How to calculate end-of-service gratuity under Saudi Labour Law, the difference between resignation and termination, and every detailed scenario.
End-of-service gratuity (or end-of-contract award) is a sum that Saudi Labour Law requires the employer to pay the employee when the contractual relationship ends. It is governed by Article 84 of the Saudi Labour Law and applies to all private-sector employees — Saudis and expats alike.
End-of-service gratuity is a legal right, not an optional bonus, and it is completely separate from the final salary, leave balance, and social insurance benefits.
| Years of service | Gratuity rate | Applicable case |
|---|---|---|
| Less than 2 years | No gratuity | Resignation only (termination = full gratuity) |
| 2 to 5 years (resignation) | One third of the full gratuity | Resigning after 2 and before 5 years |
| 5 to 10 years (resignation) | Two thirds of the full gratuity | Resigning after 5 and before 10 years |
| 10 years or more (resignation) | Full gratuity | Resigning after 10 years |
| Any period (termination) | Full gratuity from day one | Employer ends the contract |
| First 5 years (full rate) | Half a month's basic salary per year | Resignation and termination |
| After 5 years (full rate) | One full month's basic salary per year | Resignation and termination |
An employee with 7 years of service, a basic salary of SAR 8,000, who resigns:
First 5 years: 5 × (8,000 ÷ 2) = SAR 20,000
The following 2 years: 2 × 8,000 = SAR 16,000
Full total if terminated: SAR 36,000
Resigned after 7 years (5–10 bracket, two thirds): 36,000 × ⅔ = SAR 24,000
Sources: Saudi Labor Law (Royal Decree M/51), Article 84 and 85 end-of-service provisions. Figures and rules are set by the issuing authority and may change — verify current details on the official portal before relying on them. Last reviewed: June 2026.
⚠️ Disclaimer: All results are estimates based on publicly available Saudi government regulations and rates. Always verify important financial or legal decisions with your employer, bank, or the relevant Saudi authority (Ministry of Human Resources, GOSI, ZATCA, Jawazat, or SAMA).