Leaving a job in Riyadh, Jeddah or Dammam? Before you sign your final settlement, it pays to do your own Saudi end of service calculation. The end-of-service award (often called gratuity) is usually the largest single payment an expat worker receives in the Kingdom, and small mistakes, such as using basic pay instead of the full wage, or the wrong resignation fraction, can cost you thousands of riyals.
This guide sets out the formula, the wage it uses, how resignation changes the amount, when no award is due, and four worked examples in Saudi riyals (SAR). It is based on the Ministry of Human Resources and Social Development (HRSD) workers' guide and the Embassy of India's labour-law summary, opened on 9 November 2026. Our Saudi labour law basics guide covers your wider rights.
Please note: this article is general information, not professional legal or insurance advice. Rules change, so check the official sources linked below or speak to a qualified professional before you decide. Read our disclaimer.
Table of contents
- The Saudi end of service calculation formula
- Which wage counts in a Saudi end of service calculation?
- Resignation and your Saudi end of service calculation
- Saudi end of service calculation: 4 worked examples
- When no end-of-service award is due
- End-of-service award vs compensation for unfair termination
- When must it be paid, and what if it is not?
- Sources
- FAQ
The Saudi end of service calculation formula
Article 84 of the Saudi Labor Law, as summarised in HRSD's guide, sets the basic award when the employment relationship ends:
- First five years: half a month's wage for each year of service.
- Each year after the fifth: a full month's wage for each year.
- Part years count in proportion to the time worked, and all consecutive years with the employer are included.
As a formula: award = (0.5 × monthly wage × years up to 5) + (1 × monthly wage × years above 5). HRSD's guide stresses that the award is calculated on the last wage the worker received before the contract ended, not an average.
Which wage counts in a Saudi end of service calculation?
This is where many expats lose money. Article 84 says "last wage", and the Labor Law's definitions (Article 2) state that "wage" means the actual wage: the basic wage plus the other increases due under the contract or work regulations, such as allowances. Kawkaba, a Saudi law firm that quotes the Bureau of Experts text, explains that the award therefore runs on the actual wage rather than the basic salary field alone.
HRSD's guide shows how the terms differ in its overtime example: basic wage SAR 4,000, actual wage (basic plus allowances and bonuses) SAR 6,000. One exception: Article 86 lets the parties agree that commissions, sales percentages and similar variable pay are left out of the award basis, so check your contract if you earn commission. Which items count in your case depends on your contract and payroll records, so collect your contract, payslips and bank statements. If in doubt, work out both numbers, check them with the Ministry's End of Service Bonus Calculator (linked from HRSD's workers' guide) and HRSD's guide to calculating the end-of-service award, and ask your employer to explain the basis in writing.
Resignation and your Saudi end of service calculation
If you end the relationship by resigning, Article 85 reduces the award according to length of service. HRSD's guide sets it out as:
| Service when you resign | Share of the award you receive |
|---|---|
| Less than 2 years | Nothing (the resignation table starts at 2 years) |
| 2 to 5 years | One-third |
| More than 5 and less than 10 years | Two-thirds |
| 10 years or more | The full award |
These fractions apply only to resignation. As Kawkaba notes, the expiry of a fixed-term contract, termination by the employer or an agreed ending does not attract the resignation percentages.
HRSD lists exceptions where the full award is due even though the worker ends the contract: leaving because of force majeure beyond your control, and a female worker ending her contract within six months of her marriage contract or within three months of giving birth.
The guide also explains the resignation process: a resignation is treated as accepted after 30 days if the employer does not respond, the employer may postpone acceptance by up to 60 days in writing for work reasons, and you may withdraw it within 7 days if it has not yet been accepted.
Saudi end of service calculation: 4 worked examples
These examples use made-up figures to show the method of a Saudi end of service calculation. "Wage" means the last monthly actual wage.
Example 1: contract ends after 3 years
Actual wage SAR 5,000 (basic 3,500 + housing 1,000 + transport 500). Award = 0.5 × 5,000 × 3 = SAR 7,500.
Example 2: employer ends the contract after 8 years 6 months
Wage SAR 8,000. First five years: 0.5 × 8,000 × 5 = SAR 20,000. Remaining 3.5 years: 8,000 × 3.5 = SAR 28,000. Total SAR 48,000.
Example 3: you resign after 4 years
Wage SAR 6,000. Full award = 0.5 × 6,000 × 4 = SAR 12,000. Resigning between 2 and 5 years gives one-third: SAR 4,000.
Example 4: you resign after 12 years
Wage SAR 10,000. First five years: 0.5 × 10,000 × 5 = SAR 25,000. Next seven years: 10,000 × 7 = SAR 70,000. With 10+ years you keep the full award: SAR 95,000.
Compare the method with our UAE gratuity calculation and Qatar gratuity calculation guides: the Saudi formula is more generous after year five, but resignation cuts it more sharply in the early years.
When no end-of-service award is due
Some situations reduce a Saudi end of service calculation to zero:
- Probation: HRSD's FAQ says a worker is not entitled to the award if the contract ends during the probation period.
- Article 80 dismissal: the employer may end the contract without award, notice or compensation only in the Article 80 cases, after hearing the worker's objections. HRSD lists examples such as assault, forgery, disclosing secrets, intentional damage, and absence of 30 days in a contract year or 15 consecutive days without valid reason (after a written warning).
- Resigning before 2 years, as shown above.
Separately, HRSD lists cases where you may leave without notice and keep your legal rights, for example if the employer fails to meet its obligations, assigns fundamentally different work, or subjects you to assault or degrading treatment. Keep evidence if you rely on one of these.
End-of-service award vs compensation for unfair termination
The award is not the same as compensation. If a contract is ended without a valid reason or without the notice period, and the contract does not set its own compensation, HRSD's guide says the harmed party receives 15 days' pay per year of service for an indefinite contract, or the wage for the remaining period of a fixed-term contract, with a minimum of two months' wages. This is paid in addition to any end-of-service award due.
When must it be paid, and what if it is not?
The Embassy of India's summary says the employer must settle wages and entitlements within one week of the end of the contract, or within two weeks if the worker ended it. The employer must also give you a free service certificate showing your joining date, end date, profession and last wage, and return any documents you deposited.
Keep a copy of your own Saudi end of service calculation when you sign the final settlement. If the money does not arrive, HRSD's guide recommends raising it internally first, then using the Ministry's amicable settlement through the Wady platform, and finally filing with the labour court through Najiz. Indian workers can also contact the Embassy of India in Riyadh. Planning your next move? Our sister blog explains the Saudi work visa process, and you can browse hotel jobs in Saudi Arabia on Hospitality Vacancy.
Sources
This guide was checked against these official and reputable sources on 9 November 2026:
- Ministry of Human Resources and Social Development (HRSD): Awareness guide on the rights and duties of employers and workers (PDF, Dec 2025)
- HRSD Knowledge Centre: Calculating end-of-service award
- Embassy of India, Riyadh: Saudi labour law - basic points
- Kawkaba Law Firm: Article 84 of the Saudi Labor Law - text and the wage used for the award
Photo: Riyadh Skyline by B.alotaby, CC BY-SA 4.0, via Wikimedia Commons (cropped).
FAQ: saudi end of service calculation
How is end of service calculated in Saudi Arabia?
Half a month's wage for each of the first five years and a full month's wage for each later year, based on the last wage, with part years counted in proportion (Labor Law Article 84, as summarised by HRSD).
Is the Saudi end of service award based on basic salary?
No. Article 84 uses the last wage, and Article 2 defines wage as the actual wage: basic pay plus increases due under the contract or work rules. Check your contract and the Ministry's end-of-service calculator.
How much end of service do I get if I resign in Saudi Arabia?
Nothing under 2 years, one-third for 2 to 5 years, two-thirds for more than 5 and under 10 years, and the full award at 10 years or more, according to HRSD's guide.
Do I get end of service if my contract ends during probation?
No. HRSD's guide says a worker is not entitled to the end-of-service award if the contract is terminated during the probation period.
How long does a Saudi employer have to pay my final settlement?
The Embassy of India's labour-law summary says within one week of the end of the contract, or two weeks if the worker ended it. If unpaid, use the Wady amicable settlement and then Najiz.
Where can I check my Saudi end of service calculation?
To check a Saudi end of service calculation, use the Ministry of Human Resources' End of Service Bonus Calculator, which its workers' guide links to, and compare the result with your contract, last payslip and the formula in this guide.
Read next
- Saudi labour law: 8 checks for Indian workers
- Qatar gratuity calculation: formula and 4 worked examples
- Unpaid salary complaint UAE: how to file with MOHRE
- More End of Service guides
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About the author: Sumit Manwal
Sumit Manwal is the founder of Hospitality Vacancy, the job site built for the hotel industry. He is passionate about helping hotel management students and hospitality professionals build successful careers, and connects talented people with hotel jobs across India, the Gulf and Europe. On Expat Insurance & Law he writes clear, practical insurance and legal-paperwork guides for NRIs and expat workers in the Gulf, US, UK, Canada and Australia, so every reader can make confident decisions about their work and life. He is not a legal or insurance professional, so every guide here links to official sources and he encourages readers to confirm details with a qualified expert before acting.
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