Saudi End of Service Benefits 2026: Calculation Rules Explained

Updated 6 October 2026. Saudi Arabia’s end-of-service benefit (EOSB) is one of the most searched employment questions for workers and employers in the Kingdom. The basic calculation is set by the Saudi Labor Law, but the final amount can change depending on years of service, the last wage used for the calculation, the reason employment ended and whether a resignation rule applies.

What is the basic Saudi EOSB formula?

Article 84 of the Saudi Labor Law states that, when the employment relationship ends, the employer pays an end-of-service award calculated on the basis of half a month’s wage for each of the first five years and one month’s wage for each year after the first five years. Fractions of a year are calculated proportionately. The last wage received is used as the basis for the calculation.

Simple example

If an employee’s relevant last monthly wage is SAR 8,000 and the employee has completed seven years of service, the basic Article 84 calculation is:

• First five years: 5 × half a month = 2.5 months of wage = SAR 20,000.
• Next two years: 2 × one month = SAR 16,000.
• Basic total before any resignation adjustment: SAR 36,000.

This is an illustration only. Actual payroll treatment can depend on the worker’s wage components, contract terms and the legal reason the employment relationship ended.

What happens if the employee resigns?

Article 85 provides different entitlement levels when the employment relationship ends because of resignation. The current HRSD text states that an employee is generally entitled to one-third of the award after continuous service of at least two years and not more than five years, two-thirds when service is more than five years but less than ten years, and the full award when continuous service reaches ten years or more.

Do not use a simple online calculator as the final legal answer if the employee’s situation involves resignation, dismissal, Article 80, Article 81, a special contractual payment, disputed wage components or another exceptional circumstance.

Which wage is used?

Article 84 refers to the worker’s last wage as the basis. Article 86 also allows agreement in some circumstances to exclude commission, sales percentages and similar variable wage elements that naturally increase or decrease. That means two employees with the same basic salary can still have different EOSB calculations depending on the lawful wage basis in their contracts and payroll records.

Does part of a year count?

Yes. Article 84 provides for a proportionate benefit for fractions of a year actually worked. Someone who has completed, for example, six years and six months should not simply round the service period down to six years.

What records should you check before calculating?

• Employment start date and final working date.
• Whether the contract was fixed-term or indefinite-term.
• Last wage and the wage components included in the EOSB basis.
• Whether employment ended by employer termination, expiry, mutual agreement, resignation or another legal reason.
• Any contractual clause affecting variable wage components.
• Previous EOSB settlements or changes in service continuity.

Official Saudi source

The controlling reference should be the current Saudi Labor Law and Ministry of Human Resources and Social Development guidance. See the HRSD Labor Relations page, including Articles 84, 85 and 86.

More Saudi employment tools

Use the SMCE Saudi tools page for practical Saudi planning tools, and see our Saudi guides for additional checklists.