End-of-Service Benefits in Saudi Arabia: How Gratuity Is Calculated

Your end-of-service award (gratuity) 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, based on your last wage. If you resign, you get only part of it unless you have served ten years. The employer must pay it when the contract ends, whether the contract is fixed-term or open-ended.

The formula

HRSD's summary of the Labor Law (Article 84) sets the rate as:

• Years 1 to 5: half a month's wage per year.
• Year 6 onward: one month's wage per year.
• Part years: counted in proportion to the time worked.
• Wage used: your last wage. HRSD defines wage as the basic wage plus other entitled increases tied to effort, risk or contract terms. Employer and worker may agree to exclude commissions, sales percentages and similar variable pay (Article 86). Read how your contract defines wage, because that decides whether allowances such as housing are counted.

Written out: award = (0.5 x last monthly wage x first 5 years) + (1 x last monthly wage x years beyond 5).

Resignation vs termination

Article 85 reduces the award when you resign:

• Less than 2 years of service: no award.
• 2 to 5 years: one third of the award.
• More than 5 and less than 10 years: two thirds.
• 10 years or more: the full award.

The reduction applies only to resignation. If the employer ends the contract, or a fixed-term contract simply runs out, the full Article 84 amount applies. Two exceptions (Article 87) give you the full award even when you resign: you leave because of force majeure beyond your control, or you are a woman who ends the contract within six months of marriage or three months of giving birth.

When you get no award:

• Dismissal for a listed cause. Article 80 lets an employer end the contract without an award, notice or indemnity in listed cases such as assault, forgery to obtain the job, deliberate loss, unexcused absence beyond the stated limits, or disclosing trade secrets (HRSD). The employer must give you a chance to state your objection first.
• Ending the contract during probation. Neither side owes compensation, and the worker is not entitled to an award (HRSD).

Worked examples (SAR)

These use a single monthly wage figure. Check what your contract counts as wage first.

1. 3 years, contract ended by the employer, wage SAR 12,000. 3 x 0.5 x 12,000 = SAR 18,000.
2. Same person resigns. Between 2 and 5 years, so one third: 18,000 / 3 = SAR 6,000.
3. 8 years, wage SAR 15,000, employer ends the contract. First 5 years: 5 x 0.5 x 15,000 = 37,500. Next 3 years: 3 x 15,000 = 45,000. Total SAR 82,500.
4. Same person resigns. More than 5 and less than 10 years, so two thirds: 82,500 x 2/3 = SAR 55,000.
5. 6 years 4 months, wage SAR 10,000, employer ends the contract. First 5 years: 5 x 0.5 x 10,000 = 25,000. The remaining 1 year 4 months is 1.333 years at one month a year: 1.333 x 10,000 = 13,333. Total about SAR 38,333. If this person resigns, two thirds is about SAR 25,556.
6. 10 years, wage SAR 8,000, resigns. Full award because service is 10 years: (5 x 0.5 x 8,000) + (5 x 8,000) = 20,000 + 40,000 = SAR 60,000.
7. 1 year 6 months, resigns. Under 2 years: SAR 0, whatever the wage.

For your own numbers, use the salary calculator, and the annual leave calculator for the leave pay that comes on top.

What else you are owed when you leave

• Accrued annual leave. Article 111 entitles you to pay for accrued leave days you did not use, and leave pay for the part of the year you worked. See the annual leave calculator.
• Unpaid wages and any notice pay. If either side skips the required notice, Article 76 requires compensation equal to the worker's pay for the notice period. Check the notice rules with the notice period calculator.

When must it be paid

Under Article 88, as it appears in the published English translation of the law, the employer settles wages and entitlements within one week of the end of the contract, or within two weeks if the worker ended it. The employer may deduct work-related debt owed to it. That translation predates the 2025 amendments, and we could not confirm the deadline on an HRSD page, so confirm the current figure with HRSD (19911) if you are close to it.

If your employer delays payment, keep your Qiwa contract, payslips and termination record, and raise it with HRSD.

Did the 2025 labor law amendments change this?

Royal Decree M/44 amended the Labor Law and took effect on 19 February 2025, with the Executive Regulations published the same day (HRSD announcement). A law-firm summary on Qoyod lists Articles 84 and 87 among those that were not amended, and HRSD's own award page still describes the same formula. The amendments did change related rules, such as notice for resignation: see how to change jobs. Leaving the country afterwards? See the final exit visa guide.

Sources

Facts in this guide were checked on 22 October 2026 against these pages. Fees and rules change, so confirm on the official page before you pay or apply.

• HRSD: End-of-Service Award Regulations
• HRSD: Calculating End-of-Service Award
• HRSD: Probation Period
• HRSD: Work Contract Termination
• HRSD: Annual Leave (Article 111, accrued leave on leaving)
• Labor Law, English translation (Articles 84, 85, 86, 87, 88)
• HRSD: Executive Regulations and Attachments of the Labor Law take effect (19 February 2025)
• Qoyod: Labor law 2025 amendments
• Clyde & Co: KSA Labour Law amendments, Part 1, resignations (25 March 2025)