End of Service Benefit Calculation in Saudi Arabia 2026 (With Resignation Rules)
In Saudi Arabia, the end of service benefit is half a month's wage for each of your first five years and a full month's wage for each year after that. But if you resign, the award can be cut to a third, two thirds or nothing. Here is the formula, worked examples and the rules after the 2025 Labour Law amendments.
Table of contents
- What is the end of service benefit in Saudi Arabia?
- Which wage is used: basic or total?
- How to calculate the end of service benefit: the formula
- Examples: employer ends the contract
- How does resignation reduce the award?
- When do you get the full award even if you resign?
- When can you lose your end of service benefit?
- When must the award be paid?
- What notice period applies after the 2025 changes?
- What if your employer doesn't pay?
- Plan your next move
- Sources
Last reviewed: 18 October 2026. Based on the Saudi Labour Law (Articles 84–88) and the amendments in force since February 2025.
Short answer: the end of service benefit in Saudi Arabia is half a month's wage for each of your first five years of service and one full month's wage for each year after that, based on your last wage (Article 84 of the Labour Law). That's the full award if your employer ends the contract. If you resign, it's reduced: nothing with less than two years' service, one third for 2–5 years, two thirds for 5–10 years, and the full amount after 10 years (Article 85). Your employer must pay within one week if it ended your contract, or two weeks if you resigned.
Here's how to calculate your own award, with examples for both situations.
Key takeaways
- Half a month's wage per year for the first 5 years, then a full month's wage per year.
- Based on your last wage, which usually includes regular allowances such as housing and transport, not just basic salary.
- Resign with under 2 years: no award; 2–5 years: ⅓; 5–10 years: ⅔; 10+ years: full.
- Payment deadline: 1 week if the employer ends the contract, 2 weeks if you resign (Article 88).
- Notice for indefinite contracts since February 2025: 30 days from the employee, 60 days from the employer.
What is the end of service benefit in Saudi Arabia?
The end of service benefit (also called end of service award, or gratuity) is a lump sum that private sector employers in Saudi Arabia must pay when an employment contract ends. It's set out in Articles 84 to 88 of the Saudi Labour Law. It applies to expatriates and Saudi nationals in the private sector, with Saudi nationals also building pension rights through GOSI.
Which wage is used: basic or total?
This is where Saudi Arabia differs from the UAE and Qatar. The award is calculated on your last wage. Under the Labour Law, "wage" generally means your actual wage: basic salary plus regular allowances such as housing and transport, not overtime or one-off payments. Many employers calculate it on basic plus housing plus transport. Check how your contract and company policy define it, because it makes a big difference.
How to calculate the end of service benefit: the formula
- Take your last monthly wage (as defined above).
- For the first 5 years: wage × 0.5 × years of service (up to 5).
- For years after 5: wage × 1 × years beyond 5.
- Add them together, counting part years proportionally. This is the full award.
- If you resigned, apply the fraction for your length of service (see below).
Examples: employer ends the contract
| Last monthly wage | Service | Calculation | Full award |
|---|---|---|---|
| SAR 6,000 | 3 years | 6,000 × 0.5 × 3 | SAR 9,000 |
| SAR 10,000 | 7 years | (10,000 × 0.5 × 5) + (10,000 × 2) | SAR 45,000 |
| SAR 8,000 | 12 years | (8,000 × 0.5 × 5) + (8,000 × 7) | SAR 76,000 |
How does resignation reduce the award?
Under Article 85, if you resign, you receive a share of the full award based on your service:
| Service when you resign | Share of the full award | Example: wage SAR 10,000 |
|---|---|---|
| Less than 2 years | Nothing | SAR 0 after 1.5 years |
| 2 to under 5 years | One third (⅓) | 3 years: ⅓ of SAR 15,000 = SAR 5,000 |
| 5 to under 10 years | Two thirds (⅔) | 7 years: ⅔ of SAR 45,000 = SAR 30,000 |
| 10 years or more | Full award | 12 years: SAR 95,000 |
In short: if you're thinking of resigning near the two, five or ten-year mark, timing matters. Waiting a few weeks could significantly increase your award.
When do you get the full award even if you resign?
Article 87 says you still receive the full award, regardless of length of service, if you leave because of force majeure beyond your control. It also applies to a female employee who resigns within six months of her marriage or within three months of giving birth. You're also entitled to the full award if you leave without notice because of a serious breach by the employer under the cases set out in the law, such as non-payment of wages or assault.
When can you lose your end of service benefit?
Only in limited cases. An employer may dismiss an employee without an award for the specific forms of serious misconduct listed in Article 80, such as assault at work, serious breach of contract obligations, or fraud, after giving the employee a chance to respond. During the probation period, either side can end the contract without an award.
When must the award be paid?
Under Article 88, the employer must pay the end of service benefit and all other dues:
- within one week of the end of employment if the employer ended the contract;
- within two weeks if you resigned.
The employer can deduct genuine debts you owe it, such as an outstanding loan. Your final settlement should also include unpaid salary and payment for unused annual leave: you're entitled to at least 21 days a year, rising to 30 days after five years of service.
What notice period applies after the 2025 changes?
Since the Labour Law amendments that took effect in February 2025, notice for indefinite-term contracts is at least 30 days if the employee resigns and at least 60 days if the employer ends the contract. Probation can now be up to 180 days, and during probation either party can end the contract without notice or an end of service award.
What if your employer doesn't pay?
- Ask for a written final settlement statement.
- If it's late or wrong, file a labour complaint through the Ministry of Human Resources and Social Development's online services (via Qiwa or the MHRSD platform). Cases go to amicable settlement first.
- If settlement fails, the case moves to the labour courts.
Keep copies of your Qiwa contract, payslips and Wage Protection System records.
Plan your next move
Before you resign, check your notice period, how close you are to the 2, 5 and 10-year marks, and your Iqama situation. Our Saudi work visa and Iqama guide explains job transfers through Qiwa. When you're ready, browse the latest jobs in Saudi Arabia on GetSaudiJobs.
Sources
- Saudi Labour Law, Articles 80 and 84–88
- Labour Law amendments issued by Royal Decree M/44, in force from February 2025
- Ministry of Human Resources and Social Development, labour dispute procedures
This article is general information, not legal advice. For your own case, contact MHRSD or a Saudi employment lawyer.