To calculate end-of-service in Saudi Arabia, pay half a month's wage for each of the first five years of service and one full month's wage for every year after that. It is based on your last wage — basic salary plus fixed allowances such as housing — with no cap. If your employer ends the contract or it expires, you receive the full award (Article 84); if you resign, the amount is reduced according to how long you served (Article 85). This is set by the Saudi Labor Law (Royal Decree M/51), Articles 84–87 — and this guide walks through it step by step with three worked examples.
Run your own figures in the calculator below, then read on to see how it reaches that number.
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Saudi Arabia End-of-Service Gratuity Calculator
Based on Saudi Labor Law (Royal Decree M/51), Articles 84, 85 & 87
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Law citation & legal notes
Saudi Labor Law (Royal Decree M/51), Articles 84, 85 & 87
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How end-of-service is calculated in Saudi Arabia
Once you know your last wage, the formula is simple. This is the same method the calculator above uses — the one employers and the Ministry of Human Resources apply.
- Start from your last wage. Use your final monthly wage: basic salary plus fixed allowances (housing above all, whether paid in cash or in kind). This is the Article 84 basis — not basic salary alone.
- Find your daily wage. Daily wage = monthly wage ÷ 30.
- Count the first five years at half a month. Each of the first five years earns 15 days' wage: 15 × daily wage × years.
- Count later years at one full month. From the sixth year on, each year earns 30 days' wage.
- Prorate any part-year. An incomplete final year is paid in proportion to the days worked, at that year's rate, after removing any unpaid-leave days.
- Apply the Article 85 reduction only if you resigned. Multiply the full award by the Article 85 fraction for your length of service. Termination and contract expiry are always paid in full, and there is no cap.
| Service period | Award per year |
|---|---|
| First 1–5 years | ½ month's wage (15 days) |
| 6th year onward | 1 month's wage (30 days) |
| Maximum | None |
The two things people most often get wrong: the wage base is your last wage including fixed allowances (unlike the UAE, which uses basic salary only), and the amount changes sharply between termination and resignation. Everything else is arithmetic.
Worked examples
Each example below reconciles exactly with the calculator — enter the same figures to see the same result.
Example 1 — Terminated after 10 years (wage SAR 12,000)
- Daily wage = 12,000 ÷ 30 = SAR 400
- First 5 years: half a month × 5 = 2.5 months
- Next 5 years: one month × 5 = 5 months → total 7.5 months
- 7.5 × 12,000 = SAR 90,000, paid in full under Article 84.
Example 2 — Resigned after 4 years (wage SAR 9,000)
- Full award = half a month × 4 = 2 months = 2 × 9,000 = SAR 18,000
- Resignation at 2–5 years → one-third (⅓) under Article 85
- 18,000 × ⅓ = SAR 6,000
Had the employer ended the contract instead, the full SAR 18,000 would be due.
Example 3 — Resigned after 12 years (wage SAR 15,000)
- Daily wage = 15,000 ÷ 30 = SAR 500
- Full award = 2.5 months + 7 months = 9.5 months
- 9.5 × 15,000 = SAR 142,500
- Resignation at ten years or more → full award, no reduction.
Resignation vs termination: how much your award changes
This is the difference many calculators miss. Article 84 grants the full award on employer termination, mutual agreement, or expiry of a fixed-term contract. Resignation is reduced under Article 85 by length of service:
| Service at resignation | Award (Article 85) |
|---|---|
| Less than 2 years | No award |
| 2 to 5 years | One-third (⅓) |
| More than 5 and less than 10 years | Two-thirds (⅔) |
| 10 years or more | Full award |
Take someone who served 7 years on a SAR 10,000 wage. Their full award is 4.5 months = SAR 45,000:
- Employer termination → SAR 45,000 in full.
- Resignation → two-thirds (⅔) → SAR 30,000.
That is a SAR 15,000 difference from how the contract ended alone. So the ten-year mark matters if you are weighing resignation: at ten years, a resigning employee reaches the full award and draws level with termination.
Article 87: when resignation is still paid in full
Article 87 is an important exception that is rarely mentioned. The award stays full despite your resignation in specific cases:
- You leave because of force majeure beyond your control.
- A woman ends her contract within six months of marriage or three months of giving birth.
If one of these applies, use the full amount (Article 84), not the reduced resignation figure. Conversely, an employee lawfully dismissed for one of the serious reasons in Article 80 can lose entitlement.
Common mistakes to avoid
- Using basic salary only. Saudi calculates on the last wage including fixed allowances such as housing — leaving them out understates the result.
- Assuming resignation pays in full. Before ten years it is reduced to one-third or two-thirds under Article 85.
- Expecting a cap. There is no maximum in Saudi Arabia, unlike the UAE's two-year cap.
- Confusing Article 84 and 85. The first (termination/expiry) pays in full; the second (resignation) applies the reduction.
- Missing the higher rate after year five. Years 1–5 accrue half a month each; from year six the rate rises to a full month.
Frequently Asked Questions
How is end-of-service calculated in Saudi Arabia?
It is half a month's wage for each of the first five years of service and one full month's wage for each year after that, based on your last wage (basic salary plus fixed allowances), with no cap. On resignation it is reduced by the Article 85 tiers according to length of service — Saudi Labor Law (Royal Decree M/51), Articles 84–85.
Is Saudi end-of-service based on basic salary or full wage?
On your last wage, which is basic salary plus fixed allowances such as housing. Unlike the UAE, Saudi does not use basic salary alone.
How much end-of-service do you get on resignation in Saudi Arabia?
Less than 2 years pays nothing; 2 to 5 years pays one-third; more than 5 and less than 10 years pays two-thirds; and 10 years or more pays the full award — all under Article 85.
Is there a minimum service period to qualify?
For termination or contract expiry there is no minimum — the award accrues from day one (Article 84). Resignation is different: no award is due before two completed years (Article 85).
Is there a maximum end-of-service award in Saudi Arabia?
No. There is no cap on the award in Saudi Arabia, however long you served — unlike the two-year cap that applies in the UAE.
When is resignation still paid in full?
Under Article 87 the award stays full in cases of force majeure, and where a woman ends her contract within six months of marriage or three months of childbirth. It is also paid in full to any resigning employee who has completed ten years or more (Article 85).
Before you finalise your settlement
Calculating end-of-service in Saudi Arabia comes down to four things: your last wage, your daily wage, your years of service, and how the contract ended. Get those right and you can check your employer's figure to the riyal. When you are ready, enter your dates and wage in the Saudi end-of-service calculator for an instant breakdown.
Working elsewhere in the Gulf? The rules differ: see the UAE gratuity calculator (basic salary only, with a two-year cap) or the Kuwait indemnity calculator, or read how we verify our formulas.
Sources: Saudi Labor Law (Royal Decree M/51) — full text, Ministry of Human Resources and Social Development · MHRSD official end-of-service calculator. This guide is an estimate for guidance, not legal advice — confirm your final figure with your employer, Qiwa/the Ministry, or a qualified lawyer before acting.