How Saudi End of Service Benefit Is Calculated (2026 Rules)

Under the Saudi Labor Law, the end-of-service award (EOSB) 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, with part years counted pro rata. If you resign, you get nothing under two years, one third from two to five years, two thirds from five to ten years, and the full award after ten. There’s no cap.

The rules are in Articles 84 to 88 of the Labor Law published by the Ministry of Human Resources and Social Development (HRSD). This guide shows how they apply in practice, with examples where a month’s difference in timing is worth tens of thousands of riyals. For your own figures, use the Saudi EOSB calculator.

The formula

Which wage counts

This is where Saudi Arabia differs most from the UAE. The award uses your actual wage: basic pay plus regular allowances such as housing and transport. Article 2 of the law defines it that way. Commissions and other variable pay can be left out if your contract says so.

Use the figures on your last payslip. A raise shortly before you leave counts in full for all your years.

If your employer provides housing in kind rather than as cash, the treatment can be disputed. Check your contract and, if needed, ask HRSD.

Worked example 1: the five-year line

Khalid earns SAR 7,000 basic, SAR 2,500 housing and SAR 500 transport: a wage of SAR 10,000. He’s thinking about resigning.

If he resigns at 4 years 11 months (4.92 years):

1. Full award: 0.5 × 4.92 = 2.46 months = SAR 24,600.
2. Resigned between 2 and 5 years: one third = SAR 8,200.

If he waits until 5 years 1 month (5.08 years):

1. Full award: 0.5 × 5 + 1 × 0.08 = 2.58 months = SAR 25,800.
2. Resigned between 5 and 10 years: two thirds = SAR 17,200.

Two extra months of work more than double his payout, from SAR 8,200 to SAR 17,200.

Worked example 2: the ten-year line

Same wage, SAR 10,000.

Resigning at 9 years 11 months (9.92 years):

1. Full award: 2.5 + 4.92 = 7.42 months = SAR 74,200.
2. Two thirds = SAR 49,467.

Resigning at exactly 10 years:

1. Full award: 2.5 + 5 = 7.5 months = SAR 75,000.
2. Ten years or more: full award = SAR 75,000.

One more month adds about SAR 25,500.

Worked example 3: contract not renewed

Ana’s two-year fixed-term contract runs its full term, and her employer doesn’t renew it. Her wage is SAR 6,000 including allowances.

1. Full award: 0.5 × 2 = 1 month = SAR 6,000.
2. She didn’t resign; the contract ended. She receives the full SAR 6,000.

If instead the employer had ended her contract after 1.5 years, she would get 0.75 × 6,000 = SAR 4,500. There is no minimum service when the employer ends the contract.

Counting your service

Service runs from your first working day to your last. Our calculator counts calendar days and divides by 365. Some employers count in Hijri years, which are about 11 days shorter, so the same dates can give a slightly higher number of years. If your contract mentions the Hijri calendar, the Hijri date converter helps you match dates.

Unpaid leave beyond what the law allows may be excluded from service. Ask your employer for their service calculation in writing before you finalise a resignation date.

EOSB, GOSI and other money you’re owed

The end-of-service award is paid by the employer, not by GOSI. GOSI (the General Organization for Social Insurance) runs pensions and occupational hazards insurance, and unemployment insurance (SANED) for Saudi nationals. Your GOSI contributions don’t reduce or replace the award.

When a job ends, your final settlement should also include:

• unpaid salary up to your last day,
• pay for unused annual leave,
• notice-period pay where applicable,
• compensation for unlawful termination under Article 77, if the employer ended an indefinite contract without a valid reason (this is separate from EOSB),
• a return ticket, if your contract provides one.

When it must be paid

Article 88 gives the employer one week to pay if it ended the contract, and two weeks if you did. It may deduct debts connected to your work. If payment is late or short, start with a written request to HR. After that, you can file a claim through HRSD’s labour dispute process, which leads to the labour courts if it isn’t settled amicably.

Amendments to the Labor Law took effect on 19 February 2025 and changed notice periods and other procedures. As far as we could check, they did not change the award formula in Articles 84, 85 and 87. Check HRSD for the current text if you’re making a big decision.

Saudi EOSB vs UAE gratuity

For the UAE side, see how UAE gratuity is calculated or use the UAE gratuity calculator.

FAQ

How much is end of service for 5 years in Saudi Arabia?

2.5 months’ wage if the employer ends the contract or it expires. If you resign at five years, you get two thirds of that: 1.67 months’ wage.

Do I get EOSB if I resign before 2 years?

No. Under Article 85, a worker who resigns with less than two years’ service gets no award, unless an Article 87 exception applies or you left because of the employer’s breach under Article 81.

Is housing allowance included in the end-of-service award?

Yes, if it’s a regular cash allowance. The Saudi law uses the actual wage, which includes regular allowances such as housing and transport.

Is EOSB taxed in Saudi Arabia?

Saudi Arabia does not levy personal income tax on employment income, so the award is paid without income tax deduction in Saudi Arabia. If you’re tax resident elsewhere, your home country’s rules may apply.

Sources

• HRSD: Labor Law, English text (Articles 2, 77, 80, 81, 84–88)
• HRSD knowledge centre: end-of-service award explained
• GOSI: General Organization for Social Insurance

This guide is general information, not legal advice. The Labor Law is amended from time to time; check HRSD for the current text.