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.
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 service | Share of the award |
|---|---|
| Under 2 years | Nothing |
| 2 to under 5 years | One third |
| 5 to under 10 years | Two thirds |
| 10 years or more | All 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
| Item | Amount |
|---|---|
| Last wage (basic + allowances) | SAR 12,000 a month |
| Service | 8 years (1 January 2018 to 31 December 2025) |
| First 5 years: 5 × half a month | SAR 30,000 |
| Later years: about 3 × a month | SAR 36,065.75 |
| Award if the employer ends the contract | SAR 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.
Free tools for this
Sources
- Ministry of Human Resources and Social Development (HRSD): Labor Law
- Al Tamimi: amendments to the Saudi Labour Law (effective 18 February 2025)
- Etqan Law Firm: end-of-service award in the Saudi Labor Law
Rules change. Check the official text, or ask your accountant or lawyer, before you rely on a figure.
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