The Saudi end-of-service award explained: the formula, the resignation thresholds and which wage counts

The short version

When a private-sector job ends, Saudi Labour Law owes you an end-of-service award. It is half a month's wage for each of your first five years and a full month's wage for each year after, all worked out on your last wage (Article 84). How the job ends then decides how much of that you receive: all of it, part of it, or nothing.

Run your own numbers: the end-of-service calculator applies Articles 84, 85 and 87 to your wage, your dates and how the job ended. It uses the same rules as this page.

This page was checked on 10 October 2026 against the consolidated Labour Law published by the Bureau of Experts, including the amendments made by Royal Decree M/44, in force since 1446/8/20 AH (19 February 2025). Those amendments changed resignation and probation but left Articles 84 to 88 as they were. The law has been amended several times since 2005, so check article numbers against the current text before relying on them in a dispute.

How the award is calculated

• First five years: half a month's wage for each year.
• Each year after five: a full month's wage for each year.
• Part-years count in proportion to the time you worked.
• The basis is your last wage, applied to every year of service. A raise in your final year raises the award for your whole time with that employer, and a pay cut just before you leave lowers it.

Three rules decide how long your service is:

• Renewals don't reset the clock. Under Article 56, a renewal for a fixed term counts as an extension of the original period for any right that depends on length of service. A run of one-year contracts with the same employer counts as one length of service.
• Service has to be continuous. Article 2 defines continuous service as unbroken service with the same employer or its legal successor. Statutory leave and holidays do not break it, and nor do unpaid absences totalling up to twenty days in a work year.
• Check the calendar. Under Article 10, periods in the law are counted in the Hijri calendar unless your contract or the employer's work regulations say otherwise. A Hijri year is shorter than a Gregorian one, so the same dates add up to slightly more service.

Which wage counts

Article 84 bases the award on the "wage", and Article 2 defines the wage as the actual wage: your basic wage (which already includes periodic increments) plus the other increases set for you for effort or risk in the work, or set in return for the work under the contract or the employer's work regulations. The examples it names include:

• commissions, and percentages of sales or profits;
• allowances for effort or risk in the work;
• increases for the cost of living or family burdens;
• bonuses that the contract or work regulations provide for, or that are paid so routinely that staff treat them as part of their pay rather than a gift;
• in-kind benefits the contract or work regulations oblige the employer to provide, valued at no more than two months' basic wage a year unless the contract or regulations give them a higher value.

Article 86 is the only carve-out. It lets you and the employer agree to leave all or part of commissions, sales percentages and similar pay that naturally rises and falls out of the award's wage. Article 8 voids any contract term that contradicts the law. It also voids any waiver or settlement of your statutory rights made while the contract is running, unless it is more favourable to you.

Article 2 does not name a housing allowance. The ministry's unified employment-contract form, adopted by Article 18 of the Labour Law's Implementing Regulations (Annex 5), lists the housing allowance under the heading "Wage", alongside the basic wage and the transport allowance, and adds them into a "Total Wage". Neither text says in so many words that a housing allowance always counts for Article 84. If your employer leaves it out, ask which provision it relies on, and take the question to the Ministry of Human Resources and Social Development.

How the job ends decides your share

Article 85 counts the resignation thresholds in consecutive years of service.

Article 81 lets you leave without notice and keep all your statutory rights if any of these applies:

• the employer fails its essential obligations;
• the employer deceived you about the terms when you were hired;
• you were moved, without your consent, to substantially different work;
• you or a family member were assaulted;
• you were treated with cruelty or insult;
• the employer ignored a serious hazard it knew about;
• unfair treatment or breach of contract pushed you into appearing to be the one who ended it.

That last case covers an ending that looks like your decision but was brought about by the employer's unfair treatment or breach of the contract.

Article 80 dismissal requires the employer to give you the chance to object first. The grounds include:

• assault at work;
• ignoring essential duties or posted safety rules after a written warning;
• proven breach of honour or trust;
• deliberate damage, which the employer must report within 24 hours;
• forgery to get the job;
• misusing your position;
• disclosing trade secrets.

Absence counts only beyond thirty days in a contract year or fifteen in a row, and only after written warnings at twenty and ten days respectively.

Article 74 lists ending by mutual agreement, with your consent in writing (paragraph 1), and resignation (paragraph 3-bis) as separate grounds. Article 85's reduced shares are worded for an ending "because of the worker's resignation", and the Law sets no separate share for a mutual agreement. Before you sign one, ask for the end-of-service figure in writing, and check with the Ministry of Human Resources and Social Development how the ending will be recorded.

Compensation under Article 77, for a contract ended without a valid reason, is a separate claim.

Resigning since the 2025 amendments

A non-Saudi's contract must be written and for a fixed term. If it states no term, it runs for one year from the day you actually start work, and continuing to work after that renews it for the same period (Article 37). Resignation is now defined in Article 2: your written statement, made without coercion and without any condition attached, that you want to end a fixed-term contract, together with the employer's acceptance of it. Under Article 79-bis:

• the contract ends on the date the employer accepts the resignation; if the employer has not replied 30 days after you submit it, it counts as accepted;
• where the work requires it, the employer can postpone acceptance by up to 60 days, with written reasons given to you before those 30 days run out; the contract then ends when the postponement does;
• you can withdraw within seven days of submitting, unless the employer has already accepted;
• the resignation cannot name a later date;
• the contract stays in force while the resignation is pending, and both sides remain bound by it;
• a worker whose contract ends by resignation keeps all the rights the Law gives them. Article 85, which the amendments did not change, still sets the share of the award on resignation.

Reading the two together. Article 79-bis decides the date on which a resignation ends the contract. Article 85 sets the share by length of service, with thresholds at two, five and ten years: at exactly five years the share is one third, and two thirds needs more than five. The worked examples below show how much one month either side of a threshold changes the payout. If you are close to one, confirm in writing the end date the employer will record.

Article 74 also lists the expiry of a fixed term (paragraph 2) and resignation (paragraph 3-bis) as separate grounds. The Law's text does not say how your own notice that you will not renew a fixed-term contract is classed. Before you give one, ask the Ministry of Human Resources and Social Development how the ending will be recorded, and get the employer's classification in writing.

Worked examples

These use an illustrative last wage of SAR 10,000 a month: a round number for the arithmetic, not a salary benchmark.

In the first row, five years at half the wage make SAR 25,000 and three later years at the full wage add SAR 30,000. An extra month adds a twelfth of a year's rate. Then apply the share.

One extra month past five years more than doubles what a resignation pays, and the month that reaches ten years is worth more than SAR 25,000.

The wage matters as much as the years. Suppose the same contract also paid an illustrative SAR 3,500 a month in allowances that count as wage. The last wage would be SAR 13,500, and the eight-year award would be SAR 74,250 rather than SAR 55,000.

When it must be paid

Under Article 88, the employer must pay your wage and settle your entitlements within one week of the end of the contract, or within two weeks if you ended it. It may deduct any debt you owe it arising from the work. Ask for an itemised final statement showing the wage used, the service counted, the share applied and every deduction.

Where it goes wrong

• Calculated on basic pay alone. Article 86 allows only commissions and similar variable pay to be left out. Ask which provision the employer is relying on.
• Not checking the recorded end date against the thresholds. The worked examples show what one month either side of five or ten years does to a resignation payout.
• Signing the final settlement unread. Article 8 voids waivers and settlements made while the contract is running. Its wording is limited to that period and does not cover a settlement signed after the contract has ended.
• Service broken by a change of entity. Article 2 counts continuous service only with the same employer or its legal successor. If you are moved to another company in the group, get the carry-over of service in writing.
• A dismissal labelled Article 80 without the process. The article requires a chance to object, and the absence grounds require the written warnings.
• Probation. Ending during probation pays no award (Article 54). Probation cannot exceed 180 days in total (Article 53).

Questions to ask

• Before you sign: Which parts of my pay count as wage for the award? Can I have that in writing? Does the contract count periods in the Gregorian or the Hijri calendar? Which legal entity employs me, and does my service carry over if I am moved within the group?
• Before you leave: What end date will be recorded? Will the ending be classed as the term running out, a resignation or a termination? Can I see the itemised settlement before I sign anything?

For notice, leave and the rest of the contract, see Saudi labour law for international employees. To get allowances written into the contract as wage, see negotiating a Saudi job offer.

Sources

• Saudi Labour Law, official text (Bureau of Experts at the Council of Ministers): Articles 2, 8, 10, 37, 53, 54, 56, 74, 77, 79-bis, 80, 81 and 84 to 88, as amended by Royal Decree M/44 (in force 1446/8/20 AH), checked 10 October 2026
• Ministry of Human Resources and Social Development: Implementing Regulations of the Labour Law and annexes (Article 18 and Annex 5, the unified employment-contract forms); announcement that the amendments and regulations took effect on 20 Sha'ban 1446 AH (19 February 2025)

General information, not legal advice. Rules change and cases vary by nationality, profession and employer.