Table of Contents
- End of Service Benefits in Saudi Arabia: Quick Calculation
- What Is the End-of-Service Benefit (EOSB)?
- Who Is Eligible for End-of-Service Benefits in KSA?
- End-of-Service Benefit Formula in KSA
- Which Salary Is Used?
- End-of-Service Benefits on Termination vs Resignation
- Examples of End-of-Service Benefit Calculation in KSA
- Other Factors That Affect the Award
- When Must the End-of-Service Benefit Be Paid?
- Need Help Calculating End-of-Service Benefits in Saudi Arabia?
- FAQs on End-of-Service Benefits in KSA
Last updated: 2 November 2026 | Applies to: Private-sector employees in Saudi Arabia, Saudi and non-Saudi, for 2027
The end-of-service benefit, also called the end-of-service award or gratuity, is a lump sum the employer pays when an employment contract ends. It is set by Articles 84 to 88 of the Saudi Labour Law and is calculated on the employee’s last wage and total length of service.
The February 2025 amendments to the Labour Law changed the notice and resignation rules but did not change the end-of-service formula. The calculations below apply to contracts ending in 2027. The award is paid by the employer and applies to both Saudi and non-Saudi employees. For Saudis, it is separate from any GOSI pension.
End of Service Benefits in Saudi Arabia: Quick Calculation
- First 5 years: half a month’s wage for each year of service.
- After 5 years: one month’s wage for each year of service.
- Part years: paid in proportion to the time worked.
- Wage basis: the last wage, meaning the basic wage plus allowances due to the employee.
- Resignation: the award is reduced or not paid, depending on length of service.
End of Service Calculator KSA
Estimate Saudi end of service benefits based on monthly wage, service period, contract type, and reason for leaving.
- Total service period0 years
- Base award before adjustmentSAR 0.00
- Entitlement rule applied-
- First 5 years componentSAR 0.00
- After 5 years componentSAR 0.00
- Final settlement timing-
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What Is the End-of-Service Benefit (EOSB)?
The end-of-service benefit is a statutory payment that rewards an employee for the time worked with an employer. It is due when the employment relationship ends, whether through employer termination, the expiry of a fixed-term contract or, with reductions, the employee’s resignation. It is paid in addition to any outstanding salary and pay for unused annual leave.
Who Is Eligible for End-of-Service Benefits in KSA?
All private-sector employees covered by the Saudi Labour Law are eligible, whether Saudi or non-Saudi. There is no minimum service period when the employer ends the contract or a fixed-term contract expires: an employee with less than one year of service receives a proportionate award. Minimum service periods apply only when the employee resigns.
An employee dismissed for one of the reasons listed in Article 80, such as assault, serious misconduct, fraud or prolonged unexcused absence after a written warning, is not entitled to the award.
End-of-Service Benefit Formula in KSA
For service up to 5 years:
EOSB = (Last monthly wage ÷ 2) × years of service
For service over 5 years:
EOSB = (Last monthly wage ÷ 2 × 5) + (Last monthly wage × years after 5)Months and days in an incomplete year are converted into a fraction of a year. For example, 4 years and 6 months is 4.5 years.
Which Salary Is Used?
The award is calculated on the employee’s last wage, not the basic salary alone. The Ministry of Human Resources and Social Development defines wage as the basic wage plus all other increases due to the employee. In practice this includes:
- Basic salary
- Housing allowance, or the value of employer-provided housing
- Transport allowance and other fixed allowances
- Commissions, sales percentages and regular bonuses, unless the contract excludes them
Under Article 86, the employer and employee can agree in the contract to exclude all or part of commissions and similar variable pay from the calculation. Check the contract before calculating.
End-of-Service Benefits on Termination vs Resignation
When the employer terminates or the contract expires (Article 84)
The employee receives the full award calculated with the formula above, for any length of service.
When the employee resigns (Article 85)
| Length of service | Share of the full award |
|---|---|
| Less than 2 years | None |
| 2 to less than 5 years | One third |
| 5 to less than 10 years | Two thirds |
| 10 years or more | Full award |
When the employee receives the full award despite resigning (Article 87)
- The employee leaves because of force majeure beyond their control.
- A female employee ends her contract within six months of marriage or within three months of giving birth.
- The employee leaves under Article 81 because the employer breached its obligations, for example by not paying wages or assaulting the employee. This is not treated as a resignation.
Examples of End-of-Service Benefit Calculation in KSA
All examples use a last monthly wage of SAR 10,000 (for example, basic salary SAR 7,500, housing SAR 2,000 and transport SAR 500).
| Service | Calculation | Employer termination or contract expiry | Resignation |
|---|---|---|---|
| 1.5 years | 1.5 × 5,000 | SAR 7,500 | SAR 0 (under 2 years) |
| 4.5 years | 4.5 × 5,000 | SAR 22,500 | SAR 7,500 (one third) |
| 7.5 years | (5 × 5,000) + (2.5 × 10,000) | SAR 50,000 | SAR 33,333.33 (two thirds) |
| 12 years | (5 × 5,000) + (7 × 10,000) | SAR 95,000 | SAR 95,000 (full award) |
Step by step: 7.5 years of service
First 5 years: 5 × (10,000 ÷ 2) = SAR 25,000
Next 2.5 years: 2.5 × 10,000 = SAR 25,000
Full award = SAR 50,000
On resignation: 50,000 × 2/3 = SAR 33,333.33Other Factors That Affect the Award
- Unpaid leave: long periods of unpaid leave may not count toward service, depending on the contract and the Labour Law’s rules on suspension of the contract. Keep accurate leave records.
- Unfair termination: compensation under Article 77 (15 days’ wage per year for indefinite contracts, the remaining wages for fixed-term contracts, at least two months’ wages) is paid in addition to the end-of-service award.
- Deductions: the employer can deduct amounts the employee legally owes in connection with the work, such as an outstanding loan.
- More favourable contracts: if the contract or company policy gives a higher award, the higher amount applies.
When Must the End-of-Service Benefit Be Paid?
Under Article 88, the employer must pay the award with the final settlement:
- Within one week of the end of employment if the employer ends the contract.
- Within two weeks if the employee ends the contract.
Also read: Guide on Employee Termination in Saudi Arabia | GOSI Calculation and Benefits in Saudi Arabia
Need Help Calculating End-of-Service Benefits in Saudi Arabia?
End-of-service errors are one of the most common causes of labour disputes. Our payroll services in Saudi Arabia handle final settlements, end-of-service accruals, leave balances and GOSI updates, so every exit is calculated correctly and paid on time.
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FAQs on End-of-Service Benefits in KSA
Sources:
Ministry of Human Resources and Social Development – End-of-Service Award Regulations,
