Detailed Explanation of End of Service Calculation under Saudi Labor Law
The End of Service Award is governed by Chapter Four of the Saudi Labor Law (Articles 84, 85, 86, 87, and 88). It represents a deferred statutory compensation payable by the employer upon conclusion of employment.
Statutory Basis: Article 84
For each year of the first five Years, the worker receives half a month's wage. For each subsequent year, the worker receives a full month's wage. The wage used is the "actual wage" as defined by Article 2, which includes basic salary and all regular contractual allowances (housing allowance, transportation allowance, and fixed periodic bonuses).
Resignation Scenarios: Article 85
In case of voluntary resignation, entitlement tiers apply:
- Service under 2 Years: 0% entitlement.
- Service 2 to 5 Years: 33.33% (one-third) of the award.
- Service 5 to 10 Years: 66.66% (two-thirds) of the award.
- Service 10 Years or more: 100% full statutory award.
Exemptions under Article 87
A worker receives 100% full gratuity even upon resignation if leaving work due to force majeure, or in the case of a female employee resigning within six months of marriage or within three months of giving birth.
Frequently Asked Questions
Yes. Article 2 and Article 84 specify that the calculation must be based on the actual wage, which encompasses basic salary, housing allowance, transportation allowance, and any fixed regular stipends.
The employer may only deduct documented debts or authorized advances up to statutory limits, provided there is written agreement or official judicial ruling.
Under Article 88, if the employer terminates the contract, the award must be paid immediately within one week. If the worker resigns, the employer must settle all dues within two weeks.