How is EOSB calculated in Saudi Arabia?

Article 84: First 5 years = half month salary per year. Beyond 5 years = one full month per year. Partial years count proportionally.

Do I get EOSB if I resign?

Yes, but at reduced rates: under 2 years = 0%, 2-5 years = 33%, 5-10 years = 67%, 10+ years = 100%. Women resigning within 6 months of marriage or 3 months of childbirth receive full EOSB.

When must my final settlement be paid?

Article 88: If the employer terminates = within 1 week. If the employee resigns = within 2 weeks.

End-of-Service Gratuity in Saudi Arabia — Complete Guide

💰 EOSB Free ⏱ 4 min #1

How to Calculate Your End-of-Service Gratuity? The Official Formula from Article 84

Saudi Labor Law sets EOSB using two rates based on your length of service. Getting this wrong could cost you thousands.

📌 The Official Formula — Article 84

Saudi Labor Law grants EOSB based on your basic salary (not total salary):

First 5 years: Half a month's salary per year (Salary ÷ 2 × years)
Beyond 5 years: One full month's salary per year
Partial years count proportionally

Article 84 — Saudi Labor Law: "Upon termination of employment, the employer shall pay the employee an end-of-service gratuity calculated at half a month's wage for each of the first five years and one month's wage for each subsequent year."

🧮 Calculation Example

Khalid worked 7 years with a basic salary of SAR 6,000:

📊 Khalid's EOSB (Salary: SAR 6,000 | 7 Years)

First 5 years: 6,000 ÷ 2 × 5SAR 15,000

Extra 2 years: 6,000 × 2SAR 12,000

Total EOSBSAR 27,000 ✅

💡 EOSB is calculated on basic salary only — housing, transport, and other allowances are typically excluded unless your contract specifies otherwise.

Calculate your exact EOSB →

💰 EOSB Free ⏱ 3 min #2

Basic vs. Total Salary: Which Counts for Your Gratuity?

The difference between basic and total salary could mean thousands of riyals. Here's the official rule.

📌 Basic Salary Is the Basis — With Conditions

Article 84 specifies the calculation uses the last basic salary before termination — not the total salary package.

⚠️ What Is NOT Counted

Housing allowance
Transportation allowance
Food allowance
Commission and bonuses (unless contractually guaranteed)
Overtime pay

✅ What IS Counted

Basic salary
Periodic increments (annual raises)
Any allowance explicitly included in the contract for EOSB purposes

📊 Example: Ahmed with SAR 8,000 total (SAR 4,000 basic + SAR 4,000 allowances)

Correct EOSB baseSAR 4,000 (basic only)

EOSB after 3 years4,000 ÷ 2 × 3 = SAR 6,000

If total salary used (error)8,000 ÷ 2 × 3 = SAR 12,000

⚖️ If your contract has a non-standard clause that includes allowances in the EOSB base, that clause may be legally valid — consult a labor advisor.

💰 EOSB Free ⏱ 4 min #3

What Are You Owed If You Resign? The Official Percentage Table Under Article 85

Resigning doesn't mean losing everything. Article 85 grants partial EOSB based on your years of service.

📋 Resignation EOSB Table — Article 85

Years of Service	EOSB Entitlement
Less than 2 years	0%
2 to less than 5 years	33% (one third)
5 to less than 10 years	67% (two thirds)
10 years or more	100% (full EOSB)

🌸 Important Exception for Women

A female employee who resigns receives full EOSB (100%) regardless of years served, if:

She resigns within 6 months of marriage, or
She resigns within 3 months of childbirth

📊 Example: Rasha resigns after 4 years — Salary: SAR 5,000

Full EOSB (4 years): 5,000 ÷ 2 × 4SAR 10,000

Resignation rate (2–5 years)× 33%

Amount owedSAR 3,333 ✅

💡 If you resigned due to employer misconduct (Article 81), you are entitled to full EOSB regardless of years served.

💰 EOSB Free ⏱ 3 min #4

When Must Your Final Pay Be Settled? Article 88 Sets Binding Deadlines

Saudi law mandates specific deadlines for settling all dues. Missing these deadlines is a violation — and you can file a complaint.

⏰ Mandatory Deadlines — Article 88

If the employer terminates: All dues must be paid within 1 week
If the employee resigns: All dues must be paid within 2 weeks

📋 What Must Be Settled

EOSB (Article 84)
Unused annual leave balance (Article 109)
Any unpaid salaries
Notice pay if applicable (Article 75)
Overtime owed (Article 107)

🚨 What Happens If Delayed?

Delay beyond the legal deadline is a labor violation. You can file a complaint with the Ministry of Human Resources via the Musaned platform — this can result in fines for the employer.

💰 EOSB Free ⏱ 5 min #5

8 Cases Where You Lose Your Gratuity Rights — Article 80 Explained

Article 80 lists the only situations where an employer can legally terminate without paying EOSB or notice pay.

📋 The 8 Cases Under Article 80

Assault on the employer, manager, or colleagues during work
Failure to perform core contract duties despite written warning
Conduct that violates honor and trust
Forging documents or certificates to obtain employment
Absence without valid reason: more than 30 non-consecutive days/year or 15 consecutive days
Disclosing trade or industrial secrets of the workplace
Causing significant material damage to the employer (reported to authorities within 24 hours)
Using the position for personal gain at the employer's expense

🔑 Mandatory Conditions for Article 80 to Apply

The violation must be proven
The employee must be given an opportunity to present their defense
Article 80 cannot be interpreted broadly — only these exact cases apply

⚖️ Key distinction: Article 77 (unjust dismissal) vs. Article 80 (justified dismissal). If your employer claims Article 80 but cannot prove it, you are entitled to full EOSB + compensation.

💰 EOSB Free ⏱ 4 min #6

Fixed-Term Contract Ended — How Much Gratuity Are You Owed?

Fixed-term contracts have special rules that differ from open-ended ones. The difference affects both notice pay and how EOSB is calculated.

📋 Fixed-Term Contracts — Special Rules

Under Article 74, when a fixed-term contract expires naturally:

✅ Full EOSB (Article 84)
✅ All unused annual leave
✅ Any unpaid salaries
❌ No notice pay (Article 75) — because the contract expired naturally

🔄 Automatic Conversion — Important Rule

If both parties continue working after the contract expires with no new agreement, the contract automatically converts to open-ended by law. This means the employee gains all open-ended rights including notice pay.

Article 74: "A fixed-term contract ends upon expiry. If both parties continue execution, it shall be deemed renewed for an indefinite period."

📊 Example: Reza worked 2-year contract — Salary: SAR 5,000

EOSB (under 5 years): 5,000 ÷ 2 × 2SAR 5,000

Unused leave (12 days): (5,000÷30) × 12SAR 2,000

Total owedSAR 7,000 ✅

💰 EOSB Free ⏱ 3 min #7

Worker Death or Disability — Do Benefits Go to the Family?

When a worker dies or becomes permanently disabled, Saudi law protects their family's right to all entitlements.

💛 Death During Service

Full EOSB is paid to legal heirs based on Sharia inheritance rules
All unpaid salaries must be settled
Unused annual leave is paid in cash
If death resulted from a work injury: additional compensation under social insurance

♿ Total Disability

If the worker can no longer perform their role due to total disability, the contract terminates
Full EOSB is owed regardless of years served
Social insurance may provide additional disability benefits

👨‍👩‍👧 Who Are the Legal Heirs?

Spouse, children, and parents — in order of Islamic inheritance priority. The employer pays the total amount and the family distributes internally per Sharia.

💰 EOSB Free ⏱ 4 min #8

Company Closure or Bankruptcy — Are Your Rights Lost?

When a company shuts down or goes bankrupt, workers often fear losing everything. Here's how Saudi law protects you.

🏢 Company Closure

Under Article 74, permanent closure is a legitimate reason for termination. The employer must:

Pay full EOSB to all employees
Settle all unpaid salaries
Pay unused annual leave
Pay notice pay (Article 75) if applicable

🛡️ Wage Protection Fund — For Expatriate Workers

The Wage Protection Fund covers expatriate workers when employers fail to pay due to insolvency or escape. It covers:

Delayed or unpaid salaries
EOSB
Notice pay
Repatriation costs

📋 How to Apply to the Fund

File a complaint at the Ministry of Human Resources office
Provide employment contract and any salary records
The fund evaluates and processes the claim

Start your claim with Sanad →

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