Saudi End of Service Benefits: How to Calculate EOSB Correctly

Saudi end of service benefits, commonly called EOSB or gratuity, are normally calculated from the worker's last actual wage and continuous service with the employer. Under Article 84 of the Saudi Labor Law, the full award is half a month's wage for each of the first five years and one month's wage for each later year. Partial years count in proportion to the time worked.

If the worker resigns, Article 85 normally reduces the full award: no statutory resignation award before two continuous years, one-third after two to five years, two-thirds after more than five but less than ten years, and the full award after ten years or more. Exceptions may apply.

Do not calculate EOSB from basic salary automatically. The legal definition of wage can include contractual allowances and other regular wage components. Variable commissions or similar items may be excluded by agreement under Article 86. Use the official MHRSD calculator as a cross-check, then compare the result with your contract, Qiwa record, payslips, and final settlement.

Quick Answer

What Is End of Service Benefit in Saudi Arabia?

End of service benefit is a payment due at the end of an employment relationship under the applicable Saudi labour rules. It rewards the worker's completed service and is separate from monthly salary, unused leave, notice pay, unlawful termination compensation, expense reimbursement, and other final-settlement items.

For a private-sector employee covered by the Saudi Labor Law, the main EOSB rules appear in Articles 84 to 88.

EOSB can become relevant when:

• a fixed-term contract expires
• the employer terminates the contract
• the worker resigns
• the parties agree in writing to end the contract
• the employee chooses not to renew a fixed-term contract
• the establishment closes
• the activity ends
• the worker leaves under an Article 81 situation
• force majeure ends the relationship
• the worker reaches the applicable retirement point
• another lawful termination reason applies

The reason matters because it can change the resignation percentage, compensation, notice obligations, or whether Article 80 removes the award.

The employment record should first be checked through Qiwa. The Qiwa Saudi Arabia guide explains how to review the documented contract, wage, start date, contract term, employer, and termination information.

Who This Guide Covers

This guide mainly covers employees working for private-sector establishments under the Saudi Labor Law, including Pakistani, Indian, Bangladeshi, Nepali, Sri Lankan, Filipino, and other expatriate workers.

It can also help Saudi private-sector employees understand the basic formula, but it is written for expats.

The standard Article 84 formula does not automatically apply in the same way to every category.

Domestic workers

Housemaids, domestic drivers, household nurses, gardeners, and other domestic workers are covered by separate domestic worker regulations.

MHRSD states that a domestic worker is entitled to an end-of-service benefit of one month's wage for every four consecutive years with the employer, using the last wage as the basis. Domestic workers should follow the Musaned and domestic worker dispute routes rather than assuming the normal private-sector formula applies.

Government employees

Government employment may be governed by civil service, public-sector, contractual, or special entity rules. Confirm the applicable employment framework.

Independent contractors and genuine freelancers

A genuine independent contractor is not automatically an employee entitled to EOSB. However, describing an employee as a contractor does not necessarily decide the legal relationship. The actual control, duties, wage, and working arrangement may matter.

GCC citizens

GCC citizens may have social insurance arrangements that differ from other expatriates. EOSB and social insurance are separate, but the final settlement should be reviewed according to the person's employment category.

The Full EOSB Formula Under Article 84

Article 84 provides:

• half a month's wage for each of the first five years
• one month's wage for each year after the first five years
• a proportional amount for fractions of a year
• calculation based on the last wage

Formula for service of five years or less

Full EOSB = Last monthly wage x 0.5 x completed service in years

Formula for service longer than five years

Full EOSB = (Last monthly wage x 0.5 x 5) + (Last monthly wage x service after five years)

The first five-year portion always equals 2.5 months of the last wage when five full years have been completed.

Full award table

This table shows the full Article 84 amount before any resignation reduction.

Resignation EOSB Rules Under Article 85

When the employment relationship ends because of the worker's resignation, Article 85 applies service-based percentages to the full Article 84 calculation.

Important boundary points

• Exactly two years qualifies for one-third.
• Exactly five years remains in the one-third band.
• More than five years moves to two-thirds.
• Exactly ten years qualifies for the full award.
• Service should be continuous with the same employer or legal employment relationship unless an official transfer, restructuring, or succession rule preserves it.

Resignation is not the same as every worker-initiated ending

MHRSD defines resignation as the worker's written, uncoerced declaration to end the employment contract, with the process governed by the current law.

MHRSD also states that a worker's desire not to renew a fixed-term contract may not be treated as resignation. If a fixed-term contract reaches its expiry date and the worker follows the contract's non-renewal notice requirement, the full Article 84 award may apply rather than the reduced Article 85 resignation amount.

The wording, dates, contract status, notice, and Qiwa record matter. Do not allow a final settlement to label non-renewal as resignation automatically.

When Is the Full EOSB Normally Payable?

The full Article 84 award can normally be relevant when the employment relationship ends for a lawful reason other than a resignation that triggers Article 85 or an Article 80 dismissal that removes the award.

Common examples include:

• expiry of a fixed-term contract
• employer termination not falling under Article 80
• mutual termination with the worker's written consent
• permanent closure of the establishment
• termination of the activity in which the employee works
• force majeure
• retirement under the applicable rules
• worker departure under Article 81 while retaining statutory rights
• non-renewal of a fixed-term contract, where properly handled
• death or permanent inability to work under the applicable evidence and rules

Each case should be checked separately. Full EOSB does not prevent another compensation claim where unlawful termination, unpaid notice, or another violation exists.

Exceptions That Can Give a Resigning Worker the Full Award

Article 87 provides exceptions to the reduced resignation percentages.

A worker may be entitled to the full award when leaving because of force majeure beyond the worker's control.

A female worker may also be entitled to the full award when she terminates the contract:

• within six months from the date of her marriage contract
• within three months from the date of giving birth

The worker should preserve official documents and submit the resignation or termination record clearly.

Leaving under Article 81

Article 81 allows a worker to leave without notice while retaining statutory rights in specified serious situations, including certain employer breaches, deception, fundamentally different work assignments, assault, harsh treatment, serious safety danger, or conduct designed to make the worker appear responsible for ending the contract.

These cases are evidence-sensitive. A worker should not simply stop attending and assume Article 81 will be accepted later. Keep the contract, complaints, warnings, messages, medical evidence, safety reports, salary records, and official case references.

When Can EOSB Be Lost Under Article 80?

Article 80 allows an employer to terminate a worker without award, notice, or compensation in listed serious cases, provided the legal conditions are met and the worker is given an opportunity to state objections.

The cases include, among others:

• assault connected with work
• failure to perform essential contractual duties after the required warning
• deliberate refusal of lawful orders or safety instructions after warning
• misconduct involving dishonesty or breach of trust
• intentional conduct causing material loss, with required reporting
• forgery used to obtain employment
• termination during probation
• absence beyond the statutory thresholds after written warning
• unlawful exploitation of the job for personal gain
• disclosure of industrial or commercial secrets

An Article 80 label on a termination letter does not prove the employer is correct. The facts, warnings, records, timing, and evidence matter.

Do not sign an Article 80 admission if the description is inaccurate or not understood. Obtain the termination notice and seek official labour guidance.

Which Salary Should Be Used for EOSB?

This is one of the most common calculation disputes.

Article 84 says the award is calculated on the basis of the last wage. The current MHRSD labour-law definitions state that "wage" means the actual wage.

The actual wage includes the basic wage plus other due additions granted for work, risk, the employment contract, or workplace regulations. It can include:

• periodic increments
• contractual allowances
• risk or work-related allowances
• cost-of-living or family-related increases
• qualifying regular bonuses
• commissions or percentages
• benefits in kind required by the contract or work regulations

This means EOSB should not automatically be calculated using basic salary only.

Components that may form part of the last actual wage

Depending on the contract and payment record, these may be relevant:

• basic salary
• recurring housing allowance
• recurring transport allowance
• fixed responsibility or position allowance
• fixed risk or site allowance
• regular contractual cash benefits
• regularly earned commission
• contractual benefits in kind

The legal treatment depends on whether the amount is a real wage component, a reimbursement, a discretionary gift, or a variable item validly excluded under Article 86.

Article 86 and variable commissions

Article 86 allows the employer and worker to agree that all or some commissions, sales percentages, and similar wage elements that naturally increase or decrease will not be included in the EOSB calculation wage.

Check for a clear contractual clause. An employer should not invent an exclusion only at final settlement.

Items that may not be wage

The following may be excluded where they are genuine reimbursements or non-wage payments:

• repayment of documented business expenses
• travel costs paid against receipts
• temporary advances
• loans
• one-off voluntary gifts not treated as regular wage
• expense reimbursements
• amounts validly excluded under Article 86

What to compare

The Saudi GOSI registration and contributions guide explains the separate GOSI contributory wage. Do not assume that the GOSI wage and EOSB wage must always be identical because the systems use different legal purposes and definitions.

How to Calculate EOSB Step by Step

Step 1: Identify the employment end date

Use the actual legal end date, not only the day the employee stopped attending.

The end date may be affected by:

• notice period
• resignation acceptance
• postponed resignation acceptance
• contract expiry
• termination notice
• mutual termination agreement
• paid release from duties
• final working date recorded in Qiwa
• court or settlement decision

Article 84 service continues to the legal end of the employment relationship.

Step 2: Identify the continuous service start date

Use the date the covered employment relationship began.

Check:

• original contract
• first Qiwa contract
• work permit and Iqama history
• salary bank deposits
• GOSI record
• transfer records
• employer merger or legal succession documents
• previous contract renewals

A renewed contract with the same employer normally does not restart service. Article 56 states that renewed fixed-term periods are extensions of the original period for rights calculated by service.

Step 3: Calculate the service period

Calculate full years, months, and days between the legal start and end dates.

Article 84 gives proportional credit for fractions of a year. The official MHRSD calculator accepts:

• years
• months
• days
• contract type
• reason for ending
• actual wage

For day-level calculations, use the official calculator or the employer's transparent payroll method and compare it against the exact dates. Do not round a long partial period down to zero.

Step 4: Determine the last actual wage

Start with the latest wage legally due under the contract and Labour Law definition.

Separate:

• fixed wage components
• recurring contractual allowances
• variable commissions
• reimbursements
• discretionary payments
• valid Article 86 exclusions

If the employer reduced the wage shortly before termination, check whether the reduction was agreed, documented, and lawful.

Step 5: Calculate the full Article 84 amount

For the first five years:

Last wage x 0.5 x service up to five years

For later service:

Last wage x years after five

Add both results.

Step 6: Apply the resignation percentage only when Article 85 applies

Use:

• 0% before two years
• one-third from two through five years
• two-thirds above five and below ten years
• 100% from ten years

Do not apply the resignation reduction to contract expiry merely because the worker chose not to renew.

Step 7: Add separate final-settlement items

EOSB is only one part of the final settlement.

Also check:

• unpaid salary
• unused annual leave pay
• notice-period pay
• overtime already earned
• approved expenses
• commission already earned
• unlawful termination compensation
• contract compensation
• return ticket or repatriation responsibility where applicable
• lawful deductions
• loans or work-related debts
• any written settlement agreement

Step 8: Compare with the official calculator

Use the official MHRSD End of Service Benefit Calculator.

The ministry notes that the calculator operates automatically and that it is not responsible for the result. Treat it as a useful cross-check, not the final decision in a disputed case.

EOSB Calculation Examples

The following examples use an agreed last actual monthly wage. They are illustrations, not decisions on what a particular allowance must include.

Example 1: Employer termination after 3 years and 6 months

• Last actual wage: SAR 6,000
• Service: 3.5 years
• Reason: employer termination not under Article 80

Calculation:

SAR 6,000 x 0.5 x 3.5 = SAR 10,500

Estimated full EOSB: SAR 10,500

Example 2: Resignation after 3 years and 6 months

First calculate the full award:

SAR 6,000 x 0.5 x 3.5 = SAR 10,500

Article 85 percentage:

One-third

Resignation award:

SAR 10,500 x 1/3 = SAR 3,500

Estimated resignation EOSB: SAR 3,500

Example 3: Contract expiry after exactly 5 years

• Last actual wage: SAR 8,000
• Service: 5 years
• Reason: fixed-term contract expires

Calculation:

SAR 8,000 x 0.5 x 5 = SAR 20,000

Estimated full EOSB: SAR 20,000

Example 4: Resignation after exactly 5 years

Full award:

SAR 8,000 x 0.5 x 5 = SAR 20,000

Exactly five years remains in the one-third resignation band:

SAR 20,000 x 1/3 = SAR 6,666.67

Estimated resignation EOSB: SAR 6,666.67

Example 5: Employer termination after 8 years and 4 months

• Last actual wage: SAR 8,000
• Service: 8 years and 4 months
• Reason: employer termination not under Article 80

First five years:

SAR 8,000 x 0.5 x 5 = SAR 20,000

Remaining 3 years and 4 months:

3 + 4/12 = 3.3333 years

SAR 8,000 x 3.3333 = SAR 26,666.67

Total:

SAR 20,000 + SAR 26,666.67 = SAR 46,666.67

Estimated full EOSB: SAR 46,666.67

Example 6: Resignation after 8 years and 4 months

Full award:

SAR 46,666.67

Article 85 percentage:

Two-thirds

SAR 46,666.67 x 2/3 = SAR 31,111.11

Estimated resignation EOSB: SAR 31,111.11

Example 7: Resignation after 10 years and 6 months

• Last actual wage: SAR 10,000
• Service: 10.5 years

First five years:

SAR 10,000 x 0.5 x 5 = SAR 25,000

Remaining 5.5 years:

SAR 10,000 x 5.5 = SAR 55,000

Full award:

SAR 25,000 + SAR 55,000 = SAR 80,000

At ten years or more, Article 85 provides the full award.

Estimated resignation EOSB: SAR 80,000

Example 8: Non-renewal after 4 years

• Last actual wage: SAR 7,000
• Service: 4 years
• Reason: fixed-term contract expires after proper non-renewal notice

Calculation:

SAR 7,000 x 0.5 x 4 = SAR 14,000

Because MHRSD states that a desire not to renew may not be treated as resignation, the calculation may be the full Article 84 amount rather than one-third.

Estimated full EOSB: SAR 14,000

Check the contract notice clause and how the ending is recorded.

Full Award vs Resignation Comparison

Using a last actual wage of SAR 6,000:

The table assumes no Article 87 exception, Article 81 issue, Article 80 dismissal, disputed wage component, service break, or special category.

How Partial Years Are Treated

Article 84 expressly gives a proportional award for portions of a year.

This means an employer should not normally calculate only completed full years and ignore additional months.

For example, after 6 years and 9 months:

• first five years use 2.5 months of wage
• next one year uses one month of wage
• next nine months use 9/12 of one month of wage

If the last wage is SAR 6,000:

First five years:

SAR 6,000 x 2.5 = SAR 15,000

Next year:

SAR 6,000 x 1 = SAR 6,000

Next nine months:

SAR 6,000 x 9/12 = SAR 4,500

Total full award:

SAR 25,500

Use exact dates for the final calculation. The official MHRSD calculator allows days to be entered separately.

Does Unpaid Leave Reduce EOSB Service?

A long unpaid-leave period can create calculation questions because service continuity, contract status, and the specific leave arrangement matter.

Do not assume every unpaid day automatically removes service, and do not assume every unpaid period must count fully.

Check:

• contract status during leave
• written approval
• Qiwa record
• whether the contract was suspended
• applicable leave rule
• payroll record
• employer work regulations
• official MHRSD guidance for that type of leave

For a material disputed period, ask MHRSD or use the labour dispute process rather than guessing.

Does Changing Employers Reset EOSB?

A genuine transfer to a new legal employer normally ends the old employment relationship and starts a new one. The old employer should settle EOSB and other rights up to the transfer or separation date, unless a lawful written arrangement, business transfer, merger, or succession preserves service.

The Saudi Iqama transfer guide explains the labour mobility process.

Before accepting a transfer settlement, check:

• old employer's legal name
• new employer's legal name
• transfer date
• old contract termination record
• new contract start date
• whether service continuity is promised in writing
• who accepts liability for earlier service
• EOSB paid or carried forward
• GOSI exclusion and registration dates
• Qiwa contract history

Do not accept a verbal promise that "your old service will continue" without a clear written record identifying who will pay for it.

EOSB, GOSI, and Final Exit Are Different

EOSB

Paid by the employer as an employment entitlement.

GOSI

For an ordinary non-Saudi worker, GOSI mainly provides Occupational Hazards coverage. It does not normally pay the worker's EOSB.

Final exit

An immigration and residency process for permanent departure.

A worker should settle employment rights before signing a final settlement or leaving. The Saudi final exit and Iqama cancellation guide explains the practical departure steps.

A final exit visa does not prove EOSB was paid. An EOSB payment does not by itself cancel the Iqama or issue final exit.

What Must Be Included in the Final Settlement?

Ask for a calculation sheet showing each line separately. A single figure labelled "full and final settlement" is difficult to audit.

When Must EOSB Be Paid?

Article 88 states:

• when the employer ends the employment relationship, wages and entitlements should be settled within a maximum of one week
• when the worker ends the relationship, entitlements should be settled within a maximum of two weeks

The employer may deduct a work-related debt owed by the worker from amounts due.

A deduction should be documented and lawful. The employer should not use vague charges, recruitment costs, visa expenses, or invented penalties to remove EOSB without a legal and contractual basis.

Practical payment evidence

Keep:

• final settlement statement
• signed calculation
• bank transfer record
• payroll slip
• Qiwa termination record
• employer acknowledgement
• experience certificate
• deduction documents
• complaint or settlement reference

Do not sign "received in full" before the money is received unless the document clearly states that payment is still pending and how it will be made.

What Happens if the Employer Does Not Pay EOSB?

Step 1: Recalculate the amount

Use:

• exact service dates
• last actual wage
• correct ending reason
• Article 84 full formula
• Article 85 resignation band where applicable
• Article 87 exception where applicable
• separate leave, salary, notice, and compensation items

Use the official MHRSD calculator as a cross-check.

Step 2: Ask for the employer's calculation in writing

Request:

• wage basis
• service period
• reason for termination
• resignation percentage
• deductions
• payment date
• Qiwa record status

Step 3: Preserve evidence

Step 4: Use the official labour channel

The MHRSD Friendly Settlement service is the first stage for many private-sector labour disputes. It aims to resolve the dispute before referral to the labour court where required.

Use the correct official service, provide accurate figures, and upload readable evidence.

A general violation report and a personal monetary claim are not always the same process. Choose the channel that addresses unpaid entitlements.

Step 5: Do not miss procedural deadlines

Labour claims can be subject to procedural deadlines and admissibility rules. Because the correct deadline can depend on the claim and current law, submit the dispute promptly rather than waiting.

This guide is informational and does not replace legal advice. For a high-value, complex, or contested Article 80 or Article 81 case, obtain qualified Saudi labour-law assistance.

Common EOSB Calculation Mistakes

Fees and Processing Time

There is no government fee for the worker to calculate EOSB using the official MHRSD online calculator.

Fees change often. Confirm the exact amount in the official portal before payment.

Do not pay an agent who promises a guaranteed EOSB decision or court outcome.

Official Sources Checked

This guide was checked against current official MHRSD labour-law and service material.

• MHRSD Labor Relations and current Articles 74 to 88
• MHRSD End of Service Benefit Calculator
• MHRSD End-of-Service Award Regulations
• MHRSD guide to calculating the end-of-service award
• MHRSD labour-law definitions and actual wage
• MHRSD labour education FAQs
• MHRSD Friendly Settlement for Labor Disputes
• MHRSD domestic worker end-of-service rules

Last checked: 18 July 2026.

Bottom Line

Calculate Saudi EOSB in two stages.

First, calculate the full Article 84 award:

• half a month's last wage for each of the first five years
• one month's last wage for each year after five
• proportional credit for partial years

Second, check why the employment ended. Apply Article 85 only to a resignation covered by that article:

• under two years: normally no resignation award
• two through five years: one-third
• above five and below ten years: two-thirds
• ten years or more: full award

Use the last actual wage, not basic salary automatically. Check contractual allowances, regular wage components, variable commission exclusions, service dates, and the Qiwa record.

EOSB is only one part of the final settlement. Add unpaid salary, unused leave, notice pay, earned commission, approved expenses, and any separate compensation. Check every deduction.

The employer should normally settle within one week when it ends the employment relationship or within two weeks when the worker ends it. If the calculation or payment is wrong, preserve the evidence and use the official MHRSD Friendly Settlement route promptly.

This guide provides general information, not legal advice. The final result in a disputed case depends on the current law, contract, wage evidence, ending reason, and official decision.