How Saudi Arabia gratuity is calculated
Article 84: on expiry of the contract or termination by the employer, the worker receives half a month's wage for each of the first five years and one month's wage for each subsequent year, pro-rata for fractions, based on the last wage.
Article 85 reduces the award when the employee resigns from an open-ended contract:
| Service on resignation | Entitlement |
|---|---|
| Less than 2 years | Nothing |
| 2 to under 5 years | One-third of the award |
| 5 to under 10 years | Two-thirds of the award |
| 10 years or more | Full award |
Article 87: the full award is payable despite resignation when the worker leaves due to force majeure, or when a female worker resigns within six months of marriage or three months of giving birth. Article 81 resignations (employer breach) are also paid in full. Select “Resigned — exempt (Art. 81/87)” for these cases.
Wage in Saudi law means the actual wage — basic plus housing and any fixed, regular allowances — not basic alone.
Formula
Worked example
Wage SAR 12,000, 8 years, resigned: years 1–5 = 5 × 0.5 × 12,000 = 30,000; years 6–8 = 3 × 12,000 = 36,000; gross 66,000 × ⅔ (5–10 years) = SAR 44,000. If terminated: SAR 66,000.
Legal basis: Saudi Labour Law, Articles 84, 85 and 87.
Frequently asked questions
Is Saudi end of service calculated on basic salary?
No. Saudi law uses the "actual wage" — basic salary plus housing allowance and other fixed, regularly paid allowances. Variable commissions and one-off bonuses are generally excluded.
What do I get if I resign after 3 years in Saudi Arabia?
One-third of the full award. Example: wage SAR 10,000, 3 years → full award 3 × 5,000 = 15,000 → you receive SAR 5,000.
Do I get anything if I resign before 2 years?
No, unless you fall under Article 81 (employer breach) or Article 87 (force majeure, marriage, childbirth) — then you receive the full award.
Does a fixed-term contract change the calculation?
If a fixed-term contract ends naturally or the employer terminates it, you receive the full award. Resigning before the term ends is treated under Article 85 reductions.
Is there a cap on the Saudi end of service award?
No statutory cap.
Does the MHRSD online calculator give the same result?
Yes for the same inputs — this tool follows the same Article 84/85 logic. Differences usually come from which allowances you include in "wage".
Is end of service award subject to GOSI or tax?
No. It is not subject to GOSI contributions and Saudi Arabia has no personal income tax.