How the end-of-service award works in Saudi Arabia
Saudi Arabia differs from the rest of the Gulf in two ways that matter enormously, and both of them catch people who have worked elsewhere in the region.
It is calculated on your whole wage
The award uses the actual wage, which under the Labour Law means basic salary plus the fixed, regular allowances decided for the worker — typically housing and transport. Variable pay such as commission and overtime is normally excluded unless your contract says otherwise. This is the opposite of the UAE. Someone moving from Dubai to Riyadh on the same package will find their award is roughly double what the same service would have produced, and someone moving the other way gets an unpleasant surprise.
Resignation still reduces it
| Service at resignation | You receive | Law |
|---|---|---|
| Under 2 years | Nothing | Art. 85 |
| 2 to under 5 years | One third of the award | Art. 85 |
| 5 to under 10 years | Two thirds of the award | Art. 85 |
| 10 years or more | The full award | Art. 85 |
These tiers apply only when you resign. If the employer ends the contract, or it expires, or you retire, the full award is payable regardless of length of service. The thresholds are worth planning around: resigning a month before your fifth anniversary can cost you a third of the whole award.
The underlying formula
Before any tier is applied, Article 84 gives half a month's wage for each of the first five years, and a full month's wage for each year after that. Part years are paid in proportion. There is no cap, unlike the UAE.
The Article 87 exceptions
Some departures pay the full award even though they are resignations: leaving because of force majeure beyond your control, and a female worker leaving within six months of marriage or three months of giving birth. If either applies to you, tick the box in the calculator.
Questions people ask
Does my housing allowance count?
Yes. The award uses the actual wage, which includes fixed regular allowances such as housing and transport. If your employer has calculated on basic salary alone, that is the first thing to question.
I am resigning after four years. What do I get?
One third of the Article 84 award. At five years it becomes two thirds, so if your fifth anniversary is close, the difference is substantial. Check the date before you submit your resignation.
Is there a maximum?
No. Unlike the UAE's two-year cap, Saudi Arabia sets no ceiling on the award.
Do these rules apply to Saudi nationals too?
Yes. Articles 84 and 85 apply equally to Saudi and non-Saudi workers in the private sector.
When must I be paid?
Within one week of the last working day if the employer ended the contract, and within two weeks if you resigned.
Where these rules come from
Labour Law promulgated by Royal Decree M/51, Articles 2, 80, 84, 85, 87 and 88 · Ministry of Human Resources and Social Development guidance · the official end-of-service calculator on Qiwa.
Where sources genuinely disagree, this page says so rather than picking a number quietly.