Part of the guide: Saudi HR & Payroll Toolkit 2026: GOSI, End of Service, Days
Annual Leave in Saudi Labor Law (2026): Days & Pay
Annual leave in Saudi Labor Law is governed mainly by Articles 109, 110 and 111. Employees generally receive at least 21 days of paid leave each year, increasing to at least 30 days after completing five consecutive years with the same employer.
The difficult part is often the payroll calculation. Employers need to know which wage components belong in leave pay, how public holidays affect an approved vacation, and what happens to unused leave when an employee resigns or is terminated.
A wrong salary base or an incorrect leave balance can change the final settlement by hundreds or thousands of Saudi riyals.
Quick answer: Under Article 109, annual leave is paid in advance. The employer must give at least 30 days' notice of the scheduled leave. Leave cannot ordinarily be exchanged for money during employment. Article 111 requires payment for accrued and unused leave when employment ends, including the proportion earned during an incomplete year.
For an ordinary monthly-paid employee, a commonly used calculation is:
Daily leave wage = Actual monthly wage / 30
Leave payment = Daily leave wage * Eligible leave daysFor example, if the employee's actual monthly wage is SAR 8,000 and the applicable balance is 12.5 days:
8,000 / 30 * 12.5 = SAR 3,333.33The 30-day divisor follows Article 2's definition of a month unless the employment contract or work regulations stipulate otherwise. More complex wage and entitlement arrangements require individual assessment.
This guide explains the rules, works through real payroll-style examples and provides Excel and PHP calculations that you can test.
Annual Leave Entitlement: 21 or 30 Days
Article 109 establishes the minimum paid annual leave entitlement for employees covered by the relevant Saudi Labor Law provisions.
| Continuous service | Minimum annual leave | Illustrative monthly accrual |
|---|---|---|
| Before completing 5 years | 21 days | 1.75 days |
| After completing 5 years | 30 days | 2.50 days |
The monthly figures simply divide the annual entitlement by 12. They are convenient for an HR dashboard, but the exact amount accrued at a particular date also depends on the applicable leave year and accrual method.
What does "not less than" mean?
The legal figures are minimums, not maximums.
An employment contract might provide 25 days to employees during their first five years or 35 days after five years. More favorable contractual benefits can apply.
Article 8 generally invalidates a contractual provision that reduces a worker's statutory rights.
For payroll purposes, store the applicable contractual entitlement instead of assuming every employee receives exactly the minimum.
When does the 30-day entitlement begin?
Article 109 increases the entitlement once the worker completes five consecutive years with the same employer.
Consider an employee whose service began on 1 April 2021.
Under a Gregorian service-year arrangement, the fifth anniversary falls on 1 April 2026.
Joining date: 2021-04-01
Fifth anniversary: 2026-04-01
Before completion: 21-day minimum annual rate
After completion: 30-day minimum annual rateThis identifies when the five-year service condition is completed.
A separate payroll question remains: how should an employer calculate accrual during an entitlement year that crosses that anniversary?
Article 109 does not provide a detailed daily-proration algorithm for that transition.
An employer should document its approach, preserve any more favorable contractual entitlement and obtain clarification where a calculation is disputed.
Do not automatically apply a 30-day rate retrospectively to all earlier service years. Equally, do not continue treating a worker who has completed the required five years as permanently entitled to only 21 days.
What counts as continuous service?
Article 2 defines continuous service as uninterrupted service with the same employer or legal successor.
It also recognizes certain periods as continuous service, including:
- Statutory holidays and leave.
- Specified absences for examinations.
- Unpaid absences not exceeding 20 intermittent days in total during the work year, under the stated definition.
Do not assume that a worker's service restarts because they took an approved annual holiday or changed branches within the same employer.
Longer unpaid absences, contract suspensions and changes of employer need closer review.
Article 116 also provides rules on suspension of the employment contract when unpaid leave exceeds 20 days, unless the parties agree otherwise.
Does the employee receive 21 days immediately?
Article 109 establishes the entitlement for each year of service. It does not set out a universal monthly crediting schedule that every HR application must follow.
Some employers maintain an accrued balance, while others make an annual entitlement available at the beginning of the relevant leave year.
Whichever arrangement is used, it must respect the worker's rights and the rules on scheduling, advance payment and unused leave.
For a payroll system, it helps to store the following separately:
Annual contractual entitlement
Accrued leave
Leave carried forward
Approved future leave
Leave already taken
Current available balanceA single balance field cannot reliably explain why a worker has a particular number of days remaining.
Leave Pay in Advance, Scheduling and Carry-Forward
Article 109 requires the annual leave wage to be paid in advance.
This is one of the most important requirements for payroll teams because an ordinary monthly salary cycle may not align with the employee's vacation dates.
When should annual leave salary be paid?
Suppose an employee's approved annual leave begins on 10 November.
Their employer normally processes monthly salaries near the end of each month.
Waiting until the end of November to pay the wage due for the annual leave would not satisfy the advance-payment requirement merely because that is the company's usual payroll date.
Instead, payroll should arrange for the amount due for the leave to be paid before the employee starts it.
This may require a separate payroll process or an appropriate salary advance arrangement.
Important: Advance leave payment is not necessarily an extra payment on top of the worker's normal monthly salary.
Where the wage for the vacation period has already been paid in advance, the employer must account for that amount properly in the ordinary payroll cycle.
Otherwise, a payroll system could mistakenly pay the same salary period twice.
Who chooses the annual leave dates?
Article 109 allows the employer to schedule annual leave based on operational requirements.
The employer may also arrange vacations in rotation to maintain business operations.
However, the employee must be notified at least 30 days before the scheduled leave begins.
A practical HR workflow should record:
- The requested or proposed vacation dates.
- The employee's available entitlement.
- The applicable manager or HR approval.
- The final approved dates.
- Evidence of the required notice.
- The leave-wage payment status.
For example, a manager approving the vacation does not automatically prove that payroll paid the employee before the vacation began.
Approval and wage payment are two separate events.
Can an employee postpone annual leave?
Article 110 addresses postponement in two situations.
Employee-requested postponement
With the employer's approval, the worker may postpone annual leave, or part of it, to the following year.
Employer-requested postponement
If business circumstances require it, the employer may postpone leave for up to 90 days after the end of the year in which the leave became due.
A further postponement requires the employee's written consent.
Even with consent, the postponement must not extend beyond the end of the year following the entitlement year.
| Situation | Requirement |
|---|---|
| Employee requests carry-forward | Employer approval |
| Employer postpones for business needs | Up to 90 days after the entitlement year |
| Employer needs a longer postponement | Employee's written consent |
| Latest permitted postponement | No later than the end of the following entitlement year |
These rules are not permission to delete an unused leave balance automatically.
Article 111 protects payment for accrued leave when employment ends.
The standard employment contract template included in HRSD's 2025 implementing regulations also states that the right to payment for accrued and unused vacation days is not forfeited and that financial compensation is due upon termination.
A payroll application should therefore preserve the leave history, including unresolved carry-forward balances, instead of resetting everything to zero at year-end.
Which Salary Counts for Annual Leave Pay?
The most common payroll mistake is calculating leave pay using basic salary without checking what the law means by wage.
Article 2 distinguishes basic wage from actual wage.
It also defines the term "wage" as the actual wage.
Because Articles 109 and 111 use the term wage, an ordinary leave-wage calculation generally considers the actual wage rather than basic salary alone.
Basic wage versus actual wage
Basic wage is the contractual amount paid for work, including qualifying periodic increments.
Actual wage is broader and may include additional amounts due under the contract, work regulations or established practice.
Depending on their legal and contractual character, these may include:
- Housing allowance.
- Transportation allowance.
- Certain regular commissions.
- Contractual or customary bonuses that qualify as wages.
- Other qualifying allowances or benefits in kind.
Not every payment shown on a payslip automatically belongs in the wage base.
For example, reimbursement of an employee's documented business expenses should not automatically be treated as monthly salary.
Variable commissions and benefits in kind may need specific calculations or valuation rules.
Article 96 also provides rules for workers paid on a piece-rate or production basis and for wages consisting of variable commissions or similar components.
A payroll developer should therefore avoid hardcoding:
Leave wage = Basic salary onlyThe employee's actual wage components must be identified first.
Example: Basic salary and fixed allowances
Consider this ordinary monthly-paid employee:
| Wage component | Monthly amount |
|---|---|
| Basic salary | SAR 6,000 |
| Housing allowance | SAR 1,500 |
| Transportation allowance | SAR 500 |
| Actual monthly wage | SAR 8,000 |
Assume all listed allowances qualify as actual-wage components.
Article 2 generally defines one month as 30 days unless the contract or work regulations stipulate otherwise.
Using that method:
Actual monthly wage = SAR 8,000
Daily wage = 8,000 / 30
Daily wage = SAR 266.666666...For 21 days of annual leave:
Leave wage = 8,000 / 30 * 21
Leave wage = SAR 5,600.00For 30 days:
Leave wage = 8,000 / 30 * 30
Leave wage = SAR 8,000.00These amounts represent the wage attributable to those vacation periods under the illustrated calculation.
They are not necessarily additional bonuses.
Can an employer divide the salary by 26 days?
Do not substitute 26 working days merely because the establishment operates six days per week.
Article 2 establishes a 30-day month unless the employment contract or work regulations provide otherwise.
Similarly, some systems use:
Annual salary / 365That is not an automatic replacement for the statutory month definition.
A different method requires proper support under the relevant employment arrangement and must not unlawfully reduce the employee's entitlement.
The payroll team should review the contract, relevant regulations and the amount produced before approving an alternative calculation.
For a quick wage comparison, the HeadsNTail paycheck calculator provides related salary calculations. It should not replace checking the legal leave-wage base.
Calendar Days, Weekends and Saudi Public Holidays
Annual leave counting becomes more complicated when vacation dates overlap weekly rest days, Eid holidays or sickness.
The first question is whether an entitlement is being measured as calendar days or working days.
Are the 21 or 30 days calendar days?
Article 109 states the minimum number of annual leave days without providing a detailed counting algorithm for every calendar arrangement.
However, the standard employment contract template included in HRSD's 2025 implementing regulations expressly describes annual leave using calendar-day wording.
That is important evidence of the convention used by the standard contract.
For an employee whose applicable contract provides calendar days, weekly rest days falling within a continuous annual-leave period ordinarily form part of the calendar span.
Do not silently convert a 21-calendar-day entitlement into 21 working days without a contractual or other legally applicable basis.
If the employer promises additional working-day leave as a more favorable benefit, that agreement should be stated clearly and handled separately.
For example, consider an employee taking seven consecutive calendar days:
Monday Annual leave
Tuesday Annual leave
Wednesday Annual leave
Thursday Annual leave
Friday Weekly rest day
Saturday Weekly rest day
Sunday Annual leaveUnder a calendar-day entitlement, the seven-day period may consume seven calendar days, subject to the applicable rules on holidays and other leave interruptions.
A working-day entitlement under a more favorable contract could produce a different deduction.
This distinction belongs in the employment terms and leave-policy configuration, not in an undocumented assumption inside the attendance system.
Saudi public holidays
Article 112 provides fully paid leave for the holidays and occasions specified by the regulations.
HRSD's 2025 awareness guide identifies the following:
| Official holiday | Duration | Starting date |
|---|---|---|
| Eid al-Fitr | 4 days | Day after 29 Ramadan under the applicable calendar |
| Eid al-Adha | 4 days | Day of Arafat |
| Saudi National Day | 1 day | 23 September |
| Saudi Founding Day | 1 day | 22 February |
Eid dates follow the applicable Hijri calendar.
Do not hardcode the same Gregorian dates for Eid holidays every year.
What if Eid falls during annual leave?
The applicable holiday overlap rules require annual leave to be extended by the number of overlapping official holiday days.
Suppose an employee is taking ten calendar days of annual leave and four applicable Eid holiday days fall within that period.
For this example, assume all four days overlap and no further holiday adjustment applies.
Requested annual leave days = 10
Overlapping Eid holidays = 4
Annual leave balance charge = 6 days
Protected holiday days = 4If the employee still needs ten actual annual-leave days, the period of absence must be extended accordingly.
The HR system should distinguish the approved absence period from the days deducted from the annual-leave balance.
Simply subtracting every calendar date between the start and end of the vacation can charge the employee for holidays that should not consume their annual entitlement.
What if a public holiday falls on a weekly rest day?
HRSD's published holiday guidance provides corresponding time off before or after official holidays that overlap weekly rest days.
It also identifies specific non-duplication rules when National Day or Founding Day overlaps an Eid holiday.
Those rules prevent a payroll system from automatically granting duplicate compensation for every combination of holidays.
For example, if a company has already identified an overlapping day as part of the applicable Eid holiday, it should examine the specific holiday rules before creating an additional National Day or Founding Day entitlement.
What happens if the employee becomes sick during annual leave?
The implementing regulations address the situation where sick leave overlaps annual leave.
Where qualifying sick-leave days coincide with annual leave, the annual leave is suspended for the sick-leave period and resumes afterward.
An approved sick-leave interruption should therefore be recorded as a separate event, with the appropriate documentation.
A basic annual-leave calculation that ignores the sick-leave records can overstate the leave days used.
HRSD's working days calculator can help count date ranges, but holiday exclusions and entitlement rules still need to be applied separately.
Unused Annual Leave and Final Settlement Examples
Article 109 does not allow an employee to waive annual leave or take cash instead of the leave during employment.
Article 111 deals with a different situation: the worker leaves employment before using the accrued leave.
At that point, the worker is entitled to payment for the accrued leave not taken, including the proportional entitlement for the part of the current year worked.
Can annual leave be encashed during employment?
Ordinary cash substitution during ongoing employment is prohibited by Article 109.
The purpose of annual leave is to provide paid time away from work.
An employer should not routinely offer employees an extra salary amount in exchange for surrendering their minimum statutory vacation.
A company can offer additional lawful benefits, but those benefits cannot be used to remove the employee's statutory leave rights.
Example 1: Payment for a full 21-day leave
Assume the actual monthly wage is SAR 8,000 and the applicable payment calculation uses 30 days.
Actual monthly wage = SAR 8,000
Daily wage = 8,000 / 30
Leave days = 21
Leave pay = 8,000 / 30 * 21
Result = SAR 5,600.00The amount attributable to the leave must be paid in advance.
If the worker is already receiving a monthly wage, payroll must correctly allocate the advance to the relevant salary period to avoid duplicate payment.
Example 2: Encashment of 12.5 unused days
An employee leaves the company with 12.5 accrued, unused annual-leave days.
The actual monthly wage is SAR 8,000.
Daily wage = 8,000 / 30
Unused leave = 12.5 days
Settlement = 8,000 / 30 * 12.5
Settlement = SAR 3,333.33If payroll incorrectly uses only SAR 6,000 basic salary:
6,000 / 30 * 12.5 = SAR 2,500.00The difference is:
3,333.33 - 2,500.00 = SAR 833.33That is the shortfall in this example if the SAR 8,000 amount is the applicable actual wage.
Example 3: Accrual crossing the fifth anniversary
Consider an employee with these details:
| Item | Value |
|---|---|
| Joining date | 1 April 2021 |
| Last working day | 15 July 2026 |
| Reporting period begins | 1 January 2026 |
| Fifth anniversary | 1 April 2026 |
| Actual monthly wage | SAR 8,000 |
| Leave already taken in the period | 0 days |
For this illustration, assume the employer has a valid Gregorian entitlement year and uses daily proration with a 365-day denominator for 2026.
Also assume its reviewed policy allocates the 21-day annual rate before the fifth anniversary and the 30-day rate afterward.
This illustrates a calculation method, not an express statutory mandate to use this exact split.
From 1 January to 31 March 2026:
Eligible days = 90
Accrual = 90 * 21 / 365
Accrual = 5.178082... daysFrom 1 April to 15 July 2026:
Eligible days = 106
Accrual = 106 * 30 / 365
Accrual = 8.712328... daysCombined:
5.178082... + 8.712328...
= 13.890410... daysIf the employer's approved policy rounds the leave balance to two decimal places before settlement:
Accrued leave = 13.89 days
Leave value = 8,000 / 30 * 13.89
Result = SAR 3,704.00If it retains the unrounded accrual and rounds only the final monetary result, the illustrative amount is approximately SAR 3,704.11.
This difference is caused by rounding precision.
The Labor Law does not prescribe the exact database precision used in this demonstration. Employers should document their approach, apply it consistently and ensure it does not unlawfully diminish the employee's rights.
Calendar warning: If the contract has not provided for a Gregorian calculation, do not assume 365 days is the correct statutory entitlement year. Article 10 generally uses Hijri periods unless the contract or work regulations stipulate otherwise.
What if the employee resigns?
Article 111 is separate from the end-of-service award provisions.
Article 85 sets different proportions of the end-of-service award in certain resignation cases.
Those proportions should not automatically be used to reduce payment for accrued and unused annual leave.
For example, if an employee has a legally payable unused leave balance worth SAR 3,333.33, payroll should not automatically reduce it to one-third because the employee has resigned after a certain period of service.
The end-of-service award and unused-leave payment must be calculated under their respective provisions.
For the related award, see End of Service Benefits Saudi Arabia Calculation (2026).
Article 88 generally requires an employer to settle wages and other entitlements within one week after termination of the employment relationship. If the employee terminates the contract, the article provides a period not exceeding two weeks.
How should the final leave balance be recorded?
Use an auditable calculation:
Closing unused leave =
Opening carried-forward balance
+ Leave accrued during the period
+ Applicable corrections
- Leave days taken
- Other authorized balance adjustmentsStore the components rather than only the closing number.
For each leave transaction, keep the request, start and end dates, charged days, holiday exclusions, approvals and relevant payroll adjustments.
If the balance is disputed, those records allow HR to explain exactly how the final amount was calculated.
PHP and Excel Calculations That You Can Test
An HR system needs two separate calculations.
The first determines how many annual-leave days are available or have accrued.
The second calculates the wage for a defined number of payable leave days.
Combining every rule into one formula makes errors harder to find.
The following examples use PHP 8.0 or newer and an explicitly stated Gregorian 2026 calculation.
PHP: Determine the annual entitlement
The first function checks whether the employee has completed five years with the same employer, based on the dates supplied.
<?php
declare(strict_types=1);
function entitlementDays(
DateTimeImmutable $joined,
DateTimeImmutable $asOf
): int {
if ($asOf < $joined) {
throw new InvalidArgumentException(
'The check date cannot precede the joining date.'
);
}
$fifthAnniversary = $joined->modify('+5 years');
return $asOf >= $fifthAnniversary ? 30 : 21;
}The function returns the statutory minimum annual entitlement rate under the stated date convention.
It does not calculate the current available balance or account for a contract offering additional days.
PHP: Calculate leave payment
The second function calculates the amount payable for a specified number of leave days.
function leavePay(
float $actualWage,
float $leaveDays,
int $monthDivisor = 30
): float {
if (
!is_finite($actualWage) ||
!is_finite($leaveDays) ||
$actualWage < 0 ||
$leaveDays < 0
) {
throw new InvalidArgumentException(
'Wage and leave days must be finite, non-negative values.'
);
}
if ($monthDivisor <= 0) {
throw new InvalidArgumentException(
'The monthly wage divisor must be greater than zero.'
);
}
return round(
($actualWage / $monthDivisor) * $leaveDays,
2
);
}The default divisor is 30 for the illustrated monthly-wage arrangement.
The optional parameter does not mean employers may choose an arbitrary divisor. Any different value must be supported by the applicable terms and rules.
For production financial calculations, fixed-precision decimal arithmetic is preferable to PHP floating-point values.
PHP: Calculate proportional accrual
This helper calculates a proportional share of an annual entitlement.
function proratedDays(
float $annualDays,
int $eligibleDays,
int $daysInYear
): float {
if (
!is_finite($annualDays) ||
$annualDays < 0 ||
$eligibleDays < 0 ||
$daysInYear <= 0 ||
$eligibleDays > $daysInYear
) {
throw new InvalidArgumentException(
'Invalid accrual period or entitlement.'
);
}
return $annualDays * $eligibleDays / $daysInYear;
}The denominator is supplied rather than hidden inside the function.
That allows a developer to implement an explicitly approved entitlement-year calculation.
This helper does not determine whether the employer's chosen leave year or accrual convention is legally appropriate.
PHP: Complete executable verification
Create a file named annual_leave_verify_2026.php and paste this complete example.
It includes the three functions and verification cases.
<?php
declare(strict_types=1);
function entitlementDays(
DateTimeImmutable $joined,
DateTimeImmutable $asOf
): int {
if ($asOf < $joined) {
throw new InvalidArgumentException(
'The check date cannot precede the joining date.'
);
}
return $asOf >= $joined->modify('+5 years') ? 30 : 21;
}
function leavePay(
float $actualWage,
float $leaveDays,
int $monthDivisor = 30
): float {
if (
!is_finite($actualWage) ||
!is_finite($leaveDays) ||
$actualWage < 0 ||
$leaveDays < 0
) {
throw new InvalidArgumentException(
'Wage and leave days must be finite, non-negative values.'
);
}
if ($monthDivisor <= 0) {
throw new InvalidArgumentException(
'The monthly wage divisor must be greater than zero.'
);
}
return round(
($actualWage / $monthDivisor) * $leaveDays,
2
);
}
function proratedDays(
float $annualDays,
int $eligibleDays,
int $daysInYear
): float {
if (
!is_finite($annualDays) ||
$annualDays < 0 ||
$eligibleDays < 0 ||
$daysInYear <= 0 ||
$eligibleDays > $daysInYear
) {
throw new InvalidArgumentException(
'Invalid accrual period or entitlement.'
);
}
return $annualDays * $eligibleDays / $daysInYear;
}
$timezone = new DateTimeZone('UTC');
$joined = new DateTimeImmutable(
'2021-04-01',
$timezone
);
$onDate = new DateTimeImmutable(
'2026-07-15',
$timezone
);
$periodStart = new DateTimeImmutable(
'2026-01-01',
$timezone
);
$fifthAnniversary = $joined->modify('+5 years');
$dayAfterEnd = $onDate->modify('+1 day');
$daysAt21 = $periodStart
->diff($fifthAnniversary)
->days;
$daysAt30 = $fifthAnniversary
->diff($dayAfterEnd)
->days;
$accrued = round(
proratedDays(21, $daysAt21, 365)
+ proratedDays(30, $daysAt30, 365),
2
);
echo 'Annual entitlement: ',
entitlementDays($joined, $onDate),
' days',
PHP_EOL;
echo '21-day leave value: SAR ',
number_format(leavePay(8000, 21), 2, '.', ''),
PHP_EOL;
echo '12.5-day exit value: SAR ',
number_format(leavePay(8000, 12.5), 2, '.', ''),
PHP_EOL;
echo 'Illustrative accrued leave: ',
number_format($accrued, 2, '.', ''),
' days',
PHP_EOL;
echo 'Illustrative exit value: SAR ',
number_format(leavePay(8000, $accrued), 2, '.', ''),
PHP_EOL;
try {
leavePay(8000, 12.5, 0);
} catch (InvalidArgumentException $e) {
echo 'Expected validation error: ',
$e->getMessage(),
PHP_EOL;
}Check the PHP syntax:
php -l annual_leave_verify_2026.phpThen run the tests:
php annual_leave_verify_2026.phpActual verified output:
No syntax errors detected in annual_leave_verify_2026.phpThe syntax-check message above comes from the separate php -l command. The execution command produces:
Annual entitlement: 30 days
21-day leave value: SAR 5600.00
12.5-day exit value: SAR 3333.33
Illustrative accrued leave: 13.89 days
Illustrative exit value: SAR 3704.00
Expected validation error: The monthly wage divisor must be greater than zero.These results were checked by running the PHP program.
The validation-error line is a deliberately reproduced invalid-input case. The example catches the exception so the program can display the message without crashing.
For the published article, capture a genuine screenshot showing the PHP command and output. Do not replace it with a fabricated payroll screenshot.
Production limitation: The anniversary example deliberately assumes the period begins before the fifth anniversary and ends after it, within the Gregorian 2026 reporting year. For arbitrary employment dates, the program must handle periods entirely before or after the anniversary, leap years, eligibility exclusions, relevant contract terms and Hijri-based entitlement periods where applicable.
Do not deploy this demonstration as a complete leave-entitlement engine without those additional rules and tests.
Excel and Google Sheets formulas
Use the following columns:
| Column | Field | Example |
|---|---|---|
| A | Joining date | 2021-04-01 |
| B | Accrual period start | 2026-01-01 |
| C | Accrual period end | 2026-07-15 |
| D | Actual monthly wage | 8000 |
| E | Unused days to pay | 12.5 |
F2: Minimum annual entitlement at the period end
=IF(C2>=EDATE(A2,60),30,21)The EDATE function adds 60 months to the joining date.
G2: Illustrative accrued days crossing the fifth anniversary
=ROUND(21*MAX(0,MIN(C2,EDATE(A2,60)-1)-B2+1)/365+30*MAX(0,C2-MAX(B2,EDATE(A2,60))+1)/365,2)This formula uses the stated 2026 Gregorian daily-proration assumption and splits the period at the fifth anniversary.
With the sample dates, it produces:
13.89The formula is not designed to calculate arbitrary multiyear service periods or Hijri-based entitlement years. Validate the date range before using it.
H2: Payment for the separately confirmed unused balance
=ROUND(D2/30*E2,2)Expected result:
3333.33I2: Illustrative payment for the newly accrued days
=ROUND(D2/30*G2,2)Expected result:
3704.00Keep the available leave balance and the payroll payment calculation separate.
A leave balance might include carried-forward days, approved leave and adjustments that are not represented by the single-period accrual formula.
For production use, protect formula cells, validate date inputs and retain the applicable policy version with the employee's payroll record.
Other Leave Types, Common Mistakes and FAQ
Annual leave is only one category of leave under Saudi Labor Law.
A payroll system should avoid deducting every absence from the annual-leave balance.
Other statutory leave entitlements
The following table summarizes selected provisions for workers covered by the relevant rules.
| Leave type | Entitlement | Article |
|---|---|---|
| Marriage | 5 days with full pay | 113 |
| Death of spouse, ascendant or descendant | 5 days with full pay | 113 |
| Death of brother or sister | 3 days with full pay | 113 |
| Birth of worker's child | 3 days with full pay, within 7 days of birth | 113 |
| Hajj | 10 to 15 paid days including Eid al-Adha, once, after at least 2 consecutive years | 114 |
| Sick leave | First 30 days full pay, next 60 at three-quarters pay, following 30 unpaid, within the applicable sick-leave year | 117 |
| Maternity leave | 12 weeks fully paid, including 6 mandatory weeks after childbirth | 151 |
| Muslim widow's waiting-period leave | At least 4 months and 10 days with full pay | 160 |
| Non-Muslim widow's leave | 15 days with full pay | 160 |
| Unpaid leave | Duration agreed with employer; contract suspension rules apply beyond 20 days unless otherwise agreed | 116 |
The three-day sibling bereavement entitlement and the amended twelve-week maternity leave are among the provisions reflected in the amendments effective from 19 February 2025.
For maternity leave, Article 151 also provides further conditions concerning the timing of the remaining six weeks, delayed childbirth and possible unpaid extension.
These details matter when configuring leave categories.
An HR system should not treat maternity leave, bereavement leave, Hajj leave and annual leave as interchangeable balances.
Common annual leave payroll mistakes
1. Calculating the payment from basic salary alone
Articles 109 and 111 refer to wage, which Article 2 defines as actual wage.
Check the applicable wage components rather than automatically excluding every allowance.
2. Keeping employees on a 21-day annual rate after completing five years
Article 109 establishes the higher minimum after the five-year continuous-service condition has been met.
The HR system needs an anniversary check and an appropriate accrual policy.
3. Paying annual leave salary after the employee returns
Article 109 requires advance payment.
A monthly payroll cut-off does not remove that obligation.
4. Cashing out statutory annual leave during active employment
Annual leave cannot ordinarily be waived in exchange for money while the employee remains employed.
The termination payout under Article 111 is a different entitlement.
5. Deducting official Eid holidays from annual leave
The holiday overlap provisions protect the employee's annual leave when applicable official holidays fall inside it.
6. Ignoring unused leave in final settlement
Outstanding accrued leave must be reconciled and paid when due at termination.
It should not be reduced using the resignation proportions applicable to the separate end-of-service award.
7. Using the wrong calendar
Article 10 generally uses Hijri periods unless the contract or work regulations stipulate otherwise.
A software system built entirely around Gregorian years can produce incorrect service anniversaries or accrual periods when that assumption does not match the governing terms.
8. Rounding leave days without a documented policy
The example above shows how rounding accrued days before monetary calculation can change the payable amount.
A consistent monetary and leave-balance precision policy helps prevent unexplained differences.
9. Counting the same absence twice
A holiday or qualifying sick-leave interruption should not be charged as ordinary annual leave if the applicable rules exclude it.
10. Deleting carried-forward leave without resolving the entitlement
A year-end database reset is not proof that the worker has lost the underlying right.
Keep the historical entitlement, approvals, deductions and adjustments available for audit.
Frequently Asked Questions
Is annual leave 21 or 30 days in Saudi Arabia?
Under Article 109, the minimum is 21 days each year. It increases to at least 30 days after the employee completes five consecutive years with the same employer.
A contract or work regulation may provide a more favorable entitlement.
Can my employer pay me instead of giving me annual leave?
Article 109 generally prohibits replacing statutory annual leave with a cash payment while employment continues.
When employment ends, Article 111 requires payment for accrued leave the employee has not taken.
How is unused annual leave calculated at the end of service?
First determine the correct unused accrued leave balance, including any proportion earned in an incomplete year.
Then calculate the wage due using the applicable actual-wage basis and a properly supported daily-wage method.
For an ordinary employee with SAR 8,000 actual monthly wage and 12.5 payable unused days, the illustrated 30-day calculation gives SAR 3,333.33.
This is separate from the end-of-service award.
Are Eid holidays counted as part of annual leave?
Applicable official Eid holidays that overlap annual leave do not simply consume the employee's annual-leave entitlement.
HRSD's holiday guidance provides for the annual leave to be extended by the number of overlapping official holiday days.
The HR system should record those dates separately and calculate the leave balance accordingly.
Final payroll verification
Before approving an annual-leave payout, check the worker's service dates, contractual entitlement, actual wage, applicable entitlement calendar, leave already used and any carried-forward balance.
For a termination settlement, separately verify the outstanding leave wage and the end-of-service award.
The arithmetic is usually straightforward once the entitlement and wage base are correct. The difficult part is making sure the system has not silently used the wrong dates, wrong salary components or wrong leave category.
This article provides general information and technical calculation examples, not individualized legal advice. Where contract terms or entitlements are disputed, consult HRSD or qualified Saudi employment counsel.
