How to Calculate End of Service in Saudi Arabia: Formula and Worked Examples
Content updated · About Abdullah Almendaha, licensed Saudi lawyer (licence 46592)
Your end-of-service award depends on four things:
- how long you worked;
- your last wage;
- how the employment ended;
- which parts of your pay count as "wage".
This page walks through each one, with examples you can check against your own numbers. If your employer has not paid the award, see our end-of-service claims page.
We act for employees in Jubail, Dammam and Khobar on end-of-service claims.
Step 1: The basic formula
When the employment relationship ends, the employer pays an award of (Article 84):
- half a month's wage for each of the first five years, plus
- one month's wage for each year after the fifth.
The award is calculated on your last wage. Part years count in proportion: 3 years and 8 months counts as 3.67 years, not 3.
Step 2: Which wage counts
In the Labor Law, "wage" means the actual wage: your basic wage plus the other amounts you receive for your work, such as allowances and commissions (Article 2). So the award is not limited to your basic salary.
There is one exception. Commissions, sales percentages and similar pay that naturally goes up and down can be left out of the calculation, but only if this was agreed (Article 86).
Whether a particular allowance counts is a frequent point of dispute. See Are Allowances Included in End of Service Pay?
Step 3: How the employment ended
How it ended | What you receive |
|---|---|
Employer ended the contract (other than under Article 80) | Full award (Article 84) |
Fixed-term contract simply expired | Generally the award under Article 84, without the Article 85 reductions. If you declined a renewal or resigned close to expiry, the position can be disputed. |
You resigned with less than 2 consecutive years of service | No award (Article 85) |
You resigned with 2 years up to and including 5 years | One-third of the award (Article 85) |
You resigned with more than 5 and less than 10 years | Two-thirds of the award (Article 85) |
You resigned with 10 years or more | Full award (Article 85) |
You left because of force majeure; or you are a woman who resigned within 6 months of marriage or 3 months of giving birth | Full award (Article 87) |
You left relying on Article 81 | All your statutory rights, if you can prove the Article 81 ground; otherwise the employer may argue it was a resignation or absence (Article 81) |
You were lawfully dismissed under Article 80 | No award (Article 80) |
Worked examples
Example 1: terminated by the employer. A planner worked 3 years and 8 months. His last wage was SAR 7,500 (basic plus allowances). The company ended his contract, not under Article 80.
- Half a month's wage: SAR 3,750
- (3 + 8/12) × 3,750 = SAR 13,750
Example 2: same service, but he resigned. With 2 years up to and including 5 years of service, he receives one-third.
- 13,750 ÷ 3 = SAR 4,583
Example 3: resigned after 7.5 years. A QA/QC engineer's last wage was SAR 10,000.
- First 5 years: 5 × 5,000 = 25,000
- Next 2.5 years: 2.5 × 10,000 = 25,000
- Full award: SAR 50,000
- She resigned with more than 5 and less than 10 years of service, so she receives two-thirds: SAR 33,333
Example 4: 12 years of service. A senior supervisor's last wage was SAR 20,000.
- First 5 years: 5 × 10,000 = 50,000
- Next 7 years: 7 × 20,000 = 140,000
- Total: SAR 190,000
With 10 years or more, he receives the full award whether he resigned or was terminated.
What is paid on top of the award
The end-of-service award is only one part of your final settlement. You may also be owed:
- unpaid wages;
- pay for unused annual leave, calculated on your actual wage (Articles 2 and 111);
- overtime;
- your return ticket, unless you were found unfit for work or chose to return home without a legitimate reason (Article 40);
- compensation, if the contract was ended without a legitimate reason (Article 77).
When it must be paid
Your employer must pay your wages and entitlements within one week if it ended the contract, or within two weeks if you resigned. It may deduct any work-related debt you owe it (Article 88).
Common calculation errors
- calculating on basic salary only, when allowances form part of the actual wage (Article 2);
- applying the resignation fractions to a contract that simply expired;
- rounding service down to whole years instead of counting part years;
- leaving unused leave out of the final settlement.
FAQ
How is end of service calculated in Saudi Arabia?
Half a month's last wage for each of the first five years, plus a full month's wage for each year after that. Part years count in proportion (Article 84).
Is end of service based on basic salary or total salary?
On the last wage, which the Labor Law defines as the actual wage: the basic wage plus the other amounts paid for the work (Articles 2 and 84). Commissions and similar variable pay can be excluded only by agreement (Article 86).
Do I get end of service if I resign before 2 years?
No. With less than 2 consecutive years of service, a resignation gives no award (Article 85).
Do I get the full award if my contract expires?
Generally yes, but the position can be disputed if you declined a renewal or resigned close to expiry. Article 85's reductions apply to resignation; where a fixed-term contract simply expires, the award is generally calculated under Article 84 without them.
When must my employer pay my end of service?
Within one week if the employer ended the contract, or within two weeks if you resigned (Article 88).
Talk to us
If your employer's figure does not match your own calculation, send us your last payslip, your Qiwa contract and your start and end dates.
Our office is in Al Jubail, and we serve clients across Dammam, Khobar and the Eastern Province.
Message us on WhatsApp +966 55 726 8709.
Related: End of Service After Resignation or Contract Expiry · Signing a Final Settlement
This page is general information, not legal advice. For advice on your specific case, contact us.
Abdullah Almendaha · Licensed Saudi lawyer · Licence 46592Or leave your details and we'll reach you the way you prefer