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The Saudi end-of-service award, explained

Every employee in Saudi Arabia’s private sector, Saudi or expat, earns an end-of-service award. Here is the formula in Articles 84 and 85 of the Labor Law, how resignation reduces it, and what else goes into the final settlement.

Updated · 6 min read

The short answer

Half a month’s wage for each of the first five years of service, and a full month’s wage for each year after that, with part-years counted in proportion. The wage is the last actual wage: basic plus the fixed allowances the employee receives, such as housing and transport.

If the contract ends by the employer, at the end of a fixed term, or for one of the reasons the law protects, the employee gets the whole award. If the employee resigns, Article 85 reduces it according to the years of service.

When the employee resigns

Years of serviceShare of the award
Under 2 yearsNothing
2 to under 5 yearsOne third
5 to under 10 yearsTwo thirds
10 years or moreAll of it

Some cases count as if the employer ended the contract even when the employee leaves: force majeure, a woman leaving within six months of marriage or three months of giving birth, and leaving under Article 81 because the employer broke the contract or the law.

A worked example

ItemAmount
Last wage (basic + allowances)SAR 12,000 a month
Service8 years (1 January 2018 to 31 December 2025)
First 5 years: 5 × half a monthSAR 30,000
Later years: about 3 × a monthSAR 36,065.75
Award if the employer ends the contractSAR 66,065.75
Award on resignation (two thirds)SAR 44,043.84

The final settlement

  • The award, the last wage, and the cash value of unused annual leave
  • Pay in lieu of notice where notice was not given (30 days from the employee, 60 days from the employer for monthly-paid staff)
  • Payment within one week of the end of the contract if the employer ends it, or within two weeks if the employee resigns
  • A service certificate, free of charge, on request
  • The ticket home for an expat if the contract or the law requires it

When nothing is due

Under Article 80, an employer who dismisses for one of the listed serious reasons (such as assault, a serious breach after a written warning, or absence of more than 30 days in a year) can end the contract without notice or award. The employee must have the chance to object, and the employer must prove the reason. Take legal advice first.

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Sources

Rules change. Check the official text, or ask your accountant or lawyer, before you rely on a figure.

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Questions people ask

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How is end of service calculated in Saudi Arabia?

Half a month’s wage for each of the first five years and a month’s wage for each later year, with part-years in proportion, on the last actual wage including fixed allowances.

Does a resigning employee get end of service in Saudi Arabia?

Nothing under two years, one third from two to five years, two thirds from five to ten years, and the whole award from ten years.

Do Saudi employees get the end-of-service award too?

Yes. The award in the Labor Law applies to Saudis and expats alike, on top of GOSI benefits.

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