HR and payroll

How is the end-of-service award calculated in Saudi Arabia?

By Mahmoud SaiedLast updated 27 October 20262 min read

The short answer

Under Article 84 of the Saudi Labor Law, an employee earns half a month's wage for each of the first five years of service. Each year after that earns a full month's wage, based on the last wage. On resignation, Article 85 grants a share of the award that depends on length of service.

Step by step

  1. 1

    Calculate length of service

    In years, months and days, because part years count pro rata.

  2. 2

    The first five years

    Half a month's wage for each year.

  3. 3

    After five years

    A full month's wage for each additional year.

  4. 4

    On resignation under Article 85

    Nothing if service is under two years, one third of the award from two to five years, two thirds above five and under ten years, and the full award from ten years on.

  5. 5

    When the employer ends the contract

    The employee is entitled to the full award under Article 84, except in the cases of lawful dismissal that the law specifies.

A common mistake

Check what the employee's contract and the company's regulations count as the wage for this calculation, because that is the biggest source of difference between one calculation and another.

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