End-of-service benefit is money your employer owes you when your contract ends in Saudi Arabia. It is a legal right under the Saudi Labour Law, not a bonus, and it grows with every year you work. Yet many employees only discover how much they are entitled to on the day they leave — and by then it is harder to check the figure. This guide explains how to calculate end of service in Saudi Arabia in plain terms, walks through the exact formula, shows worked examples for both termination and resignation, and tells you what to do if the payment never arrives.
Your end of service benefits under Saudi labor law (Articles 84–85) are a legal entitlement, calculated on your agreed wage rather than a discretionary bonus.
The rules come from the Saudi Labour Law, Articles 84 and 85, administered by the Ministry of Human Resources and Social Development (HRSD) through the Qiwa platform. The official reference is hrsd.gov.sa. Everything below follows those statutory rules.
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How to calculate end of service in Saudi Arabia
The Saudi end of service calculation uses a two-tier formula based on the length of your continuous service. Under Article 84, the award accrues at two different rates:
For the first five years of service, you earn half a month's wage for each year. For every year beyond five, you earn a full month's wage for each year. Partial years are paid pro-rata, so a period of six months counts as half a year and thirty extra days count as a fraction of that year's entitlement.
| Years of service | Accrual rate per year |
|---|---|
| First 5 years | ½ month's wage per year |
| Each year after 5 years | 1 full month's wage per year |
| Partial years | Pro-rata, based on days worked |
To work out a partial year, take the monthly rate for that tier, divide by twelve to get a monthly value, and multiply by the number of completed months. Because the accrual rate doubles after year five, the same year of work is worth twice as much once you cross that threshold — which is why long-tenured employees see their award grow quickly.
Worked examples: termination by the employer
When the employer ends the contract, you receive the full award with no reduction. Take an employee on a basic salary of SAR 10,000 per month. Here is how the figure changes with tenure.
| Service length | Calculation | Award |
|---|---|---|
| 5 years | 5 × ½ month = 5 × 5,000 | SAR 25,000 |
| 10 years | (5 × ½) + (5 × 1) = 25,000 + 50,000 | SAR 75,000 |
Notice the jump. The first five years produce SAR 25,000, but the second five years produce SAR 50,000 — double the rate. Because there is no personal income tax in Saudi Arabia, the award is paid in full and is not reduced by income tax. The figure you calculate is the figure that should land in your account.
How resignation changes the award
If you resign rather than being terminated, Article 85 reduces the award according to your total length of service. You first work out the full award using the standard formula, then apply the resignation fraction below.
| Total service | Share of full award |
|---|---|
| Under 2 years | Nothing |
| 2 to under 5 years | One-third |
| 5 to under 10 years | Two-thirds |
| 10 years or more | Full award |
Take the same SAR 10,000 employee who resigns after 6 years. The full award is (5 × ½) + (1 × 1) = 25,000 + 10,000 = SAR 35,000. Because six years falls in the "5 to under 10 years" band, you keep two-thirds: 35,000 × ⅔ = SAR 23,333. The same person, if terminated at six years, would receive the full SAR 35,000 — so the reason your contract ends matters a great deal. Our guide on resignation versus termination covers the edge cases, including resignations that are treated as terminations under the law.
Which salary the award is based on
This is where most disputes begin. The award accrues on the agreed wage. For most private-sector contracts, the agreed wage means your basic salary, excluding housing and transport allowances — unless your contract explicitly defines the wage to include those allowances.
The difference is large. If your basic salary is SAR 10,000 but your total package with allowances is SAR 15,000, calculating on the wrong base could overstate or understate your award by fifty percent. Always read your contract's definition of "wage" before relying on any number. We explain how to identify the correct figure in basic or gross salary for end of service. When in doubt, use the Saudi end-of-service calculator and enter both figures to see the range.
Why the base salary matters so much
Because the award multiplies your monthly wage by many years, a small error in the base is amplified across your whole service. Confirm the base first, then apply the accrual formula — never the other way around.
If your award is unpaid
The end-of-service award is legally due when your contract ends. If your employer does not pay, or pays less than the correct amount, you have a clear route to recover it. Start with an amicable settlement request through HRSD / Qiwa, which attempts to resolve the dispute quickly and free of charge. If that fails, the matter escalates to the Labour Courts.
Whichever route you take, evidence decides the outcome. Keep your employment contract, your payslips (which prove the wage the award should be based on), and your termination or resignation letter (which proves how the contract ended and therefore whether any resignation reduction applies). Calculate your expected figure in advance so you know exactly what you are claiming before you file.