End of Service in Saudi Arabia: Rules, Resignation Thresholds and Examples (2026)
Resigning a month too early can cost you a third of your award. How Saudi end of service is calculated, which wage counts and when you're paid — with worked examples.
By the Finance Arabia editorial team4 min read
If you're working in Saudi Arabia, your end-of-service award (ESB, often just called "gratuity") depends on three things: how long you've worked, your last wage, and — unlike in the UAE — how your job ends. Resigning after two years can leave you with a third of what you'd get if your contract simply ended. This guide walks through the rules in the Saudi Labour Law, with worked examples you can check in our end-of-service calculator (select Saudi Arabia).
The basic formula (Article 84)
When your contract ends or your employer terminates it, you're entitled to:
- Half a month's wage for each of your first five years of service
- A full month's wage for each year after that
- Part years are paid in proportion to the time worked
There's no cap, and there's no minimum service requirement when the employer ends the contract.
Which "wage" is used?
This is the biggest difference from the UAE. In Saudi Arabia the award is calculated on your last actual wage: basic salary plus housing allowance and other fixed allowances paid regularly under your contract — not just the basic. Commissions or variable amounts are usually averaged or treated according to your contract. That makes Saudi awards noticeably bigger for the same basic salary.
If you resign (Article 85)
| Service when you resign | Share of the award you receive |
|---|---|
| Less than 2 years | Nothing |
| 2 to under 5 years | One-third |
| 5 to under 10 years | Two-thirds |
| 10 years or more | The full award |
When you get the full award even if you leave (Article 87)
- You leave because of force majeure beyond your control.
- A female employee ends her contract within six months of marriage or three months of giving birth.
- You leave for one of the reasons in Article 81 — for example, the employer doesn't pay your wages, assaults you or breaches essential contract terms.
Worked examples
All examples use a monthly wage of SAR 12,000 (basic + housing + fixed allowances).
| Situation | Calculation | Award |
|---|---|---|
| Contract ends after 8 years | (5 × 0.5 × 12,000) + (3 × 12,000) | SAR 66,000 |
| Resign after 8 years | Two-thirds of SAR 66,000 | SAR 44,000 |
| Resign after 3 years | One-third of (3 × 0.5 × 12,000) | SAR 6,000 |
| Resign after 1 year 10 months | Under 2 years | SAR 0 |
| Resign after 12 years | (5 × 0.5 × 12,000) + (7 × 12,000) | SAR 114,000 |
Notice how much timing matters: resigning at 4 years 11 months gets you a third, while waiting one more month moves you to two-thirds. If you're close to the 2, 5 or 10-year mark, check your exact dates in the calculator before you hand in your notice.
When is it paid? (Article 88)
- If your employer ends the contract: within one week.
- If you resign: within two weeks.
Your employer may deduct proven debts you owe them, such as an unpaid loan from the company.
When can an employer refuse the award?
Article 80 lists serious cases where an employer can terminate without notice or award — for example, assaulting a colleague or manager, serious breach of contract obligations after a written warning, fraud, or long unexplained absence. Employers must follow the procedure in the law, and you can challenge a dismissal through the Ministry of Human Resources and Social Development's labour dispute system.
Is GOSI the same as end of service?
No. For expats, GOSI deducts nothing from your salary — your employer pays 2% for occupational hazards, and there's no pension for non-Saudis. Your end-of-service award is a separate obligation paid directly by your employer. See our GOSI salary calculator for how deductions work for Saudi and expat employees.
Checklist before you leave
- Confirm your start date as registered with the employer and GOSI.
- Check which allowances are fixed in your contract — they count towards the wage.
- Work out whether you're close to a 2, 5 or 10-year threshold.
- List everything else you're owed: unused annual leave, final salary and any contractual ticket.
- If you're leaving the country, make sure your final settlement is paid before your exit visa is processed.
FAQs
Do expats get end-of-service in Saudi Arabia?
Yes. The award applies to all private-sector employees covered by the Labour Law, regardless of nationality.
Is housing allowance included?
Yes — the award is based on the actual wage, which includes housing and other fixed allowances.
What if I move to another company on a transfer?
Your end-of-service is settled by the employer you're leaving, based on your service with them. How it's treated (resignation or mutual agreement) affects the amount, so get the terms in writing.
The bottom line
In Saudi Arabia, the award is generous when your contract ends — half a month's full wage per year for five years, then a full month — but resignation thresholds can take most of it away. Before resigning, check the dates, the wage used and whether an Article 87 exception applies. Our calculator does the maths in seconds.
Based on the Saudi Labour Law (Articles 80, 81, 84, 85, 87 and 88) as of October 2026. This guide is general information, not legal advice; individual contracts and cases may differ.
Prices, fees and features change often. We check our facts at the time of writing, but always confirm the latest details with the provider. This article is for information only and is not financial advice.
