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Company Law & Governance

End-of-service calculator for Saudi Arabia

Short answer

Under the Saudi Labour Law, the end-of-service award is 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, based on the last wage. An employee who resigns receives nothing for less than two years' service, one third for two to five years, two thirds for five to ten years, and the full award after ten years.

The wage used for the award: basic wage plus allowances that form part of it under the contract and the law. If unsure, start with basic wage plus housing.

How did the employment end?

Enter a start date before the last working day, and a monthly wage.

Estimate only, based on Articles 84, 85, 87 and 80 of the Saudi Labour Law. The actual entitlement depends on the contract, the wage components and the facts. Payment is due within one week of the end of employment, or two weeks if the employee resigned.

How the award is calculated

  • Article 84: half a month's wage for each of the first five years, and one month's wage for each later year. Part-years count pro rata.
  • The calculation uses the last wage, including allowances that form part of the wage under the contract and the law.
  • Article 85: on resignation the award is reduced — none under 2 years, one third for 2–5 years, two thirds for 5–10 years, and the full award for 10 years or more.
  • Article 87: the full award is payable despite resignation for force majeure, or where a female employee ends the contract within six months of marriage or three months of childbirth.
  • Article 80: no award is payable where the employee is dismissed on one of the grounds listed in Article 80, after being given the chance to respond.
  • Article 88: the award is payable within one week of the end of employment, or two weeks if the employee resigned.

How resignation works after the 2025 amendments

Worked examples

Employer ends the contract after 7 years; last wage SAR 10,000
(5 × 5,000) + (2 × 10,000) = SAR 45,000
Employee resigns after 4 years; last wage SAR 8,000
4 × 4,000 = 16,000 × one third = SAR 5,333.33
Employee resigns after 12 years; last wage SAR 15,000
(5 × 7,500) + (7 × 15,000) = SAR 142,500, payable in full

Questions clients ask

Is end-of-service calculated on basic salary or total salary?
On the 'wage' as defined in the Labour Law, which can include allowances paid under the contract or work regulations, not only basic salary. The parties can agree to exclude some variable elements such as commissions. Check the contract and payroll records.
Did the 2025 Labour Law amendments change the end-of-service award?
The formula in Articles 84 to 88 was not changed by the amendments that took effect on 19 February 2025. The new resignation process does affect when employment ends, which fixes the length of service.
What if the employer does not pay?
The employee can file a complaint with the Ministry of Human Resources and Social Development, which starts with amicable settlement and may be referred to the labour court. Claims should generally be brought within 12 months of the end of employment.

Official sources

Laws change. We cite the official text so you can check the current version.

A question about your company, a contract or a dispute?

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