Saudi End of Service Award Explained: How It Is Calculated

When your job in Saudi Arabia ends, the employer owes you an end of service award (مكافأة نهاية الخدمة) under the Saudi Labor Law. The 2025 amendments did not change how much you get.

The formula (Article 84)

The award is half a month’s wage for each of the first five years of service and a full month’s wage for each year after that. It is based on your last wage, and part of a year counts in proportion.

Service	Award for each year
Years 1 to 5	Half a month’s wage
Year 6 onward	One month’s wage

The article sets no maximum, unlike the UAE, where gratuity is capped at two years’ pay.

Which wage counts

Article 2 defines “wage” as the actual wage: the basic wage plus the other increments decided for the work. That includes allowances, cost-of-living and family increments, regular rewards stated in the contract, and in-kind benefits stated in the contract. So housing and transport allowances normally count. UAE gratuity, by contrast, uses basic pay only.

Under Article 86, the employer and worker can agree to leave commissions, sales percentages and similar variable pay out of the wage used for the award. Check your contract.

Worked examples

Contract ended by the employer, 8 years, wage SAR 10,000. First 5 years: 5 × 0.5 = 2.5 months. Next 3 years: 3 × 1 = 3 months. Total 5.5 months × 10,000 = SAR 55,000.

Contract ended by the employer, 3 years, wage SAR 6,000. 3 × 0.5 = 1.5 months × 6,000 = SAR 9,000.

If you resign (Article 85)

Resignation reduces the award:

Service when you resign	Share of the award
Under 2 years	Nothing
2 years up to and including 5 years	One third
More than 5 years and under 10 years	Two thirds
10 years or more	The full award

Example: 7 years, wage SAR 12,000, resigned. The full award is (5 × 0.5 + 2 × 1) = 4.5 months × 12,000 = SAR 54,000. Two thirds is SAR 36,000.

At exactly 5 years the share is still one third, because the text says “not more than five”. Two thirds starts only after 5 years.

When you get the full award even if you resign (Article 87)

• You leave because of a force majeure beyond your control.
• A woman ends her contract within six months of her marriage, or within three months of giving birth.

When there is no award (Article 80)

The employer can end the contract without an award, notice or indemnity only in the cases listed in Article 80, and only after giving you a chance to state your objection. They include:

• assaulting the employer or a superior
• forging documents to get the job
• deliberately causing the employer a material loss
• disclosing trade secrets
• using the position for personal gain
• unexcused absence beyond the limits in the article (after written warnings)
• dismissal during a probation period

Any other dismissal gets the full award under Article 84. If you dispute it, the labour court decides whether Article 80 applies.

When it must be paid (Article 88)

Within one week of the end of the contract. If you ended it, the employer has two weeks. The employer may deduct any work-related debt you owe.

What the 2025 amendments changed

The amendments in Royal Decree M/44 took effect on 19 February 2025. Articles 84 to 87 are not in the Ministry of Human Resources’ guideline listing the changed articles. Notice periods and the resignation procedure did change: see our guide to resigning in Saudi Arabia.

Calculate yours

The Saudi end of service calculator applies the formula and the resignation shares to your dates and last monthly wage. For the award plus leave, unpaid wages and notice, use the final settlement calculator.

Source: Saudi Labor Law, Royal Decree No. M/51, English text published by the Ministry of Human Resources and Social Development, Articles 2, 80, 84, 85, 86, 87 and 88, and the Ministry’s guideline on the 2024 amendments. Checked on 2 October 2026. The English text is a translation; the Arabic text governs.