End of Service Gratuity in Saudi Arabia: How It Is Calculated
Official sources cited: 3
On this page
End of service gratuity is an entitlement the Saudi Labor Law sets in a worker's favor when their contract ends, and its amount depends on a number of factors, including length of service, final wage, and how the relationship itself came to an end.
The General Idea Behind the Gratuity
Article 84 of the Labor Law entitles a worker to a gratuity when their service ends, calculated at 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 partial years calculated proportionally, based on the worker's most recent wage. Under Article 86, the parties may agree that commissions, sales percentages and similar variable wage elements are excluded from the wage used to calculate the gratuity.
Factors That Affect the Amount
Factors that directly affect the gratuity amount include the worker's actual length of service, their final wage before service ended, and whether the relationship ended through expiry of the contract, termination by the employer, or resignation by the worker. Where the relationship ends by the worker's own resignation, Article 85 sets a specific scale tied to length of service: the worker is entitled to one third of the gratuity after continuous service of not less than two years and not more than five years, two thirds if continuous service exceeds five years but is less than ten, and the full gratuity for ten years of service or more. The article provides no share for a resigning worker before two continuous years of service. Article 80 also allows an employer, in specific cases it lists exhaustively, to end the contract without a gratuity, while Article 81 preserves all of the worker's statutory rights where the worker leaves without notice in the cases it sets out.
Why It's Worth Checking Before Calculating
Clear as these rules are, certain situations carry their own exceptions, including cases where the full gratuity is due despite the relationship ending by resignation. Confirming exactly how the relationship ended, from either the employer's or the worker's side, remains a necessary step before relying on any final calculation. This is a general introductory overview, not a final calculation for a specific case.
End of Service Gratuity Calculator
Enter the last monthly wage, the length of service and how the relationship ended to estimate the gratuity under Articles 84 and 85 of the Labor Law.
Enter the wage and length of service to see the result.
Example: last wage SAR 10,000, 7 years of service
| Full gratuity | 5 years × half the wage + 2 years × the wage = SAR 45,000 |
|---|---|
| Contract expired or the employer ended it | Full gratuity = SAR 45,000 |
| Resignation (over 5 and under 10 years) | Two thirds of the gratuity = SAR 30,000 |
An estimate under Articles 84 and 85 as this guide sets them out. It does not include unpaid wages or leave balances. Some situations have their own rules, including Articles 80 and 81, so confirm how the relationship ended before relying on any figure.
Frequently asked questions
Under Article 84 of the Labor Law, end of service gratuity is calculated at 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 partial years calculated proportionally. The calculation is based on the worker's most recent wage. What the worker receives also depends on how the relationship ended, since Article 85 sets a specific scale for resignation.
End of service gratuity is calculated on the worker's most recent wage before service ended (Article 84). That wage is one of the factors that directly affect the amount, along with the worker's actual length of service and how the relationship ended. The parties may agree that commissions, sales percentages and similar variable wage elements are excluded from that wage (Article 86).
Under Article 86 of the Labor Law, the parties may agree that commissions, sales percentages and similar variable wage elements are excluded from the wage used to calculate the gratuity. The gratuity itself is calculated on the worker's most recent wage (Article 84).
Under Article 85 of the Labor Law, a worker who resigns is entitled to one third of the gratuity after continuous service of not less than two years and not more than five years, two thirds if continuous service exceeds five years but is less than ten, and the full gratuity for ten years of service or more. The article provides no share for a resigning worker before two continuous years of service. Certain situations carry their own exceptions, including cases where the full gratuity is due despite resignation.
Article 80 of the Labor Law allows an employer, in specific cases it lists exhaustively, to end the contract without a gratuity. Article 85 provides no share for a worker who resigns before two continuous years of service, although certain situations carry their own exceptions, including cases where the full gratuity is due despite resignation. By contrast, Article 81 preserves all of the worker's statutory rights where the worker leaves without notice in the cases it sets out.