End of Service Benefit in Saudi Arabia: Calculator and Full Rules
End of service benefit is one month of pay for each year you worked, halved for the first five years — calculated on your full wage, not your basic salary, and reduced to a third or two thirds if you resign rather than being let go. Everything else is detail on top of that sentence.
This guide gives you the calculation, a lookup table so you can get your number in under a minute, a worked example with real riyal figures, and the article numbers you can quote if your employer’s number differs from yours. It sits inside the Saudi salary and offers guide, which covers the rest of your compensation.
Quick answer
- Years 1-5: half a month of wage per year. Year 6 onwards: a full month of wage per year.
- Partial years count. A fraction of a year earns a proportional fraction of the benefit.
- “Wage” means basic plus regular fixed allowances, not basic alone.
- If you resign: under two years earns nothing, 2-5 years earns one third, 5-10 years earns two thirds, 10+ years earns the full amount.
- If the employer terminates: you get the full amount regardless of how long you served.
How is end of service benefit calculated in Saudi Arabia?
Article 84 of the Saudi Labor Law sets the base formula: half a month’s wage for each of the first five years of service, and one month’s wage for each year after that, based on the last wage. Article 84 also states that the worker is entitled to the benefit for fractions of a year in proportion to the time served.
Two definitions do all the work here:
Wage (الأجر) — Article 2 defines it as the basic salary plus all regular entitlements paid to the worker for the work, paid on a periodic basis. In practice this means basic + housing + transport + any fixed monthly allowance. It is not the basic salary in isolation.
Last wage — the wage in effect at the end of the relationship, not an average of your career. A raise in your final months raises the whole calculation, including the early years.
Article 86 allows commissions and percentages of sales — pay that varies by nature — to be excluded from the calculation by agreement. Fixed monthly allowances are not in that category.
The multiplier table
Multiply your monthly wage by the figure in this table to get your full Article 84 entitlement. The formula behind it: for the first five years, 0.5 × years; after that, 2.5 + (years − 5).
| Completed years | Months of wage |
|---|---|
| 1 | 0.5 |
| 2 | 1.0 |
| 3 | 1.5 |
| 4 | 2.0 |
| 5 | 2.5 |
| 6 | 3.5 |
| 7 | 4.5 |
| 8 | 5.5 |
| 10 | 7.5 |
| 15 | 12.5 |
| 20 | 17.5 |
For a partial year, take the next step of the table and prorate. Seven years and four months = 4.5 months (for 7 years) + 4/12 of a month (for the extra 4 months) = 4.833 months of wage.
The manual calculation, four steps
STEP 1 — Your monthly wage
Basic salary _______
+ Housing allowance (monthly) _______
+ Transport allowance _______
+ Other fixed monthly allowances _______
= MONTHLY WAGE (W) _______
STEP 2 — Your service period
Start date ____ End date ____
= Years (Y) ____ + extra months (M) ____
STEP 3 — Your multiplier
If Y <= 5 : 0.5 x Y
If Y > 5 : 2.5 + (Y - 5)
Plus for the extra months:
M/12 x 0.5 if you are still inside year 1-5
M/12 x 1.0 if you are past year 5
= MULTIPLIER (X) _______
STEP 4 — Apply the ending
Employer terminated (Art. 84) : W x X x 1
You resigned, 2-5 years : W x X x 1/3
You resigned, 5-10 years : W x X x 2/3
You resigned, 10+ years : W x X x 1
You resigned, under 2 years : 0
= END OF SERVICE BENEFIT _______A worked example with real numbers
Take an employee at a Riyadh company with a total monthly package of SAR 15,000, structured as basic 9,000, housing 3,750, transport 1,500, mobile 750. Service: 7 years and 4 months.
Multiplier: 4.5 months for the first seven years, plus 4/12 of a month for the extra four months (past year five, so at the full-month rate) = 4.833.
If the employer terminates the contract: 15,000 × 4.833 = SAR 72,500.
If the same employee resigns: service is between 5 and 10 years, so two thirds applies. 72,500 × 2/3 = SAR 48,333.
Now the expensive mistake. If the employer calculates on basic salary only: 9,000 × 4.833 = SAR 43,500. That is SAR 29,000 less than the correct figure for the same person on the same package. This single misunderstanding is the most common end-of-service dispute in the Saudi private sector, which is why the basic-to-total split in your contract matters so much — see basic vs total salary for how to read yours.
What changes if I resign instead of being terminated?
Article 85 reduces the benefit when the worker ends the contract. The tiers are based on completed service:
| Your service | If employer terminates | If you resign |
|---|---|---|
| Under 2 years | Full Article 84 amount | Nothing |
| 2 to under 5 years | Full | One third |
| 5 to under 10 years | Full | Two thirds |
| 10 years or more | Full | Full |
The jump at ten years is significant. An employee at nine years and eight months who resigns receives two thirds; the same employee four months later receives the whole amount. If you are inside that window and control your timing, the difference is usually worth more than a month of notice — factor it in alongside your notice period obligations before you hand in your resignation letter.
Article 87 sets out exceptions where a worker who leaves still receives the full benefit regardless of service length, including leaving for reasons of force majeure outside the worker’s control, and a female worker who resigns within six months of her marriage or three months of giving birth. There are also cases under Article 81 where a worker may leave without notice due to the employer’s breach and keep full entitlement.
Do fixed-term and indefinite contracts differ?
Yes, and the difference confuses people because it is about how the contract ends, not about the label on it.
Indefinite contract, employer terminates: full Article 84 amount, plus notice or payment in lieu.
Indefinite contract, you resign: the Article 85 fractions apply.
Fixed-term contract that runs to its natural expiry: the contract ends by its own terms rather than by anyone resigning, so the full Article 84 amount is due. This is the case people most often get wrong — reaching the end of a two-year contract is not resigning.
Fixed-term contract you break early: treated as ending the contract before term, and consequences depend on the contract’s own clauses as well as the law.
If your employer’s position on any of these differs from what you expected, the wording of your specific contract matters, and the Saudi labor law guide covers how these provisions fit together.
When must the employer pay, and what if they do not?
Article 88 sets payment deadlines: broadly, the employer settles all dues within one week of the contract ending when the employer is the one ending it, and within two weeks when the worker resigns. Because the exact wording and periods can be amended, confirm the current text of Article 88 on the HRSD platform before you quote a deadline in a dispute.
If the deadline passes:
- Send one written request by email, stating your last working day, the amount you calculated, and the calculation. Written requests are what create a paper trail.
- File a labour claim through Qiwa. The friendly settlement stage comes first, then referral to the labour court if no settlement is reached.
- Bring documents, not arguments. Your contract, recent payslips showing the allowance structure, your appointment letter, and your GOSI record proving your service dates.
Your GOSI registration is the strongest independent proof of your start date, which is why understanding your GOSI record and deductions matters beyond the monthly deduction line.
Four things that quietly change your number
Unpaid leave. Extended unpaid leave may be excluded from the service period. Check how your employer records it before you assume continuous service.
A recent pay cut. Because the calculation uses the last wage, a reduction shortly before departure reduces the entire gratuity, including the earliest years. If you are asked to accept a lower salary near the end of a long tenure, that is the cost to weigh.
Ownership change or merger. Continuous service transfers with the establishment; your accrued years do not reset. Get written confirmation of your original start date before signing anything with the new entity.
Allowances that were never in the contract. If housing was paid in cash monthly but the contract calls the salary “basic 15,000” with no breakdown, that helps you. If housing was provided in kind, the treatment is different. The written contract is what the dispute will turn on.
Know the number before you sign, not after you leave
Almost every end-of-service argument traces back to a contract signed years earlier, where a low basic and generous allowances looked identical to a clean total. The time to model this is when you are holding an offer.
That is what the offer comparison in TrueSira is for: you enter two offers with their real basic-and-allowance splits, and you see what each one is actually worth over time — including the end-of-service consequence that only shows up on your last day. Your Master Profile keeps your history in one place, so the comparison runs on your real numbers. Get started free before you sign the next one.
FAQ
Is end of service calculated on basic or total salary?
On the wage as the Labor Law defines it in Article 2: basic salary plus the regular entitlements paid periodically alongside it, which in practice means housing, transport and other fixed monthly allowances. It is not basic salary alone. This is the most common and most expensive misunderstanding, and on a typical package the gap runs to tens of thousands of riyals.
Do I get a gratuity if I resign before two years?
No. Under Article 85, a worker who resigns with less than two years of service is not entitled to a gratuity. Termination by the employer is treated completely differently — there, the full Article 84 amount is due from the first year of service, prorated for partial years.
How much do I get if I resign after three years?
One third of the Article 84 amount. Three completed years gives a full entitlement of 1.5 months of wage, so resigning at three years gives you half a month of wage. On a monthly wage of SAR 15,000, that is SAR 7,500 rather than the SAR 22,500 you would receive if the employer had terminated the contract.
Does the housing allowance count in the calculation?
Yes, when it is paid regularly as part of your monthly wage, because Article 2 defines the wage as basic plus regular periodic entitlements. Variable pay such as sales commissions and percentages can be excluded by agreement under Article 86, but a fixed monthly housing allowance is not variable pay. Check how your contract describes it.
How long does the employer have to pay after my last day?
Broadly, within one week when the employer ends the contract and within two weeks when you resign, under Article 88. Because periods can be amended, confirm the current wording on the HRSD platform before quoting it. If the deadline passes, send one written request, then file a claim through Qiwa with your contract, payslips and GOSI record.
Does the gratuity reset if my company changes ownership?
No. Continuous service transfers with the establishment through mergers, acquisitions and ownership changes, so your accrued years carry over rather than restarting. Before signing any new paperwork with the acquiring entity, get written confirmation of your original start date, and keep your GOSI record as independent proof of it.