87 provides exceptions under which the full award is payable notwithstanding Article 85, including:
- The worker leaves due to force majeure beyond their control.
- A female worker ends the contract within six months from the date of her marriage contract, or within three months from the date of delivery.
The facts and statutory conditions should be assessed before relying on an exception. Do not assume it applies merely because the reason for leaving is described as urgent or personal.
When must final entitlements be settled? — Article 88
Under Article 88, the employer must pay wages and settle entitlements within a maximum of one week after the contractual relationship ends when the employer ended the contract. If the worker ended the contract, the period is no more than two weeks. The article also allows the employer to deduct work-related debt owed by the worker from amounts payable to them. Keep the settlement statement, correspondence and evidence of the termination date.
End-of-service benefit is not the same as Article 77 compensation
The Article 84 end-of-service award, the resignation proportions in Article 85, any potential compensation for unlawful termination under Article 77, and payment for unused leave when applicable are separate matters. Article 77 compensation is not automatically added to every end-of-service calculation, and this guide does not establish entitlement to it. That question requires a separate assessment of the termination reason, contract type and terms, and applicable law.
Checklist before requesting settlement
- Confirm the employment start and end dates; retain the contract and any renewals.
- Check the last wage used in the calculation and how commissions or variable components are treated, if relevant.
- Identify the actual reason the relationship ended: expiry, agreement, resignation or employer termination. Do not assume all reasons have identical consequences.
- Request an itemised statement of the award, final wages, unused leave and other amounts, and keep copies of records.
- If the calculation differs or a dispute arises, consult official channels or a qualified legal adviser before making a final decision.
Frequently asked questions
Are partial years included?
Yes. Article 84 provides for a proportionate award for fractions of a year worked.
Do resignation proportions apply to every contract ending?
Do not assume so. Article 85 addresses termination due to the worker's resignation. Other situations need to be assessed under the actual reason for termination and the relevant rules.
Does this guide guarantee a final amount?
No. The example is illustrative. The result may depend on the recognised wage, exact service period, variable-pay arrangements, reason for termination and other applicable provisions.
For an initial estimate, use the KSA Tools calculator and check the result against your contract details.
KSA Tools End-of-Service Benefit Calculator · Calculating End-of-Service Award — HRSD
Official sources
This is general educational information, not legal advice or a guarantee of entitlement. Outcomes can vary with the facts, contract and applicable rules. For a dispute, consult the competent authority or a qualified legal professional.