How to calculate end-of-service pay under the Saudi Labour Law
End-of-service pay is owed when employment ends, based on the last wage and the length of service. Here is the rule, with worked examples.
The basic rule
- First 5 years: half a month’s wage for each year.
- After 5 years: a full month’s wage for each year.
- Part years: paid in proportion to the time worked.
Which wage is used?
The award uses the last wage: basic pay plus fixed allowances that are due, such as housing and transport. Commissions, percentages and similar variable items can be excluded by agreement.
On resignation
| Service | Share of the award |
|---|---|
| Under 2 years | None |
| 2 to under 5 years | One third |
| 5 to under 10 years | Two thirds |
| 10 years or more | Full award |
A female employee who leaves within 6 months of marriage or 3 months of giving birth receives the full award, as does an employee who leaves because of force majeure.
Examples
Example 1: ended by the employer. Last wage SAR 10,000, 6 years of service.
First 5 years: 5 × 5,000 = SAR 25,000. Year 6: SAR 10,000. Total: SAR 35,000.
Example 2: resignation. Same wage, 4 years of service.
Full award: 4 × 5,000 = SAR 20,000. One third on resignation: about SAR 6,667.
Common mistakes
- Using basic pay only and leaving out fixed allowances.
- Rounding service to whole years instead of counting months and days.
- Treating the end of a fixed-term contract like a resignation; it earns the full award.
Work it out in seconds
Try the free calculator. In Syncstead the award is calculated automatically in the final settlement.
Open the calculator Request a demoFor general information, not legal advice. Source: Ministry of Human Resources and Social Development.