How to Calculate End of Service Gratuity in Saudi Arabia (with Examples)
Quick answer: In the Saudi private sector, end of service is half a month of your last wage for each of your first five years, plus one full month for each year after that. Part of a year counts in proportion. If you resign, you get none, one third, two thirds or all of it, depending on how long you worked.
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What is the end-of-service award?
The end-of-service award (also called end of service benefits, ESB, EOSB or gratuity) is a lump sum your employer pays when your contract ends. It is set by Article 84 of the Saudi Labor Law and applies to Saudi and non-Saudi employees in the private sector. Domestic workers and government employees follow separate rules.
The formula
Award = (years up to 5 × 0.5 × wage) + (years after 5 × 1 × wage)
- First five years: half a month of wage per year.
- After five years: one full month of wage per year.
- Part years: months and days count in proportion. Four years and three months is 4.25 years.
Which wage do you use?
Use your last monthly wage, not your first. In practice this is your basic salary plus allowances paid regularly every month, such as housing and transport. Overtime and one-off bonuses are usually left out. Your contract and last payslip show the exact figure.
What if you resign? (Article 85)
When you resign, the full award is reduced by your length of service:
| Years of service | Share you receive |
|---|---|
| Less than 2 years | Nothing |
| 2 to 5 years | One third (1/3) |
| More than 5 and less than 10 years | Two thirds (2/3) |
| 10 years or more | Full award |
This reduction applies only to resignation. If your employer ends the contract or the contract simply expires, you get the full award, even with less than two years of service. More examples are in the resignation guide.
When do you get the full award after resigning? (Article 87)
- You left because of force majeure beyond your control.
- A female worker resigns within 6 months of her marriage or within 3 months of giving birth.
If your employer broke the contract or the law and you left for that reason, the rules on leaving without notice may also protect your full rights. Check the exact case with HRSD or a lawyer.
Worked examples
Example 1: contract ended, 7 years. Last wage is 9,000 SAR (6,000 basic + 2,250 housing + 750 transport).
- First 5 years: 5 × 0.5 × 9,000 = 22,500 SAR
- Next 2 years: 2 × 1 × 9,000 = 18,000 SAR
- Total award: 40,500 SAR
Example 2: same person, but resigned. Seven years is more than 5 and less than 10, so the share is two thirds: 40,500 × 2/3 = 27,000 SAR.
Example 3: resigned after 3 years and 6 months. Last wage is 7,000 SAR.
- Full award: 3.5 × 0.5 × 7,000 = 12,250 SAR
- Resignation share (2 to 5 years): one third
- Award paid: 12,250 × 1/3 = 4,083.33 SAR
When must it be paid? (Article 88)
- If the employer ends the contract: within one week.
- If the worker ends the contract: within two weeks.
Unused annual leave is paid separately, on top of the award (final settlement guide). Saudi Arabia has no personal income tax, so nothing is deducted from it.
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Frequently asked questions
Do expats get end of service in Saudi Arabia?
Yes. Article 84 covers Saudi and non-Saudi private-sector employees alike.
Is end of service calculated on basic salary only?
No. It uses your last wage, normally basic salary plus regular allowances such as housing and transport.
Do I get anything if I resign before 2 years?
No, unless an Article 87 case applies. If the employer ends the contract, you still get the award for the time worked.
Are extra months counted?
Yes. Months and days count in proportion, so 6 extra months add half a year.
Is the calculator result final?
No. It is an estimate. Your contract, actual service dates and the reason the contract ended decide the final amount.
Official sources
This guide explains the general rules. It is not legal advice.