One of the most common misunderstandings about working in the Kingdom is that quitting your job wipes out your end-of-service benefit. It does not. The single most important thing to understand about resignation vs termination Saudi end of service is this: the underlying formula is exactly the same whether you resign or your employer lets you go. What changes is the percentage of that award you actually take home. When the employer ends the contract, you receive the full amount. When you resign, a sliding reduction applies based on how many years you have served — and past ten years, even that reduction disappears.
On termination, end of service in KSA is always paid in full, whereas resignation applies a sliding reduction based on your years of service.
This article walks through exactly how the reduction works, shows side-by-side worked examples so you can see the real riyal difference, and flags the special circumstances where a resigning employee still collects the full award. Everything here is grounded in Articles 84 and 85 of the Saudi Labour Law, administered by the Ministry of Human Resources and Social Development (HRSD) and processed through Qiwa.
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How the Saudi award changes: resignation vs termination
Start with the base calculation, because it never changes. The end-of-service award (gratuity) is built on your agreed wage — in practice usually the basic salary, excluding allowances such as housing or transport, unless your contract explicitly says otherwise. You earn half a month's wage for each of the first five years of service, and a full month's wage for every year beyond five. Partial years are paid pro-rata, so a worker with seven and a half years earns for the full seven and a half. If you want a step-by-step breakdown of that base math, see our detailed guide to end of service calculation in Saudi Arabia.
That figure — call it the full award — is what a terminated employee always receives. If your employer ends the contract (outside the narrow disciplinary grounds in Article 80), you are entitled to one hundred percent of it. Resignation is where the numbers diverge. Under Article 85, an employee who resigns receives only a fraction of the full award, and that fraction grows the longer you have stayed. This is the mechanism behind the Arabic phrase مكافأة نهاية الخدمة عند الاستقالة — the end-of-service benefit on resignation — which is calculated exactly the same way, then scaled down.
The resignation reduction scale
The reduction depends solely on your total length of continuous service. Here is the full scale that applies when you resign voluntarily:
| Total continuous service | Fraction of full award | What you receive |
|---|---|---|
| Under 2 years | Nothing (0) | No end-of-service award |
| 2 to under 5 years | One-third (⅓) | 33% of the full award |
| 5 to under 10 years | Two-thirds (⅔) | 67% of the full award |
| 10 years or more | Full award | 100% — same as termination |
Notice the two endpoints. Resign with less than two years behind you and you walk away with nothing. But cross the ten-year line and resignation and termination pay identically — the reduction has fully phased out. Everything in between is a partial haircut.
Worked examples: what the difference looks like in riyals
Abstract fractions are hard to feel, so let us put real numbers on them. Take an employee whose agreed (basic) wage is SAR 10,000 a month, and look at three service lengths. First we compute the full award using the base formula, then apply the resignation fraction from the table above.
At six years, the full award is five years at half a month (SAR 25,000) plus one year at a full month (SAR 10,000), totalling SAR 35,000. Terminated, you receive the whole SAR 35,000. Resigning puts you in the five-to-ten-year band, so you collect two-thirds — about SAR 23,333. That is a gap of roughly SAR 11,667 purely because of how the contract ended.
| Service length | Full award (base formula) | If terminated | If you resign | Resignation band |
|---|---|---|---|---|
| 3 years | SAR 15,000 | SAR 15,000 | SAR 5,000 | ⅓ (2–5 yrs) |
| 6 years | SAR 35,000 | SAR 35,000 | SAR 23,333 | ⅔ (5–10 yrs) |
| 12 years | SAR 95,000 | SAR 95,000 | SAR 95,000 | Full (≥10 yrs) |
The three-year case is the starkest: SAR 15,000 if terminated, but only SAR 5,000 if you resign — a two-thirds loss. The twelve-year case shows the opposite lesson. There the full award is five years at half a month (SAR 25,000) plus seven years at a full month (SAR 70,000), giving SAR 95,000 — and because you have passed ten years, you receive the entire SAR 95,000 whether you resign or are let go. At that point, the method of departure makes no financial difference at all. You can run these comparisons for your own wage and tenure on our Saudi end-of-service calculator.
Exceptions where resignation still pays in full
The reduction scale is the general rule, but it is not absolute. The law recognises that some departures, though technically initiated by the employee, should not be penalised. In certain circumstances a resigning employee receives the full award as if they had been terminated.
These generally include leaving because of a legitimate force-majeure reason recognised under the law, and specific protections for women — for example, a woman who leaves employment within a defined window after marriage or after childbirth may be treated as entitled to the full benefit. A fixed-term contract that simply reaches its natural expiry date is also different in character from a mid-term resignation, and is not subject to the resignation reduction in the same way. The exact conditions, time windows, and documentation for each of these are specific, so treat this as a signal to check your own situation rather than a checklist. If any of these might apply to you, confirm the details with HRSD or a qualified labour advisor before you submit your resignation — the timing and paperwork matter.
Practical tips: mind your service milestones
Because the resignation reduction is tied to hard service thresholds — two, five, and ten years — the single most valuable thing you can do is know exactly where you stand relative to the next milestone before you hand in your notice. The difference of a few weeks can move you into a higher band and materially change your payout.
If you are resigning at, say, four years and eleven months, waiting until you clear five full years lifts your fraction from one-third to two-thirds. Approaching ten years, the case for patience is even stronger, because at ten years your resignation award equals the full termination award — there is no penalty left to avoid. Check your official start date on Qiwa, count your continuous service accurately (including how partial years are treated), and model both scenarios before you commit. Calculate your gratuity using your real basic wage rather than your total package, since allowances are usually excluded unless your contract states otherwise.
Finally, keep your paperwork clean. Whether you resign or are terminated, your entitlement should be settled promptly on departure. If a dispute arises over the amount or the classification of your departure, the route is to raise it first through HRSD and Qiwa, and then, if unresolved, through the Labour Courts. Understanding the rule before you act is your best protection — and it is exactly why the resign-versus-terminate decision deserves a careful look at the numbers first.