When is the end-of-service benefit paid?

Within one week of the end of employment at most, or within two weeks if the employee ended the contract. The employer may deduct any debt owed to it because of the work (Article 88).

Is an employee entitled to end-of-service benefit during probation?

No. If the contract ends during probation, no end-of-service benefit is due for that period and neither party owes compensation (Article 54). Wages for days worked and any leave earned are still paid. Probation is never assumed: it must be stated expressly in the contract and cannot exceed 180 days in total (Article 53 as amended by M/44).

How much end-of-service benefit does an employee get after resigning at 4 years?

One third, because 4 years falls between two and five years. On a last wage of SAR 10,000, the full benefit is SAR 20,000 (4 × 5,000), so the employee receives one third: about SAR 6,667. Resigning before completing two years means no benefit.

Is the end-of-service benefit different for Saudi and non-Saudi employees?

No, the calculation is the same for every nationality. In addition, the employer pays a non-Saudi worker's return ticket home after the employment ends, unless the worker is found unfit for the work or chooses to return without a legitimate reason, in which case the worker bears the cost (Article 40).

Is the end-of-service benefit calculated differently for an open-ended contract?

No, the formula is the same for both contract types. The difference is in how the contract ends: when a fixed-term contract expires, the employee receives the full benefit; an open-ended contract is ended for a legitimate reason with written notice of at least 60 days from the employer or 30 days from the employee when pay is monthly; and the text of Article 85 does not distinguish between the two contract types.

End-of-Service Benefit in Saudi Arabia: How It Is Calculated and What You Get If You Resign

What is the end-of-service benefit, and who is entitled to it?

The end-of-service benefit is a sum the employer must pay when the employment relationship ends, calculated over the employee's entire period of service. Its rules apply to every worker covered by the Labor Law, Saudi or not: Article 84 applies the same calculation regardless of nationality.

The Labor Law does not apply to groups excluded by Article 7, among them domestic workers, agricultural workers and private shepherds, and sports club and federation players and coaches. Most of these groups are governed by separate regulations.
The Labor Law amendments issued by Royal Decree No. (M/44) dated 8/2/1446H, in force since 19 February 2025, did not touch Articles 84 to 88, which govern the benefit. The rules in this guide apply as written.
The same amendments did change the rules on resignation, notice periods and probation. Their effect on the benefit is covered below, and the full picture is in our Saudi Labor Law guide.

How is the end-of-service benefit calculated?

The benefit is half a month's wage for each of the first five years of service, plus a full month's wage for each year after that. The employee's last wage is the base, and part-years count in proportion to the time actually worked, whether months or days.

In short:

First five years: (last wage ÷ 2) × years of service.
After year five: last wage × each additional year.
Full benefit: the two parts added together, before any resignation reduction.

Three rules decide the service period that counts:

Service stays continuous through statutory leave and public holidays, and through unpaid absences totalling no more than 20 intermittent days in a work year.
During unpaid leave agreed between the parties, the contract is suspended for any period beyond 20 days, unless they agree otherwise.
If the employer releases the employee from work during the notice period, service still counts as continuous until the notice period ends.

Under the Labor Law a month is 30 days unless the contract or the work regulations say otherwise.

To get your exact figure from your wage and your start and end dates, use the free end-of-service calculator.

Worked example: what does an employee earning SAR 10,000 get after 8 years?

SAR 55,000 if the employer ends the contract or it runs out, and about SAR 36,667 on resignation, because 8 years falls in the two-thirds band.

If the employee were dismissed for an Article 80 cause, the benefit would fall away, but wages due and the leave balance would still be paid.

Item	Calculation	Amount
First five years	5 × 5,000	SAR 25,000
Years 6 to 8	3 × 10,000	SAR 30,000
Full benefit (employer termination or contract expiry)	25,000 + 30,000	SAR 55,000
Resignation (two thirds, Article 85)	55,000 × 2 ÷ 3	about SAR 36,667
Resignation in an Article 87 case	full benefit	SAR 55,000

How much end-of-service benefit do you get if you resign?

A resigning employee receives a share of the benefit that depends on continuous service, on the Article 85 scale:

Under 2 years: no benefit.
From 2 years up to 5 years: one third.
More than 5 years and under 10: two thirds.
10 years or more: the full benefit.

Watch the five-year line. Article 85 gives one third for service of "no more than five years" and two thirds once service "exceeds" five years, so someone resigning at exactly 5 years gets one third; two thirds starts only after the fifth year is passed. Article 85 itself makes no distinction between fixed-term and open-ended contracts.

What changed for resignations in 2025: the amendments added a definition of resignation to Article 2, as the worker's written wish to end a fixed-term contract, and set out how it is accepted in Article 79 bis:

A resignation is deemed accepted if 30 days pass without a reply from the employer. The employer may postpone acceptance by up to 60 days where the business requires it, through a reasoned written explanation given before the 30 days run out (Article 79 bis).
The contract stays in force while the resignation is pending and ends on acceptance or when the period lapses, so service counts up to the date the resignation takes effect, not the date it was submitted.
The employee may withdraw the resignation within 7 days of submitting it, unless the employer has already accepted it.
A resigning employee keeps every right the Labor Law grants, including the benefit at the share Article 85 sets.
On an open-ended contract paid monthly, either party may end it for a legitimate reason with written notice of at least 30 days from the employee or at least 60 days from the employer (Article 75 as amended).

The scale does not apply in the Article 87 cases, where a resigning employee receives the full benefit; they are covered in the next section.

When is the full benefit paid, and when is it lost?

The full benefit is due in the cases below, and also on resignation in the Article 87 cases. It is lost in two situations: dismissal for an Article 80 cause, and termination during probation.

Full benefit:

The employer ends the contract outside probation and not for an Article 80 cause. There is no minimum service period here; the benefit is paid pro rata for any length of service.
A fixed-term contract expires without renewal. This is not a resignation and the Article 85 scale does not apply.
The employee reaches retirement age under the Social Insurance Law, dies, or becomes unable to work, certified by an approved medical report.
The employee leaves without notice in one of the Article 81 cases, for example the employer fails to meet its essential obligations, assigns substantially different work without consent, or treats the employee unfairly so that the employee only appears to have ended the contract. The employee keeps all statutory rights.
The employee leaves because of force majeure beyond their control, or a female employee ends her contract within 6 months of her marriage contract or 3 months of giving birth (Article 87).

Benefit lost:

Dismissal in one of the nine cases listed in Article 80, provided the employer gives the employee the chance to state objections. They include assault on the employer, the responsible manager, a superior or a subordinate during or because of work, forgery to obtain the job, disclosing industrial or trade secrets, and unjustified absence of more than 30 days in a contract year or more than 15 consecutive days after a written warning.
Termination during probation: neither party owes compensation, and no end-of-service benefit is due for that period. Probation must be stated expressly in the contract and cannot exceed 180 days in total.

In both cases the employee is still owed wages due and the leave balance: Article 80 allows dismissal without benefit, notice or compensation, and does not touch wages or leave pay. If the employer ends the contract for an illegitimate reason, the employee's compensation under Article 77 is a separate right paid on top of the benefit, not instead of it.

Is the end-of-service benefit based on basic salary or the full wage?

On the full wage, not the basic salary alone. The Labor Law defines "wage" as the actual wage: basic pay plus whatever is granted to the worker for their work under the employment contract or the work regulations.

What counts toward the wage the benefit is calculated on:

Allowances set in the contract, such as housing and transport allowances.
Commissions and percentages of sales or profits.
Bonuses and grants that are set in the contract or work regulations, or paid so customarily that workers treat them as part of pay rather than a gift.
In-kind benefits set in the contract, such as housing provided by the employer, valued at no more than two months' basic wage per year unless the contract or work regulations value them higher.

Special cases:

The parties may agree that commissions, sales percentages and similar elements, in whole or in part, are left out of the wage used for the benefit (Article 86).
Where pay is by piece or output, the base is the average earned over actual working days in the final year of service. Where pay is entirely commission or percentages, the average daily wage is total earnings divided by actual working days (Article 96).
Occasional or discretionary bonuses that the contract does not set and that are not customarily paid do not count.

To see the components of a wage and the true cost of an employee to the company, use the salary calculator.

Is unused annual leave paid out with the end-of-service benefit?

Yes, as a separate item on top of the benefit. On leaving, the employee is paid for accrued annual leave they have not taken, and for leave earned in part-years in proportion to time worked.

Annual leave is at least 21 days a year, rising to at least 30 days once the employee has completed 5 continuous years with the employer.
Leave cannot be cashed in while employment continues; the payout falls due on leaving.
The leave payout is not cut by the resignation scale, because Article 85 applies to the benefit only.
The law defines wage as the actual wage, yet some employers pay leave on basic salary alone, so check what your contract and work regulations say.

How can your company avoid end-of-service calculation errors?

Calculate the liability for each employee on their current full wage, update it with every pay rise and every completed year, and record in writing why each employment ended. The benefit is based on the last wage, so it grows with every increase.

The benefit accrues at about 4.2% of annual wage cost in the first five years (half a month for every 12 months), and about 8.3% after that (a month for every 12 months).
Errors to avoid: calculating on basic salary alone, applying the resignation scale to a contract that simply expired, and withholding the benefit on a dismissal that does not meet the Article 80 conditions.
Final dues must be settled within one week of the end of employment at most, or within two weeks if the employee ended the contract (Article 88).

To check how ready your HR file is, try the HR Health Scorecard. If you want a team to calculate and document these entitlements for you on an ongoing basis, that is part of our HR Outsourcing service.