How is end-of-service benefit calculated in Saudi Arabia?
Article 84 — base calculation
Saudi Labor Law calculates EOSB from the last wage: half a month’s wage for each of the first five years, and one full month’s wage for each year thereafter, with partial years pro-rated.
Article 85 — resignation
If the employee resigns, entitlement is reduced: under 2 years — none; 2–5 years — one-third; 5–10 years — two-thirds; 10+ years — full. Contract expiry or employer termination receives the full award.
Resignation vs contract end or termination
| Length of service | Resignation (Art. 85) | End / termination (Art. 84) |
|---|---|---|
| Under 2 years | 0% | 100% |
| 2 – 5 years | ⅓ | 100% |
| 5 – 10 years | ⅔ | 100% |
| 10+ years | 100% | 100% |
Worked examples (SAR)
Example 1 — 4 years, SAR 6,000 wage, contract ended
4 × ½ × 6,000 = SAR 12,000 (full award).
Example 2 — 7 years, SAR 8,000 wage, employer termination
(5 × ½ × 8,000) + (2 × 8,000) = 20,000 + 16,000 = SAR 36,000.
Example 3 — 6 years, SAR 10,000 wage, resignation
Base: (5×½×10,000)+(1×10,000)=35,000. Under Art. 85 (5–10 yrs): ⅔ × 35,000 ≈ SAR 23,333.
What smart companies do with this liability
Instead of treating EOSB as a raw balance-sheet obligation, leading employers launch Shariah-compliant workplace savings — payroll-integrated, wellbeing-focused, and retention-friendly.
Explore the employee savings programThis calculator is illustrative only and is not legal advice. Consult a specialist or your HR department for individual cases.