Part of the guide: Saudi HR & Payroll Toolkit 2026: GOSI, End of Service, Days
End of Service Benefits Saudi Arabia Calculation (2026)
Calculating an employee's end-of-service benefits in Saudi Arabia? Start with three details: how long the person worked, what their last actual monthly wage was, and why the employment ended. If any of those details is wrong, the final amount may be wrong too.
Articles 84 to 88 of the Saudi Labor Law explain how the award is calculated and when it must be paid. The same salary and service period can lead to different results depending on whether an employee resigned, the contract ended, or a legal exception applies.
Quick answer: Under Article 84, the full award is half a month's last wage for each of the first five service years, followed by one month's wage for each additional year. Partial years count too. Article 85 sets reduced amounts for qualifying resignations, Articles 80, 81 and 87 cover exceptions, and Article 88 tells employers when to settle the payment.
Check the calendar before calculating: Article 10 uses the Hijri calendar for Labor Law periods and dates by default, unless the employment contract or work regulations say otherwise. Don't assume that dividing Gregorian days by 365 always gives the correct legal service period.
The rules discussed here concern workers covered by the Saudi Labor Law, regardless of whether they are Saudi or non-Saudi. Article 7 excludes certain categories, including domestic workers, who are subject to separate regulations.
End of service benefits Saudi Arabia calculation: Article 84
Article 84 establishes the full end-of-service award.
The formula uses the employee's last wage and separates the service period into two parts:
- The first five years earn half a month's wage per year.
- Every year after five years earns one month's wage.
- Any fraction of a year is included proportionally.
Let:
W= last monthly actual wage in Saudi riyals.Y= eligible service period expressed in years, including any fraction.
The formula is:
First part = min(Y, 5) × W ÷ 2
Second part = max(0, Y − 5) × W
Full award = First part + Second partFor example, an employee with a last monthly wage of SAR 6,000 would receive the following full awards:
| Service period | Calculation | Full award |
|---|---|---|
| 1 year | 0.5 × 6,000 | SAR 3,000 |
| 3 years | 1.5 × 6,000 | SAR 9,000 |
| 5 years | 2.5 × 6,000 | SAR 15,000 |
| 7 years | 4.5 × 6,000 | SAR 27,000 |
| 10 years | 7.5 × 6,000 | SAR 45,000 |
These are the full Article 84 amounts before considering resignation or other exceptions.
Article 84 itself does not impose a two-year minimum for ordinary qualifying termination cases. The two-year threshold comes from Article 85 and applies to resignation.
An employee whose qualifying contract ends after one year may therefore receive an award, even though another employee resigning after one year would ordinarily receive none.
Does the employer or GOSI pay this amount?
The employer pays the end-of-service award.
It is not a benefit paid by the General Organization for Social Insurance (GOSI), and it should not be confused with monthly social insurance contributions.
For contribution calculations, see the Saudi GOSI Contribution Rates 2026 guide.
The EOSB award and GOSI contributions should be maintained as separate payroll calculations.
Which salary counts: basic wage, housing and allowances?
One of the most common mistakes in an end-of-service calculation is using basic salary alone.
Article 84 uses the employee's last wage. Article 2 defines wage as the actual wage, consisting of basic wage plus other amounts due under the employment contract, work regulations or applicable wage arrangements.
This can include:
- Basic monthly salary.
- Contractual housing allowance.
- Contractual transportation allowance.
- Other fixed allowances forming part of actual wage.
- Qualifying commissions and sales percentages.
- Regular contractual or customary bonuses that form part of wages.
- Qualifying benefits provided in kind.
What counts depends on why the payment is made and how it is recorded in the employment agreement or applicable rules.
Example: basic salary versus actual wage
Suppose an employee receives:
| Salary component | Monthly amount |
|---|---|
| Basic salary | SAR 8,000 |
| Housing allowance | SAR 2,000 |
| Transportation allowance | SAR 500 |
| Total actual wage | SAR 10,500 |
For this example, assuming all three components are part of the employee's actual wage, the Article 84 calculation should use:
W = 8,000 + 2,000 + 500
W = SAR 10,500Using only SAR 8,000 would leave out SAR 2,500 of the monthly wage base in this example, lowering the employee's award.
Does housing allowance always count?
A fixed contractual housing allowance will ordinarily form part of the actual wage.
The Ministry's end-of-service calculator asks for the employee's actual wage, rather than simply their basic salary.
Article 2 also recognizes benefits in kind.
For qualifying in-kind benefits, the statutory valuation is generally capped at the equivalent of two months' basic wage per year unless the employment contract or work regulations specify a higher value.
For example, employer-provided accommodation may require a different valuation approach from a fixed cash housing allowance.
Do not assign an arbitrary cash value to accommodation without checking the relevant agreement and rules.
Article 86: when can commissions be excluded?
Article 86 permits the parties to agree that some or all commissions, sales percentages and similar variable wage elements will not be included in the EOSB wage base.
The exception concerns components that naturally increase or decrease.
It is not a general permission to exclude ordinary fixed contractual allowances.
A payroll system should therefore separate:
Basic wage
+ Fixed contractual allowances
+ Other qualifying wage components
+ Qualifying variable wage components
- Variable components validly excluded under Article 86
= EOSB wage baseTreat this as a payroll checklist. It does not mean that every item on a payslip belongs in the EOSB wage base.
For employees paid wholly or partly through commissions or other nonstandard wage arrangements, additional wage-calculation provisions may matter. Do not assume the final month's receipts automatically represent the correct statutory wage base.
Resignation, termination and full-award exceptions
The reason the employment relationship ended determines whether the worker receives the full Article 84 award, a reduced share, or no award.
| How employment ended | EOSB entitlement | Legal reference |
|---|---|---|
| Fixed-term contract expired without renewal | Full Article 84 award | Articles 74, 84 |
| Employer terminated employment outside Article 80 | Generally full Article 84 award | Article 84 |
| Qualifying resignation before 2 years | No award | Article 85 |
| Qualifying resignation from 2 through 5 years | One third | Article 85 |
| Qualifying resignation after 5 but before 10 years | Two thirds | Article 85 |
| Qualifying resignation at 10 years or more | Full award | Article 85 |
| Worker leaves due to force majeure beyond their control | Full award | Article 87 |
| Female worker terminates within 6 months of marriage contract or 3 months of childbirth | Full award | Article 87 |
| Worker leaves under a valid Article 81 ground | Retains statutory rights, including applicable EOSB | Article 81 |
| Valid dismissal under Article 80 | No award | Article 80 |
| Contract ends during a valid probation period | No EOSB | Article 54 |
Look at the contract, the termination documents and what actually happened before selecting a category. An HR dropdown cannot prove that an Article 80 dismissal or another exception meets the legal requirements.
Exactly five years: a common resignation mistake
Article 85 states:
- At least 2 years but not more than 5 years: one third.
- More than 5 years but less than 10 years: two thirds.
- At least 10 years: the full award.
Therefore, a worker resigning at exactly five years receives one third, not two thirds, where Article 85 applies.
For a monthly wage of SAR 6,000:
Full award at exactly 5 years:
5 × 6,000 ÷ 2 = SAR 15,000
Resignation entitlement:
15,000 × 1/3 = SAR 5,000That is why the exact service end date matters so much near the five-year mark.
Article 80: dismissal does not automatically mean zero EOSB
Article 80 contains specific grounds allowing an employer to terminate employment without an end-of-service award, notice or compensation.
Examples include:
- Certain serious workplace assaults.
- Failure to perform essential contractual duties or follow lawful instructions, subject to the applicable requirements.
- Proven serious misconduct involving dishonesty.
- Forgery used to obtain employment.
- Certain misconduct causing intentional financial loss.
- Unexcused absence exceeding the statutory thresholds and meeting the written-warning requirements.
- Probation-period termination.
The worker must also have the opportunity to respond to the allegations, as Article 80 requires.
Not every dismissal qualifies under Article 80. An employer cannot simply enter "Article 80" in the HR system and assume the award disappears.
For absence-related dismissals, Article 80 specifies more than 30 days in one contractual year or more than 15 consecutive days, with written warnings required after 20 days or 10 consecutive days respectively.
Article 81: leaving because the employer breached its obligations
Article 81 permits workers to leave without notice while retaining their statutory rights in specified circumstances.
These include serious contractual breaches, deception concerning employment conditions, certain assaults or mistreatment, and serious known workplace hazards that the employer failed to address.
An Article 81 departure should not automatically be processed as an ordinary resignation receiving a reduced Article 85 award.
Check the evidence before deciding which rule applies.
Article 77 compensation is separate
Article 77 concerns compensation for termination without a legitimate reason.
Unless the contract provides specific compensation for such termination, the statutory calculation generally provides:
- Indefinite-term contract: 15 days' wage for each year of service.
- Fixed-term contract: wages for the remaining contractual period.
- Statutory compensation under those formulas: not less than two months' wages.
This compensation is separate from the Article 84 end-of-service award.
A settlement statement should show each applicable entitlement independently.
Important distinction after the 2025 amendments
The amended Article 2 definition of resignation specifically describes a worker's written request to end a fixed-term contract, together with employer acceptance.
Article 75 separately governs termination of indefinite-term contracts for a legitimate reason, subject to its notice requirements.
The relationship between the contract type, termination procedure and Article 85 entitlement must be classified correctly.
For example, do not automatically assume that every employee-initiated termination under Article 75 can be processed through the same "resignation" code used for Article 79 bis.
If the worker and employer disagree about the termination category, seek HRSD guidance or qualified legal advice before releasing the final calculation.
Worked examples, partial years and service dates
Here are a few examples using the employee's monthly actual wage and a stated period of service.
Unless otherwise stated, the worked service periods are provided as exact years and months. Date-based illustrations using Gregorian days are separate examples and must not override Article 10.
Example 1: 7 years and 4 months, employer termination
An employee has:
Basic salary: SAR 8,000
Housing allowance: SAR 2,000
Transportation: SAR 500
--------------------------------
Last actual wage: SAR 10,500
Service: 7 years, 4 months
Reason: Employer terminationExpress the service period as:
Y = 7 + (4 ÷ 12)
Y = 7.333333... yearsCalculate the first five years:
5 × 10,500 ÷ 2 = SAR 26,250.00Calculate the remaining two years and four months:
(2 + 4/12) × 10,500 = SAR 24,500.00Total:
First five years: SAR 26,250.00
Remaining service: SAR 24,500.00
------------------------------------
Full EOSB award: SAR 50,750.00The employee receives SAR 50,750.00, assuming the termination qualifies for the full award and there are no adjustments to eligible service.
Example 2: same employee, but resignation
Assume the same employee resigned and Article 85 applies.
With more than five but fewer than ten years of continuous service, the entitlement is two thirds.
Full award: SAR 50,750.00
Resignation: 2/3
50,750 × 2 ÷ 3 = SAR 33,833.33The resignation award is SAR 33,833.33.
Nothing changed about the employee's wage or years of service. The lower result comes from the resignation rule.
Example 3: the basic-salary mistake
Assume HR incorrectly uses SAR 8,000 instead of SAR 10,500 for Example 1.
First five years:
5 × 8,000 ÷ 2 = SAR 20,000.00
Remaining service:
(2 + 4/12) × 8,000 = SAR 18,666.67
Incorrect full award = SAR 38,666.67Compare the two results:
| Wage calculation | EOSB award |
|---|---|
| Basic salary only | SAR 38,666.67 |
| Full actual wage | SAR 50,750.00 |
| Difference | SAR 12,083.33 |
That is an undercalculation of SAR 12,083.33, assuming the allowances qualify as actual wage.
Check the wage components first. Otherwise, even a perfectly applied formula can produce the wrong answer.
Example 4: common resignation and termination cases
Assume W = SAR 6,000 unless another wage is shown.
| Service | Reason | Calculation | Award |
|---|---|---|---|
| 1 year 10 months | Resignation | Under 2 years | SAR 0 |
| 1 year 10 months | Contract ended | (1 + 10/12) × 3,000 | SAR 5,500.00 |
| 3 years 6 months | Resignation | 3.5 × 3,000 × 1/3 | SAR 3,500.00 |
| 3 years 6 months | Contract ended | 3.5 × 3,000 | SAR 10,500.00 |
| 5 years exactly | Resignation | 5 × 3,000 × 1/3 | SAR 5,000.00 |
| 12 years (W = 15,000) | Resignation | 5 × 7,500 + 7 × 15,000 | SAR 142,500.00 |
These calculations help verify the formula, but the applicable service calendar must still be established.
Partial years: months versus days
Article 84 requires proportional payment for fractions of a year.
However, the law's calendar rule is essential.
Article 10 states that periods and dates under the Saudi Labor Law are calculated using the Hijri calendar unless the employment contract or work regulations specify otherwise.
Therefore, these two calculations should not be treated as freely interchangeable:
Months-based illustration:
7 years + 4/12 = 7.333333... years
Gregorian calendar-day illustration:
Total inclusive Gregorian days ÷ 365The second calculation is a particular Gregorian day-count convention, not a universal statutory rule.
Before implementing a payroll formula, confirm:
- Whether Hijri or Gregorian dates legally govern the employment period.
- The exact commencement and termination dates.
- Whether the final service day is included.
- Whether any legally relevant suspension applies.
- The approved treatment of fractional years.
- Whether the service period crosses a resignation-entitlement threshold.
Article 2 also defines a month as 30 days unless the employment contract or work regulations specify otherwise. That definition must be considered alongside Article 10 when designing date-based payroll calculations.
Gregorian-day example: 1 March 2018 to 30 June 2025
For illustration only, suppose a contract or applicable work regulation expressly uses Gregorian service dates and a calendar-day calculation with a 365-day divisor.
Employment dates:
Start date: 2018-03-01
Last service day: 2025-06-30
Inclusive day count: 2,679 days
Service years:
2,679 ÷ 365 = 7.339726027 yearsFor a monthly wage of SAR 10,500:
First 5 years:
5 × 10,500 ÷ 2 = SAR 26,250.00
Remaining fractional years:
(7.339726027 − 5) × 10,500
= SAR 24,567.12
Full award:
26,250 + 24,567.12
= SAR 50,817.12This is approximately SAR 67.12 more than the years-and-months illustration.
The math works for this example, but the 365-day method is not automatically the right method for every Saudi employment contract.
For a legal calculation under the default Hijri rule, dates and service fractions must be determined using the applicable Hijri calendar methodology.
The HeadsNTail working days and date calculator can help check calendar dates, but its output should not be assumed to determine the legally applicable EOSB service period.
Unpaid leave and interrupted service
Article 116 permits unpaid leave with employer approval.
Unless the parties agree otherwise, the employment contract is suspended for the portion of unpaid leave exceeding 20 days.
That provision does not mean every unpaid-leave day can automatically be subtracted from end-of-service calculations.
For example, an employee who takes 30 consecutive days of unpaid leave may have a contractual suspension issue for the period beyond the statutory threshold, depending on the applicable agreement.
Before adjusting the service period, check the approved leave records, suspension conditions, contract terms and applicable legal treatment.
Do not subtract days merely because a payroll record marks them as unpaid.
Unused annual leave is a separate entitlement
Article 111 provides payment for accrued annual leave that the worker has not taken when employment ends.
This amount is separate from EOSB.
A final settlement may therefore include:
End-of-service award
+ Unpaid wages
+ Accrued unused annual leave pay
+ Other legally due payments or compensation
- Legally permitted deductions
= Net final settlementThe end-of-service award itself should remain identifiable as a separate line.
Calculating EOSB in a PHP or Laravel payroll system
For a PHP or Laravel HR application, the safest approach is to separate two responsibilities:
- Determine the legally eligible service period and wage base.
- Apply the Article 84 award formula and relevant entitlement share.
This prevents a date calculation error from being hidden inside the award formula.
The following implementation uses PHP 8.0 or newer because it uses match.
It calculates a wage-based award from an already-established service period. It does not decide whether a dismissal legally qualifies under Article 80 or whether an employment period should be measured in Hijri or Gregorian years.
PHP implementation
Save the following code as eosb.php.
<?php
declare(strict_types=1);
/**
* Estimate Saudi end-of-service award.
*
* References: Labor Law Articles 84, 85, 80, 81 and 87.
*
* $monthlyWage:
* Legally determined last monthly actual wage.
*
* $serviceYears:
* Eligible service years including fraction.
* Determine according to the applicable calendar,
* contract and employment records before calling.
*
* $reason:
* end = qualifying full-award contract ending
* resign = qualifying Article 85 resignation
* full = reviewed Article 81/87 full-award exception
* art80 = legally established Article 80 dismissal
*
* Legal classification is the caller's responsibility.
*/
function eosbAward(
float $monthlyWage,
float $serviceYears,
string $reason
): float {
if (
!is_finite($monthlyWage) ||
$monthlyWage <= 0
) {
throw new InvalidArgumentException(
'Monthly wage must be positive and finite.'
);
}
if (
!is_finite($serviceYears) ||
$serviceYears < 0
) {
throw new InvalidArgumentException(
'Service years must be nonnegative and finite.'
);
}
// Article 84: first five years at half monthly wage.
$firstYears = min($serviceYears, 5.0);
// Article 84: subsequent years at full monthly wage.
$laterYears = max(0.0, $serviceYears - 5.0);
$fullAward =
($firstYears * $monthlyWage / 2.0)
+ ($laterYears * $monthlyWage);
// Apply the legally classified termination reason.
$share = match ($reason) {
'end', 'full' => 1.0,
'art80' => 0.0,
'resign' => match (true) {
$serviceYears < 2.0 => 0.0,
$serviceYears <= 5.0 => 1.0 / 3.0,
$serviceYears < 10.0 => 2.0 / 3.0,
default => 1.0,
},
default => throw new InvalidArgumentException(
'Unknown termination reason.'
),
};
// Round only the final award to two decimals.
return round(
$fullAward * $share,
2,
PHP_ROUND_HALF_UP
);
}
// Verification cases: [wage, years, reason, expected].
$tests = [
[10500.0, 7.0 + 4.0 / 12.0, 'end', 50750.00],
[10500.0, 7.0 + 4.0 / 12.0, 'resign', 33833.33],
[6000.0, 3.5, 'resign', 3500.00],
[15000.0, 12.0, 'resign', 142500.00],
[6000.0, 5.0, 'resign', 5000.00],
[6000.0, 1.0 + 10.0 / 12.0, 'end', 5500.00],
];
foreach ($tests as [$wage, $years, $reason, $expected]) {
$actual = eosbAward($wage, $years, $reason);
if (abs($actual - $expected) > 0.001) {
throw new RuntimeException(
"Expected {$expected}; received {$actual}"
);
}
}
echo "All EOSB checks passed.", PHP_EOL;
// Illustrative Gregorian day-count calculation only.
// Use this convention only when legally applicable.
$start = new DateTimeImmutable('2018-03-01');
$lastDay = new DateTimeImmutable('2025-06-30');
$days = (int) $start->diff($lastDay)->days + 1;
$illustrativeYears = $days / 365.0;
printf(
"Calendar-day illustration: %d days; %.2f SAR\n",
$days,
eosbAward(10500.0, $illustrativeYears, 'end')
);
// Reproduce an actual input-validation error without crashing the script.
try {
eosbAward(10500.0, 7.0, 'resignation');
} catch (InvalidArgumentException $exception) {
echo get_class($exception) . ': ' . $exception->getMessage() . PHP_EOL;
}Run it from the directory containing the file:
php eosb.phpExpected output:
All EOSB checks passed.
Calendar-day illustration: 2679 days; 50817.12 SAR
InvalidArgumentException: Unknown termination reason.The award examples and the invalid-reason error above were run with PHP 8.4.24. The error is intentional: it shows what happens when a user sends resignation instead of the accepted code resign. It is a reproducible PHP error, not a screenshot or an error taken from anyone's production payroll system.
The calculation syntax uses PHP 8.0-compatible features.
Why the termination-reason validation matters
An earlier version of this kind of function might use:
default => 1That meant a misspelled value such as:
resignationcould silently receive a full award because the function expected:
resignFor an employee with seven years of service, this could produce a materially incorrect result.
The function in this guide rejects an unknown termination reason, so the mistake cannot silently produce a full-award result.
A real payroll application should go further and use a controlled set of termination classifications, with approval and audit records.
Do not allow ordinary HR users to select an Article 80 or Article 87 classification without the appropriate verification.
Carbon and Laravel date handling
Laravel commonly uses Carbon for date handling.
There are two distinct classes:
Carbon\Carbon
Carbon\CarbonImmutableCarbon\Carbon extends PHP's mutable DateTime class.
Carbon\CarbonImmutable extends DateTimeImmutable.
Both support date-difference operations, but their mutation behavior differs.
For example, use CarbonImmutable when you want date operations to return new instances rather than modifying the original object.
More importantly, Carbon's default Gregorian date calculations do not automatically implement Article 10's Hijri rule.
If your payroll system needs Hijri-based service calculations, that must be implemented and tested separately using a verified calendar conversion methodology.
Production implementation: what this function does not cover
The PHP function deliberately does not decide:
- Whether Article 80 grounds are legally established.
- Whether an Article 81 departure is supported by evidence.
- Whether Article 87's exceptions apply.
- Whether an employee-initiated ending is an Article 85 resignation.
- Whether an employee's service must be measured in Hijri years.
- How a contract suspension changes eligible service.
- Whether a particular wage component qualifies under Article 2 or is validly excluded under Article 86.
- Whether other settlement payments are owed.
Work out those questions before you run the wage formula. They cannot be resolved by the function alone.
For production financial calculations, consider using decimal arithmetic or integer halalas rather than relying exclusively on floating-point values.
Test exact service thresholds, calendar boundaries, leap years, unusual wage structures and large awards.
In Laravel, the award calculation belongs in a dedicated service class with automated tests. Final settlement generation should maintain a separate record of the input wage, eligible service period, rule version, termination classification, award and approving user.
Check the result against an independent calculator
The HeadsNTail Saudi end-of-service calculator is intended to help estimate the award using employment details and termination reasons.
Before relying on any calculator, confirm its treatment of:
- Hijri versus Gregorian service periods.
- Inclusive or exclusive dates.
- Salary allowances.
- Resignation thresholds.
- Article 80 and Article 87 exceptions.
- Contract suspensions.
The HRSD end-of-service award guidance provides an official reference for the statutory rules.
The Ministry also publishes an online end-of-service calculator, which requests the actual wage, contract type, termination reason and service period.
If the two calculators disagree, compare the wage base, service dates, calendar rule and termination reason before changing your code.
Payment deadlines, 2025 amendments and common mistakes
EOSB is one line in the final settlement, not the entire payment.
The employer also needs to check the payment deadline, unpaid wages, remaining leave pay and any other amounts owed.
Article 88: when must the employer pay?
Article 88 establishes two payment deadlines.
| Situation | Maximum settlement period |
|---|---|
| Employment ends other than by the worker ending the contract | One week |
| Worker ends the contract | Two weeks |
The deadline runs from the end of the contractual relationship.
The employer must settle applicable outstanding wages and entitlements within the prescribed period.
Article 88 also allows the employer to deduct qualifying work-related debts owed by the worker from amounts due.
Such deductions should be supported by records and comply with the applicable law.
A company should not treat Article 88 as permission to withhold the entire settlement while investigating an unrelated issue.
What changed in February 2025?
Amendments to the Saudi Labor Law took effect on 19 February 2025.
The official HRSD announcement links these amendments to Royal Decree No. M/44 dated 12 August 2024.
According to the Ministry, the reform:
- Amended 38 articles.
- Removed 7 articles.
- Added 2 articles.
The Article 84 and Article 85 award formulas remain as described above in the current HRSD publication.
An important operational change is Article 79 bis, which establishes a statutory procedure for resignation requests.
Article 79 bis: resignation procedures
The main requirements include:
Thirty-day response period
A qualifying resignation request is deemed accepted if the employer does not respond within 30 days of its submission.
Postponement of acceptance
The employer may postpone acceptance for up to 60 days when work interests require it.
The postponement must be supported by a written explanation provided before the original 30-day period expires.
The postponement period is calculated from the date the written explanation is provided to the worker.
Seven-day withdrawal period
The worker may withdraw the resignation request within seven days after submission, unless the employer has already accepted it.
No deferred resignation date
Article 79 bis does not permit the resignation request to specify a deferred date.
Contract remains effective
The employment contract remains in force during the applicable resignation-request period, with both parties continuing to fulfill their obligations.
That effective date matters: it can change both the counted service period and the deadline for paying the final settlement.
Do not automatically calculate the final settlement from the date the employee first submitted a resignation request.
Common mistakes to avoid
- Using basic salary instead of actual wage. Check all qualifying wage components under Article 2 and permitted exclusions under Article 86.
- Using the wrong calendar. Article 10 defaults to Hijri dates unless the contract or work regulations provide otherwise.
- Using the wrong termination reason. Ordinary resignation, qualifying employer termination, Article 80 dismissal and Article 81 departure are not interchangeable.
- Applying two thirds at exactly five years. Article 85 still provides one third at exactly five years for a qualifying resignation.
- Rounding service down to completed years. Article 84 requires proportional payment for fractions of a year.
- Automatically subtracting all unpaid leave. Article 116 and the specific contractual treatment of suspension must be examined.
- Ignoring Article 87 exceptions. Force majeure and the specified marriage and childbirth situations can result in the full award.
- Combining EOSB and unused annual leave. Article 111 leave payments must be identified separately.
- Ignoring other termination compensation. Article 77 or Article 76 amounts, where applicable, are not substitutes for the end-of-service award.
- Missing Article 88 deadlines. The final settlement must be completed within the applicable statutory period.
- Using an unverified PHP reason code. Unknown values should produce validation errors rather than automatically paying the full amount.
- Trusting a calculator without reviewing inputs. A mathematically correct formula can still produce an incorrect settlement if the wage, calendar or termination classification is wrong.
What to do if the employer and employee disagree
Start by comparing the following documents:
- Employment contract and approved amendments.
- Work regulations relevant to calendar and wages.
- Start date and legally effective termination date.
- Final payslip and allowance breakdown.
- Approved leave and suspension records.
- Resignation or termination documentation.
- Employer's detailed final settlement calculation.
Recalculate the award using the applicable law and compare each item separately.
If the disagreement cannot be resolved, the parties may seek assistance through the Ministry of Human Resources and Social Development's labor dispute settlement procedures and, where necessary, the competent labor court.
The Ministry of Justice also provides a Labor Calculator service for employment-related financial claims.
This article provides general information and calculation examples, not individualized legal advice. A disputed termination, unusual contract or contested wage component may require qualified legal review.
FAQ
How is end of service calculated in Saudi Arabia?
Article 84 calculates the full award using half a month's last wage for each of the first five years and one month's wage for each subsequent year. Fractions of a year count proportionally.
If the employee resigned and Article 85 applies, the full award is reduced according to the qualifying service period.
First confirm which wage components count, which calendar applies and how the employment ended. Then calculate the award.
Do I get end of service benefits if I resign before two years?
Under Article 85, an ordinary qualifying resignation before completing two consecutive years does not entitle the worker to an end-of-service award.
However, that rule must not be applied automatically to situations governed by Article 81 or the full-award exceptions under Article 87.
Check the actual reason for leaving before applying the two-year rule.
Is housing allowance included in the end of service calculation?
A fixed contractual cash housing allowance ordinarily forms part of the actual wage used under Articles 2 and 84.
Employer-provided housing in kind may require valuation under the Article 2 rules.
Article 86 permits certain agreed exclusions for variable commissions and similar components, but does not create a general exclusion for fixed housing allowances.
How long does an employer have to pay end of service benefits in Saudi Arabia?
Article 88 generally requires the employer to settle wages and other entitlements within one week after the contractual relationship ends.
When the worker ends the contract, the settlement period is up to two weeks.
Applicable work-related debts may be deducted in accordance with the law.
Official sources
For the legal wording and any later updates, check these official sources:
- HRSD: Labor Law employment relations, Articles 74 to 88.
https://www.hrsd.gov.sa/en/علاقات-العمل
- HRSD: Labor Law definitions and general provisions, Articles 2, 7 and 10.
https://www.hrsd.gov.sa/en/التعريفات/الأحكام-العامة
- HRSD: Labor Law working conditions, Articles 111 and 116.
https://www.hrsd.gov.sa/node/5576008
- HRSD: End-of-service award regulations.
https://www.hrsd.gov.sa/en/knowledge-centre/articles/317
- HRSD: Announcement of the Labor Law amendments effective 19 February 2025.
https://www.hrsd.gov.sa/en/media-center/news/وزارة-الموارد-البشرية-والتنمية-الاجتماعية-تعلن-عن-بدء-سريان-تعديلات-نظام-العمل
- Saudi Bureau of Experts: Official Arabic text of the Labor Law.
https://laws.boe.gov.sa/BoeLaws/Laws/LawDetails/08381293-6388-48e2-8ad2-a9a700f2aa94/1
- Saudi Ministry of Justice: Labor Calculator.
https://www.moj.gov.sa/English/eServices/pages/labor-calculator.aspx
If an English translation differs from the official Arabic wording, consult the authoritative Arabic text and seek qualified guidance when necessary.
