End-of-Service Benefits in Saudi Arabia: Calculation Guide with Examples 2026

Work eight years at a company and resign, then discover that your colleague — whose contract the company ended after the exact same period — walked away with SAR 55,000 while you got 36,000, on identical salaries. Nobody cheated you: that is Article 85 working exactly as written. The gap between those two numbers is the price of a decision made without knowing the formula. This guide gives you the full calculation with worked examples, riyal by riyal, so you know your number before you sign anything.

Key takeaways:

• The base rule (Article 84): half a month's wage per year for the first five years + a full month per year after that, computed on your last actual wage, not basic salary alone.
• Resignation reduces the award per Article 85: nothing before 2 years, one-third from 2–5 years, two-thirds from 5–10, and the full amount after 10 years.
• A fixed-term contract expiring, or termination by the employer = full award, no reduction.
• 5 fully worked examples + a ready table to measure your own case against.
• When the award is forfeited entirely (Article 80), and when you keep it in full despite resigning (Articles 81 and 87).
• The statutory payout window is one to two weeks (Article 88) — and how to claim if your employer stalls, before the 12-month deadline expires.

The base rule: Article 84

When the employment relationship ends — for any reason other than the excluded cases — the worker is owed an award calculated as follows:

• Half a month's wage for each of the first five years.
• A full month's wage for each year after the fifth.
• Fractions of a year count pro-rata: work seven and a half years and the half-year earns half that year's entitlement.
• The basis is your last wage at the end of the relationship — not an average, not your starting salary.

As a formula:

Full award = (years up to 5 × half monthly wage) + (years beyond 5 × monthly wage)

Which wage? Gross, not basic

The single most expensive mistake employees make: accepting a calculation based on "basic salary." Article 2 of the Labor Law defines wage as the actual wage — everything you regularly receive for your work, including:

• Basic salary.
• Housing allowance when paid regularly in cash.
• Regular transport allowance.
• Any other fixed contractual allowances.
• Commissions, averaged, for commission-based pay.

The difference in practice: an employee on 8,000 basic + 2,500 fixed allowances with 6 years of service (employer-initiated termination) gets 28,000 if computed on basic — and 36,750 computed correctly on 10,500. An 8,750-riyal difference for knowing one definition.

Resignation: the Article 85 table

If you are the one ending an open-ended contract, these fractions apply to the full award computed above:

Note the practical effect: an employee at the end of year nine loses a third of the award by resigning, but crossing into year ten earns it in full. If you are near a threshold (2, 5, or 10 years), the timing of your resignation is itself a financial decision.

5 worked examples

Example 1 — fixed-term contract expires, 3 years, wage 8,000:

3 × (8,000 ÷ 2) = SAR 12,000 in full — contract expiry is not a resignation.

Example 2 — employer terminates, 8 years, wage 10,000:

First five: 5 × 5,000 = 25,000. Next three: 3 × 10,000 = 30,000. Total = SAR 55,000 in full.

Example 3 — resignation after 4 years, wage 6,000:

Full award: 4 × 3,000 = 12,000. Your third: SAR 4,000.

Example 4 — resignation after 7 years, wage 12,000:

Full: (5 × 6,000) + (2 × 12,000) = 54,000. Your two-thirds: SAR 36,000.

Example 5 — fractions: employer terminates after 6.5 years, wage 10,000:

First five: 25,000. Year six: 10,000. Half of year seven: 5,000. Total = SAR 40,000.

When is the award forfeited entirely? (Article 80)

The contract may be terminated without award, notice, or compensation only in cases the law lists exhaustively, most notably:

• Assaulting the employer, manager, or a superior during or because of work.
• Failing essential obligations or disobeying lawful orders despite written warning.
• Proven misconduct or an act against honor or integrity.
• Forgery to obtain the job, or being within a written probation period.
• Unjustified absence exceeding 30 non-consecutive or 15 consecutive days a year, after written warning.
• Disclosing trade secrets or exploiting the position for personal gain.

Outside these cases, no internal policy or contract clause can cancel your award — the law overrides both.

Cases where you keep the full award despite leaving

• Leaving for lawful cause (Article 81): if the employer fails essential obligations, misrepresented the job's terms, assigns you fundamentally different work without consent, or commits assault or cruel treatment — you may leave without notice, keeping all rights including the full award.
• Force majeure (Article 87): leaving due to a force beyond your control = full award.
• Working women (Article 87): a female employee who ends her contract within 6 months of marriage or within 3 months of giving birth is owed the full award — an explicit exception many women never hear about, losing the gap between a third and the whole.

When must it be paid?

Article 88 sets precise deadlines:

• If the employer ended the contract: your wage and full settlement are due within one week.
• If you ended it: within two weeks at most.

There is no such thing as "after the budget closes" or "with next month's payroll" — delay is a statutory violation.

Employer stalling? Claim in this order

1. Demand in writing (formal email to HR) citing Articles 84 and 88 — a written demand dates your claim and moves most companies.
2. File with the labor office (amicable settlement) via the Widdi platform or Ministry of Human Resources branches — the settlement session is mandatory.
3. If settlement fails within 21 days, the case moves to the Labor Court via Najiz — workers' claims are exempt from fees.
4. Do not wait: labor claims are not heard after 12 months from the end of the employment relationship.

Keep copies of your contract, payslips, and the termination or resignation decision — that is your entire case file.

4 mistakes that cost thousands

1. Accepting a basic-salary calculation instead of the actual wage including fixed allowances.
2. Resigning weeks before a statutory threshold (2 / 5 / 10 years) without computing the difference.
3. Signing a final settlement for less, unchecked — a signed release is hard to challenge later.
4. Letting the claim pass 12 months, assuming the right never lapses.

Your end-of-service award is not a company favor — it is a statutory obligation with exact numbers. Compute it yourself with the examples above before any HR meeting, and negotiate from a number, not an impression. And since your strongest card at the end of one job is the next one: make sure your CV is ready for screening systems before you hand in that resignation, and read the full guide to your rights under Saudi labor law so no clause catches you off guard.