Quick answer
Under Articles 84–87 of the Saudi Labor Law (Royal Decree No. M/51, 2005, as amended), the end of service benefit KSA formula is half a month's wage for each of the first five years of service and a full month's wage for each year beyond that. The base is your last wage, including fixed allowances like housing and transport. If you resign before two years, you get nothing. Between two and five years, you get one-third of the benefit. Between five and ten, two-thirds. After ten years of resignation, or any termination not for cause, the full amount.
What counts as "wage" for the calculation
This is where people slip up. Your end of service benefit isn't calculated on basic salary alone.
Article 2 of the Labor Law defines wage as the basic pay plus any allowance paid regularly against the work. That means housing allowance, transport allowance, and any fixed monthly supplements. Commissions and percentage-based pay also count if they're a steady part of your income — see Article 86 specifically for how variable pay feeds into the end-of-service average.
What doesn't count: one-off bonuses, overtime, reimbursed expenses, and most performance incentives that aren't contractually guaranteed.
So if your contract shows SAR 8,000 basic + SAR 2,000 housing + SAR 500 transport, your calculation base is SAR 10,500 — not SAR 8,000. Employers who try to peg the benefit to basic salary only are quietly wrong. Push back.
Watch out: Some employers restructure contracts late in your tenure to reduce "basic" and inflate "variable" components. The end of service benefit is based on your last wage, so this trick does hurt you. If it happened in the last year or two, raise it with the Labour Office.
The formula, with real numbers
Let's say your final total wage is SAR 15,000/month and you worked 8 full years. Here's how the end of service benefit KSA calculation runs:
- First 5 years: 5 × (½ × 15,000) = SAR 37,500
- Next 3 years: 3 × (1 × 15,000) = SAR 45,000
- Total gratuity: SAR 82,500
For partial years, the benefit is prorated. Seven years and four months of service? You'd get the full seven-year calculation plus 4/12 of the eighth year's entitlement.
A quick sanity check: if someone tells you the maximum is capped, they're wrong. Saudi labor law does not cap the end of service benefit the way some Gulf states do.
Resignation vs termination — the numbers change
This is the part that stings when people get it wrong.
If the employer terminates you (and it's not for a Article 80 cause — things like forgery, assault, or unexcused absence), you get the full benefit no matter how long you served.
If you resign, Article 85 scales it:
- Less than 2 years: nothing
- 2 to under 5 years: one-third of the benefit
- 5 to under 10 years: two-thirds
- 10 years or more: the full amount
So on that SAR 82,500 example above — if you resigned at 8 years, you'd actually receive SAR 55,000 (two-thirds). Resign at 9 years and 11 months and you still only get two-thirds. One more month and it jumps to the full SAR 82,500 plus the extra month of accrual. Timing matters.
Exceptions where resignation still pays full: force majeure, the employer breaching the contract, or — critically for women — resignation within six months of marriage or three months of childbirth (Article 87). Fixed-term contracts that end naturally also pay full benefit under Article 84.
What else should land in your final settlement
The gratuity isn't the only thing you're owed. Your end-of-service package should include:
- Unpaid salary through your last working day.
- Accrued annual leave paid out in cash — minimum 21 days per year under Article 109, rising to 30 days after five years.
- Return ticket to your home country for expats, unless you're joining another employer in KSA (Article 40).
- Any contractual bonuses or commissions earned but not yet paid.
- GOSI contributions, which have been accruing in your name — these are separate from the gratuity and belong to the General Organization for Social Insurance, not your employer.
Payment deadline: within one week of contract end if the employer terminated you, within two weeks if you resigned (Article 88). After that, you can file a wage claim.
Key timeline: You have 12 months from the end of the contract to file a labor claim (Article 222). Miss it and the claim dies. Don't sit on this.
When the employer refuses to pay — or lowballs you
First step: write to HR with your calculation. Keep it in email so there's a paper trail. Reference the specific articles — 84, 85, 86 — and attach your contract and last three payslips.
If that fails, file a complaint through the Ministry of Human Resources and Social Development via the Musaned or Qiwa platform, depending on your sector. Labor dispute cases first go to the Amicable Settlement stage (around 21 working days). If no agreement, the matter moves to the Labor Court, which has exclusive jurisdiction over employment disputes under the Labor Courts Law (Royal Decree M/26, 2020).
Court filings are free for workers. You don't need a lawyer to file, though for larger claims (over SAR 100,000, say) it helps to have one review the pleadings.
A note on exit visas and final clearance: your employer must process your end-of-service through Qiwa and release you on the GOSI system before you can transfer sponsorship or exit. If they're holding this up as leverage over the gratuity, that itself is a labor violation. Report it.
For more on related workplace rights, see our overview at /answers/employment.
Common mistakes that cost you money
- Signing a final settlement before checking the math. Once you sign a receipt acknowledging full payment, clawing back the difference is painful. Calculate first, sign second.
- Assuming the HR calculator is correct. It often isn't. Run the numbers yourself or use an independent end of service benefit KSA calculator.
- Forgetting fixed allowances. Housing and transport allowances are part of the base. Full stop.
- Resigning one month before a service milestone. If you're at 4 years and 10 months, hold on two more months and your entitlement jumps from one-third to two-thirds. The math on waiting is usually worth it.
- Not getting the resignation reason in writing. If you're resigning because the employer breached the contract (unpaid wages, unsafe conditions, assault), document it. That turns a resignation into a constructive termination under Article 81 — and you keep the full benefit.
Is a few weeks of patience worth tens of thousands of riyals? Usually, yes.
Sources
[1] Saudi Labor Law, Royal Decree No. M/51 of 23/8/1426H (2005), as amended — Articles 2, 40, 80, 81, 84, 85, 86, 87, 88, 109, 222. Ministry of Human Resources and Social Development.
[2] Labor Courts Law, Royal Decree No. M/26 of 15/5/1442H (2020).
[3] Ministry of Human Resources and Social Development — Qiwa platform guidance on end-of-service processing.
[4] General Organization for Social Insurance (GOSI) — contributor benefits and separation procedures.
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