Under Saudi Labor Law, end of service benefits are set by three articles working together. Article 84 fixes the rate at half a month's wage for each of the first five years and one full month's wage for every year after that, calculated on your last wage with no upper limit. Article 85 reduces that award if you resign, by how long you served. Article 87 restores it in full in a handful of specific situations. A fourth, Article 80, is the only lawful route to paying nothing at all.
This guide reads those articles clause by clause: who qualifies, what the statute means by "wage", when the award is cut, forfeited or restored, what your employer must do and by when. Run your own numbers first, then read on.
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Saudi Labor Law (Royal Decree M/51), Articles 84, 85 & 87
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What Articles 84 and 85 of Saudi Labor Law say
The two articles are short enough to read in full. This is the Ministry of Human Resources and Social Development's English translation; neither article was changed by the 2025 amendments, and where the English and Arabic differ, the Arabic text governs.
Article 84. Upon the end of the employment relation, the employer shall pay the worker an end-of-service award equivalent to the amount of a half-month wage for each of the first five years and a one-month wage for each of the following years. The end-of-service award shall be calculated on the basis of the last wage and the worker shall be entitled to an end-of-service award for the portions of the year in proportion to the time spent on the job.
In plain terms: whenever employment ends, the award is half a month's wage per year for years one to five and a full month per year after that, measured on your last wage, with part-years paid pro rata. Nothing in the article sets a minimum period or a cap.
Article 85. If the employment relation ends due to the worker's resignation, he shall, in this case, be entitled to one third of the award after service of not less than two consecutive years and not more than five years, to two thirds if his service is in excess of five consecutive years but less than 10 years, and to the full award if his service amounts to 10 years or more.
In plain terms: resignation keeps the Article 84 figure but pays a fraction of it. Under two years, nothing; two to five years, a third; over five and under ten, two-thirds; ten years or more, all of it. The worked figures below come from the Saudi end of service calculator, and the step-by-step guide has more worked examples of the end of service calculation.
Who qualifies for end-of-service benefits under Saudi Labor Law
Almost every private-sector employee does. The Labor Law covers Saudi nationals and expatriates alike, and there is no minimum service period when the employer ends the contract: Article 84 grants an award "for the fractions of a year in proportion to the time spent at work", so it starts accruing on day one. Eleven months of service earns eleven months' worth.
Five groups sit outside that, or lose the entitlement:
- Employees still in their probation period. If either side ends the contract during probation, no award is due. Probation can now run up to 180 days. Once you pass it, those days count as part of your continuous service.
- Employees dismissed under Article 80. This is the only route by which an employer can lawfully pay nothing after years of service, and it is narrow (see below).
- Domestic workers. They are covered by separate regulations, not the general Labor Law provisions used here or by the calculator above.
- Civil servants and military personnel. They have their own civil-service and military retirement systems. Workers that government bodies hire on labour contracts are covered by the Labor Law (Article 5), and so are private-school teachers.
- Anyone resigning with under two completed years. The award exists, but Article 85 reduces it to zero. Termination at the same point still pays.
One point that confuses a lot of Saudi nationals: GOSI is not your gratuity. Social insurance contributions and any future pension are a separate system that runs alongside end-of-service, not instead of it. Expatriates are not in the GOSI pension branch at all, which is exactly why the statutory gratuity matters so much to them.
The entitlement matrix: how your contract ends decides your amount
Length of service sets the size of the pot. How the contract ends decides how much of that pot you actually receive. Put both together and every case falls into one of these rows:
| How employment ended | Under 2 years | 2 to 5 years | Over 5, under 10 | 10 years or more |
|---|---|---|---|---|
| Employer terminates (no Article 80 cause) | Full | Full | Full | Full |
| Fixed-term contract expires | Full | Full | Full | Full |
| Mutual agreement | Full | Full | Full | Full |
| You resign | Nothing | One-third (⅓) | Two-thirds (⅔) | Full |
| Resignation under Article 87 | Full | Full | Full | Full |
| Dismissal under Article 80 | Nothing | Nothing | Nothing | Nothing |
| Ends during probation | Nothing | n/a | n/a | n/a |
Three articles produce that whole grid. Article 84 sets the rates and gives you the full award whenever the ending is not your own choice. Article 85 applies the resignation fractions. Article 87 overrides Article 85 in two cases: leaving because of force majeure beyond your control, and a female employee ending her contract within six months of marriage or three months of giving birth.
The calculator above applies Articles 84 and 85. For an Article 87 case there is no separate setting: your entitlement is the full Article 84 figure, so select employer termination to see it.
What Saudi Labor Law counts as your "wage"
This is where Saudi Arabia differs sharply from the UAE, where most under-payments start, and where the Arabic and English web openly contradict itself. Saudi gratuity is calculated on your last actual wage (الأجر الفعلي): basic salary plus every fixed allowance you receive regularly. A housing allowance counts, whether it is paid in cash or provided in kind; Article 2 values a benefit in kind at up to two months' basic wage a year, unless your contract sets a higher figure. A fixed transport allowance counts. Commission and sales percentages are part of the actual wage too, but Article 86 lets the contract exclude them from the end-of-service base, so check yours. What does not count is a genuinely discretionary payment, such as a one-off gift that is neither in your contract nor paid regularly enough to be treated as wage.
You will find well-known HR and payroll blogs stating the opposite, that the award is computed on basic salary alone and excludes housing and transport. The statute settles it in two steps. Article 2 defines two distinct terms: the basic wage (الأجر الأساسي) and the actual wage (الأجر الفعلي), the latter being the basic wage plus all other due increases and allowances. Article 84 then says the award is calculated on «الأجر الأخير», the last wage, without narrowing it to the basic wage, so the broader definition governs. Where the law wants the basic wage, it says so.
The decisive check is one nobody quotes: the Ministry's own end-of-service calculator asks you for الأجر الفعلي, the actual wage, not the basic wage. If the government tool that adjudicates the entitlement takes allowances into account, a settlement sheet computed on basic salary alone is short.
The gap is not small. Take a package of SAR 12,000 built the way many Saudi contracts are:
| Component | Monthly | In the gratuity base? |
|---|---|---|
| Basic salary | SAR 9,000 | Yes |
| Housing allowance | SAR 2,250 | Yes |
| Transport allowance | SAR 750 | Yes |
| Discretionary bonus | varies | No |
| Wage base | SAR 12,000 |
After four completed years, terminated by the employer, the award is 60 days' pay:
- On the correct base of SAR 12,000: daily wage 400, so 60 × 400 = SAR 24,000
- On basic salary alone: daily wage 300, so 60 × 300 = SAR 18,000
That is SAR 6,000 lost on a single, easily-missed input, and the error scales with every extra year you serve. If your employer's settlement sheet shows a "basic salary" line as the calculation base, that is the first thing to query.
The ten-year line: what resigning a year early costs
Everyone knows resignation is reduced. Far fewer people have priced the jump between the tiers, and the ⅔-to-full step at ten years is the largest cliff edge in Saudi employment law.
Take an employee on a wage of SAR 14,000 who is thinking about resigning during their tenth year:
| Resigning after… | Full award earned | Article 85 fraction | Actually paid |
|---|---|---|---|
| 9 completed years | 6.5 months = SAR 91,000 | Two-thirds | SAR 60,666.67 |
| 10 completed years | 7.5 months = SAR 105,000 | Full | SAR 105,000 |
One more year of service is worth SAR 44,333 here, an increase of roughly 73%. Part of it is the extra year of accrual at the full-month rate; the larger part is crossing from the two-thirds tier to full entitlement.
The practical takeaway is not "never resign". It is that if you are inside the last few months before a tier boundary, the timing of your last working day is a financial decision, not an administrative one. The same logic applies at the two-year line, where an award of nothing becomes an award of one-third.
When gratuity is reduced, forfeited, or restored
Three different mechanisms are often lumped together as "losing your gratuity". They are not the same thing.
Reduced (Article 85). Resignation, and only resignation, triggers the fractions in the matrix above. Nothing else in ordinary employment reduces the award. There is no cap, no deduction for taking annual leave, and no penalty for having changed roles internally.
Forfeited (Article 80). An employer may dismiss without award, notice, or compensation only for one of the serious grounds listed in Article 80: assault on the employer or a colleague, serious failure to perform core obligations or to follow lawful instructions, proven dishonesty or forgery, deliberate material damage, unexcused absence of more than 30 days in a year or more than 15 consecutive days, and similar misconduct. Two safeguards matter here. The employer must give you the opportunity to state your case before the decision is finalised, and in a dispute the burden of proving the Article 80 ground rests with the employer, not with you. "Dismissed for poor performance" is not, by itself, an Article 80 case.
Article 87: when the full award comes back
Article 87. As an exception to the provisions of Article 85 of this Law, the worker shall be entitled to the full end-of-service award if he leaves the work due to a force majeure beyond his control. A female worker shall likewise be entitled to the full award if she ends her contract within six months from the date of her marriage or three months from the date of giving birth.
Restored (Article 87). Even though you ended the contract, the full award is due if you left because of force majeure beyond your control, or if you are a woman who ended her contract within six months of marriage or three months of childbirth.
That last one is worth a number, because it is routinely paid at the resignation rate by employers who have never read the article. An employee with 6 completed years on a wage of SAR 11,000 has earned 3.5 months, or SAR 38,500:
- Treated as an ordinary resignation: two-thirds → SAR 25,666.67
- Treated correctly under Article 87: SAR 38,500
A difference of SAR 12,833 turning on a single provision. If it applies to you, cite Article 87 by number in writing when you query the settlement.
What changed in February 2025, and why it can move your tier
Articles 84, 85 and 87 themselves were not amended by the package of Labor Law changes that came into force in February 2025. The rates, the tiers and the exceptions are unchanged. What changed is the machinery around when a resignation actually takes effect, and because your award depends on completed years of service, that machinery can decide which tier you land in.
| Rule | Before Feb 2025 | Now |
|---|---|---|
| Resignation from a fixed-term contract | Not expressly regulated | Expressly recognised; a written, voluntary declaration by the employee |
| How it is submitted | Practice varied by employer | Submitted in writing, in practice through the Qiwa platform |
| Employer response | Informal | May accept, reject, or postpone acceptance |
| Silence from the employer | Unclear | Deemed accepted after 30 days |
| Postponement | Not provided for | Up to 60 days, with written reasons given before the 30 days expire |
| Withdrawing a resignation | Unclear | Allowed within 7 days, if not yet accepted |
| Probation period | 90 days, extendable to 180 by agreement | A single period of up to 180 days |
| Non-Saudi contract with no stated term | Tied to work permit duration | Treated as one year, renewable |
The consequence for gratuity is straightforward once you see it. Your service period runs to your actual last working day, not to the date you handed in a letter. If your employer postpones acceptance, your service keeps running, and an employee who submits a resignation at 9 years and 10 months may well leave with ten completed years and full entitlement instead of two-thirds. Equally, withdrawing within the seven-day window and staying is sometimes worth far more than the notice period you were trying to save.
Two practical notes. Employees on indefinite contracts, typically Saudi nationals, now give 30 days' notice while the employer gives 60. And a resignation submitted and accepted is a resignation for Article 85 purposes, even if your employer later frames it as "mutual".
Employer obligations and what to do if you are underpaid
The law puts a clock on payment. Under Article 88, if the employer ends the contract, all your dues must be settled within one week of the employment ending. If you resigned, the employer has two weeks. Gratuity is only one line of that settlement; unused annual leave and, where applicable, notice pay are separate entitlements, and you can estimate them with the Saudi leave salary calculator and the Saudi notice period calculator.
If the number is wrong or the money does not arrive, the escalation path is free and well-defined:
- Query it in writing, citing the specific article: 84 for the rate and the wage base, 85 for the fraction applied, 87 if an exception applies to you.
- Check your GOSI record. It shows the salary your employer registered and your official employment dates. If the registered wage is lower than what you were actually paid, fix that discrepancy while you are still employed, because it becomes your evidence later.
- File through Qiwa / the Ministry of Human Resources and Social Development. Labour disputes go to an amicable settlement stage before any court hearing, and there is no filing fee.
- Mind the deadline. Under Article 234 (the rule used to sit in Article 222, which is now repealed), labour courts will not hear a claim brought more than twelve months after the employment relationship ended, unless you can show an acceptable excuse or the employer acknowledges the debt. This is the single most common way a valid gratuity claim dies.
Five checks before you sign the final settlement
Signing a clearance form can be treated as accepting the figure, so run these first:
- The wage base, not just the basic salary. Confirm every fixed allowance is in it.
- The end reason on the paperwork. "Resignation" and "contract expiry" produce very different numbers, and expiry of a fixed-term contract at its agreed end date is not resignation.
- Your service dates. Unpaid leave of up to 20 days in a work year still counts as service (Articles 2 and 116); only the days beyond that come off.
- The tier applied. Check the fraction on the settlement sheet against your completed years.
- Whether Article 87 applies to you before you accept a reduced resignation figure.
Frequently Asked Questions
What does Saudi Labor Law say about end of service pay?
Four articles govern it. Article 84 sets the rate: half a month's wage for each of the first five years, one month's wage for each year after, on the last wage, prorated for part-years and with no cap. Article 85 reduces the award on resignation to nothing under two years, one-third from two to five, two-thirds from over five to under ten, and the full amount at ten years or more. Article 87 pays the full award despite resignation for force majeure, or where a woman leaves within six months of marriage or three months of childbirth. Article 80 is the only lawful basis for paying nothing, and the employer must prove it.
Who is entitled to end-of-service gratuity in Saudi Arabia?
Every private-sector employee under the Saudi Labor Law, Saudi or expatriate. There is no minimum service period when the employer ends the contract or it expires, because Article 84 prorates the award for fractions of a year. The exceptions are employees whose contract ends during probation, employees lawfully dismissed under Article 80, domestic workers (covered by separate regulations), and anyone resigning with less than two completed years.
Is Saudi gratuity based on basic salary or total salary?
On your last actual wage (الأجر الفعلي), which is basic salary plus fixed allowances such as housing and transport, whether paid in cash or provided in kind. Commission is part of the actual wage too, unless your contract excludes it under Article 86; a genuinely discretionary payment is not. Some payroll blogs state that only basic salary counts, but Article 2 of the Labor Law defines the actual wage as the basic wage plus all other due allowances, Article 84 calculates the award on the last wage without narrowing it to basic, and the Ministry's own official calculator asks for the actual wage. Using basic salary alone is the most common cause of underpayment.
Can my employer refuse to pay my end-of-service gratuity?
Only through a lawful dismissal under Article 80, which lists specific serious grounds such as assault, proven dishonesty, deliberate damage, or unexcused absence beyond 30 days in a year or 15 consecutive days. The employer must let you state your case first and must prove the ground in a dispute. Refusing simply because you resigned is not lawful; resignation reduces the award under Article 85, it does not cancel it after two years.
How long does my employer have to pay it?
Article 88 gives the employer one week from the end of employment if the employer terminated the contract, and two weeks if you resigned. If the deadline passes, you can raise a free complaint through Qiwa or the Ministry of Human Resources and Social Development.
Did the 2025 Saudi labour law amendments change end-of-service gratuity?
No. Articles 84, 85 and 87 were not amended, so the rates, the resignation tiers and the exceptions are unchanged. The amendments in force since February 2025 changed the surrounding rules: resignation is now a formal written process with employer acceptance, deemed accepted after 30 days and postponable by up to 60, withdrawable within 7 days, alongside a single 180-day probation period. These affect your last working day, and therefore your completed years of service.
How long do I have to claim unpaid gratuity in Saudi Arabia?
Twelve months from the date the employment relationship ended. Under Article 234 (the rule used to sit in Article 222, now repealed), labour courts will not hear a claim after that unless you present an excuse the court accepts or the employer acknowledges the debt.
Does GOSI replace end-of-service gratuity?
No. GOSI social insurance is a separate system that runs alongside the Labor Law entitlement, and it applies to Saudi nationals. Your gratuity under Articles 84 and 85 is owed by your employer regardless. Your GOSI record is still useful, because it evidences your registered wage and employment dates.
Check your own entitlement
Saudi end-of-service gratuity rewards the fine print: the wage base you were paid on, the exact reason recorded for leaving, and the number of completed years on your last working day. Get those three right and the arithmetic is fixed. Enter your dates and wage in the Saudi end-of-service calculator for a full breakdown, or work through the formula line by line in our step-by-step calculation guide.
Moving elsewhere in the Gulf? The entitlement rules change completely: the UAE gratuity calculator uses basic salary only and caps the total at two years' pay, while Kuwait runs its own resignation tiers and an 18-month ceiling. You can also read how we verify every formula.
Sources: Saudi Labor Law (Royal Decree M/51), consolidated Arabic text as amended to 1446 AH, Ministry of Human Resources and Social Development · MHRSD official end-of-service calculator. This guide is an estimate for general guidance, not legal advice. Confirm your figure with your employer, Qiwa/MHRSD, or a qualified lawyer before acting.